MORE than two million customers of Southern Water are to receive a financial rebate after the company admitted 'fixing' wastewater samples and a series of failures in its sewage treatment sites.

The company, which collects and treats Hampshire and the Isle of Wight's wastewater and sewage has been hit with a record £126 million penalty package after a 'shocking' probe by the industry regulator uncovered the wrongdoing, including what were described as 'co-ordinated efforts to hide and deceive customers'.

Southern Water is now under criminal investigation by the Environment Agency although it is not known if this is into the company itself, or individual employees.

Regulator Ofwat said its large-scale investigation found Southern Water had failed to operate a number of wastewater treatment works properly. It says the company did not make the necessary investment, which led to equipment failures and spills of wastewater into the environment.

The watchdog added that Southern Water also manipulated its wastewater sampling process, which led to it misreporting information to Ofwat and avoiding penalties in previous years.

Along with the criminal investigation, Southern Water has agreed to refund £123 million to customers through their bills and pay a fine of £3 million.

It means that customers will now receive rebates of £61. However, this repayment will be spread over five years, with a £17 rebate in 2020/21 and £11 in each of the following four years. And the penalty package has been reduced after Southern Water co-operated with the watchdog.

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

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.

"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 counter to the public service ethos we expect. That is why the company deserves such a significant sanction."

Sir Tony Redmond, London and South East chairman for the Consumer Council for Water (CCWater), slammed Southern Water's 'reckless disregard' for the environment.

"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," he said.

In a tweet, Southern Water apologised for what it described as 'mistakes'.

Current chief executive, Ian McAulay, who was appointed in 2017, said: "There are no excuses for the failings that occurred.

"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 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."