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United Utilities given £8.5m fine United Utilities given £8.5m fine
(10 minutes later)
Water firm United Utilities has been given a £8.5m fine from water regulator Ofwat for breaching trading rules.Water firm United Utilities has been given a £8.5m fine from water regulator Ofwat for breaching trading rules.
Ofwat imposed the penalty, the first of its kind, after the North West-based firm "repeatedly breached its licence" for failure to "market check".Ofwat imposed the penalty, the first of its kind, after the North West-based firm "repeatedly breached its licence" for failure to "market check".
Market checking ensures a firm assesses the services it uses are the best value for money, so that customers pay no more than necessary.Market checking ensures a firm assesses the services it uses are the best value for money, so that customers pay no more than necessary.
Ofwat said the fine sent a message that firms must obey their licence terms.Ofwat said the fine sent a message that firms must obey their licence terms.
This fine of £8.5m sends a strong message to United Utilities Water and the rest of the water industry thatthey must comply with their licence conditions Regina Finn, Ofwat chief executive See United Utilities' shares
Under its licence United Utilities Water is obliged to "market test for services that it procures from companies within the United Utilities group".Under its licence United Utilities Water is obliged to "market test for services that it procures from companies within the United Utilities group".
Ofwat said the fine, first proposed in April, would be met by United's shareholders and paid to the government. The regulator based the fine on £95m in trading between the utility and its own companies in the year-and-a-half to March 2007.Ofwat said the fine, first proposed in April, would be met by United's shareholders and paid to the government. The regulator based the fine on £95m in trading between the utility and its own companies in the year-and-a-half to March 2007.
Ofwat said the fine covered the utility's deals with its associate companies, including installing and maintaining water meters without testing its prices in the wider market.Ofwat said the fine covered the utility's deals with its associate companies, including installing and maintaining water meters without testing its prices in the wider market.
United has said that it is making strong progress - under a new management team - to address Ofwat's concerns by competitively tendering relevant services.United has said that it is making strong progress - under a new management team - to address Ofwat's concerns by competitively tendering relevant services.
Regina Finn, Ofwat chief executive, said: "This fine of £8.5m sends a strong message to United Utilities Water and the rest of the water industry thatthey must comply with their licence conditions."