The sum has been agreed after an investigation from Ofwat discovered ‘significant’ breaches of the company’s licence conditions and statutory duties between 2010 and 2017.
A report published today says workers at Southern Water, including those in senior management positions, took ‘widespread and deliberate’ measures to ‘hide’ the true performance of its treatment works by stopping samples of wastewater from being taken.
This meant the samples could not be tested for compliance with environmental permit conditions.
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Regulators also found the company had made ‘unpermitted and premature spills of wastewater’ from its treatment works, meaning sewage had not been fully cleaned before being released into the environment.
In its report summary, Ofwat said: ‘We have concluded that Southern Water has deliberately misreported data to us about the
performance of its wastewater treatment works.
‘We have also concluded that it has failed: to have adequate systems of planning, governance and internal controls in place to be able to manage its wastewater treatment works; to accurately report information about the performance of these works; and to properly carry out its general statutory duties as a sewerage undertaker, to make provision for effectually dealing with and treating wastewater.’
Previous stormwater discharges into Langstone Harbour have come from Southern Water facilities at Henderson Road in Eastney, Budds Farm in Havant, Fort Cumberland and Court Lane in Cosham.
However, none of these locations are mentioned in Ofwat’s report.
The document also flags up 991 issues with Southern Water’s wastewater treatment works and a maintenance backlog which could cost as much as £26m to remedy.
Of the £126m the company will pay out, £3m is fines and the remaining £123m will come in customer bill rebates over the next five years.
Each Southern Water customer will receive at least a £17 rebate in 2021 and at least £11 annually for the following four years.
Windsurfer Mike Owens from Hayling Island, who has long campaigned against Southern Water's stormwater discharges into Langstone Harbour, said the rebate is a small price to pay.
‘I don't think it's proportionate, but I understand they don't want to put Southern Water out of business because they treat wastewater for many people,' the 59-year-old said.
‘My initial thought was that I would rather Southern water get itself together than get a few quid myself.
'I'd much rather that £11 a year be invested in putting right what they are not doing right.’
The company said it ‘fully supported’ Ofwat’s investigation and was ‘deeply sorry' about what it found.
Southern Water CEO, Ian McAulay, said: ‘In 2017, I was brought in to drive change and transformation.
‘Since then we have been working very hard to understand past failings and implement the changes required to ensure we better deliver for our customers and meet the standards they deserve.
‘We are deeply sorry for what has happened. There are no excuses for the failings that occurred between 2010 and 2017 outlined in Ofwat’s report.
‘We have clearly fallen far short of the expectations and trust placed in us by our wastewater customers and the wider
communities we serve.
‘We are fully committed to continuing the fast pace of change delivered since 2017.
‘There is a lot more work to do but we’re pleased that this proposal agreed with Ofwat enables us to fully make amends to our customers and regain their trust as quickly as possible.’