Ofwat fines water company
A UK water company has been fined heavily by the UK water regulator Ofwat for breaching regulations over monopoly utilities. United Utilities has been fine £8.5 million by the water regulator after the regulator ruled against the company in April this year. The company operates in the North West of England. According to the claims against the water giant United Utilities had been paying its own subsidiary companies for carrying out various works such as installations, maintenance works, and cleaning.
Ofwat has strict regulations with regards to abuse by monopoly utilities, and this practice means that United Utilities has breached these regulations. The company should have carried out a tendering process for these works to be carried out, but was instead awarding the work to its own subsidiary companies and then paying them for doing the work. This results in higher bills and consumers having to pay more for their services.
With regards to the breach of regulations and the £8.5 million fine imposed on the water company an official from Ofwat stated: 'This fine of £8.5m sends a strong message to United Utilities Water and the rest of the water industry that they must comply with their licence conditions.' Ofwat will now be monitoring the practices of the water giant after the company promised that it would be following the regulation with regards to tendering the work that was being carried out through the proper channels.
At the end of the 2006 financial year United Utilities made profits that were up by 21 percent on the previous year. Ofwat has the power to fine utility companies up to ten percent of their annual turnover, and this fine of £8.5 million represents around 0.7 percent.
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