Southern Water has been ordered to pay record fines of £126 million after an investigation by regulator Ofwat uncovered "serious failures" at the company.
Southern Water has agreed to pay £126m in penalties and payments to customers following the discovery of "serious failures in the operation of its sewage treatment sites and for deliberately misreporting its performance", according to Ofwat.
Following a large-scale investigation into the water company, Ofwat say they found that Southern Water failed to operate a number of wastewater treatment works properly, including by not making the necessary investment which led to equipment failures and spills of wastewater into the environment.
The regulator also found that Southern Water manipulated its wastewater sampling process which resulted in it misreporting information about the performance of a number of sewage treatment sites.
The £126m package will see the water company pay a rebate of £123m to customers through their bills and pay a fine of £3m.
According to Ofwat, the rebate includes £91m in penalties Southern Water had avoided and a further £32m of payments as recognition of their serious failures.
The regulator says, proportionate to the size of the business, this package of penaties and payments is the biggest Ofwat has ever imposed.
Southern Water wastewater customers should expect a rebate on their bills of £61, with £17 in 2020/21 and £11 in each of the following years.
The company appointed a new Chief Executive in January 2017 with substantial changes to the company made following that appointment.
Investment has also been made into the failing treatment sites and work will continue to improve them.
Ofwat Chief Executive, Rachel Fletcher, said: "What we found in this case is shocking.
"In all, it shows the company was being run with scant regard for its responsibilities to society and the environment.
"It was not just the poor operational performance, but the co-ordinated efforts to hid and deceive customers of the fact that are so troubling.
"The previous management failed to stamp out this behaviour and failed to manage its plants properly.
"In doing so, Southern Water let-down its customers and operated in a way completely deserves such a significant sanction.
"We also think it is important Southern Water has a formal fine on their record for this serious breach.
"The rebates on customer bills will go some way towards putting things right.
"It is now for Southern Water, under its new leadership, and with the improvements it is introducing, to show it has learnt from this unacceptable behaviour and can be trusted again.
"Today's announcement should also serve as a reminder to all other companies about the gravity of their responsibilities to society and the environment and that we will take action if they neglect them."
Sir Tony Redmond, who's the London and South East Chair for the Consumer Council for Water, said: "Customers of Southern Water will be absolutely appalled at the reckless disregard the company showed for the environment, which people care so much about.
"It also deliberately misled its customers, which is why it's right the vast majority of the penalty is returned to bill payers who would have received most of this money had the company told the truth about its performance.
"Southern now has a huge task on its hand to rebuild the trust it has damaged."
Southern Water say in a statement on their website: "We are deeply sorry for the past failures outlined in Ofwat's notice.
"We are fully committed to continuing to improve our business and deliver the standards our customers deserve.
"New management has worked closely with Ofwat since 2017 and is pleased with this comprehensive package which encompasses penalty, reparation for customers and assured improvement.
"The package of measures with Ofwat deals with these failings and ensure that the ongoing improvements and investments we are making are being implemented in a timely way and with the right level of assurance from our regulator."
Southern Water's Chief Executive, said: "In 2017, I was brought in to drive change and transformation.
"Since then we have been working very hard to understand past failings and implement the changes required to ensure we better deliver for our customers and meet the standards they deserve.
"We are deeply sorry for what happened.
"There are no excuses for the failings that occurred between 2010 and 2017 outlined in Ofwat's report.
"We have clearly fallen far short of the expectations and trust placed in us by our wastewater customers and the wider communities we serve.
"We are fully committed to continuing the fast pace of change delivered since 2017.
"There is a lot more work to do but we're pleased that this proposal agreed with Ofwat enables us to fully make amends to our customers and regain their trust as quickly as possible."
Hampshire and Isle of Wight Wildlife Trust have also responded to the investigation.
Chief Executive of the Trust, Debbie Tann, said: "Our chalk streams and coastal waters are amongst the most important and precious habitats for wildlife and are under untenable pressure.
"For decades our rivers and seas have been polluted by wastewater discharges as well as run-off from the land.
"The Wildlife Trusts and other groups have long since highlighted the devastating impacts that these toxins can have on our widlife and natural environment; decimating freshwater and marine species and jeopardising our vital natural resources.
"We have repeatedly called on water companies and other polluters to clean up their act.
"Our water companies must have both a responsibility and a vested interest to protect and enhance the environment and create a healthy and sustainable resource for both people and wildlife.
"We are pleased to see that Southern Water are taking meaningful steps to transform the way they do business and moving away from the bad practices of the past.
"Under the company's new leadership we expect that Southern Water will put investment in restoration and protection of the environment at the very top of their agenda going forward.
"The Wildlife Trusts already work in partnership with Southern Water and other water companies to deliver practical improvements to our rivers and surrounding land and we hope today's announcement will signal a real step change towards a better future for our natural environment."
The Environment Agency are now investigating the impact of Southern Water's actions on the environment.