Ofwat's proposed fine on Severn Trent Water breaks down as follows:

* 2.9% of 2006-07 turnover (£34.7m) for deliberately misreporting some key customer service information; and

* 0.1% of 2005-06 turnover (£1.1m) for providing sub-standard services to customers in 2005-06 by failing to meet Guaranteed Standards of Service.

Severn Trent Water's Customer Relations Department deliberately misreported some of its customer service data to hide its true performance in 2005 and in earlier years. This damaged Ofwat's ability to regulate the water sector effectively and protect customers.

Severn Trent Water's shareholders will bear the entire cost of the proposed penalty. It cannot be passed on to its customers.