South East Water has avoided a £22 million penalty after failing numerous customers. Instead, the regulator Ofwat has approved a package of measures amounting to £30.5 million following three investigations into the company’s shortcomings. Ofwat has backtracked on its previous intent to fine South East Water for causing significant disruptions that led to stress and anxiety among residents in Kent and Sussex.
After discussions with the company, Ofwat has now agreed on “undertakings” and a “redress package” instead of imposing a fine on the firm. Ofwat emphasized that not penalizing the company was deemed more beneficial for customers rather than directing the money to the Treasury.
In response to the announcement of a hosepipe ban in Kent due to high demand exceeding supply, South East Water has issued an apology to its 850,000 customers. The company’s CEO, David Hinton, resigned in May following criticism from MPs regarding its performance but has been permitted to stay in his position temporarily for a smooth transition.
Hinton, aged 58, received total pay and perks amounting to £457,534 in the 2024/25 financial year, including a salary exceeding £300,000, an annual bonus of £115,000, and over £30,000 towards his pension. His base salary surged by 30% to £400,000 in the previous year, coinciding with a 20% increase in customers’ bills. Additionally, he received a £50,000 perk for implementing the price hike and is set to receive over £38,000 from a long-term reward scheme this month.
The proposed £22 million fine in March followed an investigation into supply disruptions affecting more than 286,000 customers in Kent and Sussex between 2020 and 2023. Ofwat found that the company had neglected infrastructure planning and maintenance, leading to system failures during extreme weather conditions or high demand periods.
A subsequent investigation initiated in January focused on 70,000 households in Tunbridge Wells and across Kent and Sussex experiencing water supply interruptions from then until the previous November. South East Water attributed the disruptions to Storm Goretti. On that occasion, Ofwat criticized the company for inadequate communication with customers and insufficient supply of bottled water to affected individuals.
The £30.5 million settlement includes £13 million from the company’s shareholders designated for addressing the root causes of its failures. The remainder of the funds will be used for temporary water storage facilities and customer support initiatives.
Helen Campbell, Ofwat’s Executive Director for Delivery, stated, “South East Water must prioritize its customers. These failures have caused significant disruption and hardship for residents and businesses over the years, and such supply interruptions have occurred too frequently. This package marks the initial step towards accountability and performance improvement, and we appreciate the company’s cooperation in resolving these issues. However, the company must make substantial and enduring changes to ensure reliable service for its customers.”