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Ofwat today launched a consultation over new powers it will have to fine water companies. Companies could face a financial penalty if they breach their licence conditions, or fail either to deliver required customer service standards or meet their legal obligations. The three-month consultation seeks views on the criteria that Ofwat should take into account when deciding whether to impose a fine. It also invites comment on the factors which should influence Ofwat's decision on the size of any financial penalty. Under the Water Act 2003 Ofwat will be able to fine companies up to ten per cent of their annual turnover. In practice, it is unlikely the maximum penalty would be levied except in the most extreme cases of failure. The new provisions will bring Ofwat's powers into line with those already operated by other regulators. They are expected to take effect in 2005. Tony Smith, Ofwat's director of competition and consumer affairs, said: "These new powers will extend the range of tools available to us to ensure that water companies meet their obligations. We want to hear views on how we should operate these new powers so that we can ensure fairness while providing the right incentives for companies to continue to meet their responsibilities." The Secretary of State for Environment, Food and Rural Affairs and the National Assembly for Wales have been given similar powers to impose fines under the Act. Notes to Editors: 1.The Director General of Water Services is the economic regulator of the water and sewerage companies in England and Wales. He exercises his powers in a way that he judges will allow them to carry out their functions properly, and finance them. WaterVoice represents customers' interests. 2.Copies of the consultation document, together with a draft statement of the policy will be available from Ofwat's library www.ofwat.gov.uk 3.Responses should be sent in writing to Elaine King, Consumer Affairs, Ofwat, 7 Hill Street, Birmingham, B5 4UA (fax: 0121-625 1359) or by e-mail to elaine.king@ofwat.gsi.gov.uk to be received no later than 5.00pm on 31 May 2004. 4.The responses to the consultation will inform the formal statements of principal which all enforcing authorities are required by the Water Act 2003 to publish and consult on before the new powers take effect. MEDIA ENQUIRIES TO OFWAT PRESS OFFICE ON: 0121 625 1416/1496/1442 Out of hours enquiries to pager: 08700 555 500 water 503/509. Ofwat publications and press notices can be found on Ofwat's website at: www.ofwat.gov.uk  | ||||||
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