Southern Water customers in Kent are line for lower bills as the firm faces a bumper £176million penalty for a series of failings.

The firm, which provides water and sewage services for the county, has been branded an "under-performer" by regulator Ofwat.

Now it could be hit with the largest ever "shortfall levy" for failings in customer services and managing sewerage systems.

It is similar to a fine, but where the firm is forced to reduce customer bills to make up the deficit.

Ofwat is proposing Southern Water's average bills would go down by 8.5% – before inflation – between 2015 and 2020.

It is in discussions with the firm, which has an £806m annual turnover, over the proposed penalties.

A shortfall levy of £150m could be imposed for the "non-compliant" discharges from sewage systems and flooding to properties caused by blockages since 2010.

This could be in addition to a £26m adjustment to the company's revenue for poor customer service.

It comes after swimmers were warned in July not to enter the sea at nine beaches around Thanet following discharges from Southern Water pumping stations.

The alert was issued after storm water was released from its stations at Foreness Point and Broadstairs.

And Thanet District Council warned swimmers in May about entering the sea in the area after the discharge of raw sewage.

However, the Ofwat penalty does not relate to these cases, a Southern Water spokesman said.

Southern Water said Ofwat had responded positively to parts of the company's business plans for 2015-2020.

It said: "Importantly, Ofwat's concerns do not relate to impacts on public health or bathing water quality.

"Ofwat has asked us for further information and evidence to support our view that no penalty should be imposed and we are currently finalising our response.

"However, no decisions on a final business plan have been made and the process of reaching a final determination continues."

A final decision will be published by Ofwat on December 12.

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