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Southern Water has been dealt a record £126 million package of fines and customer rebates for "serious failures" in its sewage treatment sites.

Regulator Ofwat announced on Tuesday that its large-scale investigation found Southern Water failed to operate a number of wastewater treatments works properly.

These included by not making the necessary investment, which led to equipment failures and spills of wastewater into the environment, Ofwat said.

It added that Southern Water also manipulated its wastewater sampling process, which led to it misreporting information to the watchdog and avoiding penalties.

Customers of the utility company will now receive rebates of £61 over the next five years after Southern Water agreed to the package, which, given the size of the firm, is the largest the regulator has ever imposed.

Southern Water will refund £123 million to customers through their bills and pay a fine of £3 million.

The rebate includes £91 million in penalties Southern Water had avoided and a further £32 million of payments as recognition of its serious failures.

The package was reduced after Southern Water co-operated with the watchdog.

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 hide and deceive customers of the fact that are so troubling."

Southern Water customers can now expect to receive a £17 rebate on their bills in 2020/21 and £11 in each of the following four years after the two-year investigation by Ofwat.

The water company appointed a new chief executive - Ian McAulay - in January 2017 to replace Matthew Wright and has since seen a raft of management changes.

It has also committed to new governance to ensure accurate monitoring and reporting, and a programme to change its culture, according to Ofwat.

The regulator said the firm had also put investment into its failing sewage sites, but will need to report to Ofwat on its progress on the commitments it has made.

Ms Fletcher added: "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."

The Environment Agency is now investigating Southern Water and the environmental impact of its actions.

Sir Tony Redmond, London and South East chairman for the Consumer Council for Water (CCWater), 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."

Ian McAulay, chief executive of Southern Water, said: "We are deeply sorry for what has 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."