Water returns and Severn Trent set to be fined for leaks

This afternoon there have been reports of Randwick folk getting their water back - an hour ago it gushed from my own taps in Bread Street - wonderful! Although it is still not drinkable and free supplies of bottled water will still be given out.

Photo: Turkish water being given out free: goodness knows where else all the water is coming from

It is ironic to hear that Severn Trent, who have been unable to supply customers with mains water because of floods, could this week be punished for failing to curb leaks sufficiently. Ofwat, the industry regulator, is planning to impose a multi-million pound penalty on the company.

Photo: Tewkesbury floods

The regulator has the powers to impose a fine of 10 per cent of Severn Trent's turnover from water services ie more than £50m. However the regulator is understood to be seeking an agreement for the company to pay an even greater amount to replace pipes - possibly double that figure - the cash would then benefit customers rather than the Treasury. The problem is that the expenditure must come from shareholders' reserves and will not be recoverable through price rises - does this mean shareholders profits might be damaged?

Photo: Marc Beswethherwick, Wallington floods

Ofwat had been planning to reveal leakage figures for the water company on Monday, but has delayed the announcement, partly because of the floods and the minor task of handing out 5m litres of bottled water a day, repairing Mythe and using tankers to fill 1,800 bowsers parked throughout the area.

Ofwat is also planning to fine Severn Trent for providing misleading customer-performance data. Plus there will also be an additional penalty imposed on the company when the Serious Fraud Office completes its investigation into false leakage figures given to the regulator before 2005.

For many previous posts re floods click on 'floods' label below - and Glos Green party initial response here.

Lastly a leaflet is being circulated by Severn Trent Water regarding the fact that supplies are being reinstated, but should not be used for drinking. The problem is that this leaflet is being delivered in areas where supplies have not been affected. The District Council have had an extra 300 phone calls already from people concerned and an increase on demands on bottled water supplies. The advice is clear - if your supply has not been affected, you should continue using it as normal.