article: Regulator Ofwat has named Southern Water as an "underperformer" after discharges from sewage treatment works and flooding to properties. Southern Water, which serves customers from east Kent to Hampshire, has an £806m annual turnover. The company said it was in discussions with Ofwat over the proposed penalties. A shortfall levy of £150m could be imposed on Southern Water for the "non compliant" discharges from sewage systems and flooding to properties caused by blockages since 2010, an Ofwat spokesman said. This could be added to an adjustment to the company's revenue of £26m for poor customer service, he said. The Ofwat spokesman said: "We are currently in the process of setting prices for Southern Water over the next five years. "As part of that process, we need to look at whether the company has delivered what customers have paid for over the last five years. We have challenged Southern and, in particular, still have questions over how they have operated their sewerage network and treatment works. "We have therefore proposed clawing back money for customers, so they are protected." He said the regulator was proposing that Southern's average bills would go down by 8.5% between 2015 and 2020, before inflation. A final decision will be made in December. A shortfall levy is different to a fine, in that the company is forced make customer bills cheaper or shareholders have to put more money in to make up the deficit, Ofwat said. The previous largest shortfall levy for a water company was £69m imposed on Northumbrian Water in 2009, the watchdog said. A Southern Water spokesman said the regulator had responded positively to parts of the company's plans for 2015-2020. "[Ofwat] details further areas for us to address, including the 'penalties' it is proposing, which relate to our operational and customer service performance since 2010," he said. In August, beach-goers in Littlehampton were warned to avoid swimming after Southern Water pumped sewage into the sea following the failure of a valve at the West Sussex town's Sea Road pumping station. In July swimmers were warned not to enter the sea at nine beaches around Thanet in Kent, following discharges from Southern Water pumping stations. Southern Water said it had done nothing wrong by releasing storm water from its stations at Foreness Point and Broadstairs. Thanet District Council previously warned swimmers about entering the sea in the area in May following a discharge of raw sewage. In Monday the Consumer Council for Water announced that Southern Water had reported drops in complaint numbers but the company remained "too far adrift" of the rest of the industry.
summary: A water company could face a financial penalty of £176m for failings in customer services and managing sewerage systems, BBC South East has learned.