Pennon losses widen after South West Water’s parasite outbreak in Devon

A parasitic outbreak in Devon earlier this year pushed the owner of South West Water further into the red in the first half, after it was forced to pay compensation.

London-listed company Pennon said the incident in Brixham, south Devon, cost it £16.3 million, after an outbreak in the water supply left some people in hospital, while more than 100 others reported symptoms including diarrhoea.

The parent company made a £38.8 million pre-tax loss in the six months to September.

Capital spending, on things like upgrading its water infrastructure, rose to £331.8 million, up about a quarter on the same period last year.

Pennon said the £16.3 million went towards compensating some customers, providing eight weeks’ worth of bottled water for people in the affected area, and carrying out “extensive interventions to clean and filter the network”.

Chief executive Susan Davy said: “When things go wrong, as they did for customers and businesses in and around Brixham earlier this year, we put it right, with no excuses. But we know we have more to do.”

Water firms have drawn public outrage in recent years over the extent of pollution and other incidents, amid steep planned increases to bills, high dividends, and executive pay and bonuses.

Pennon has asked regulators to let it increase average consumer bills at South West Water by 23% over the next five years, with Ofwat’s final decision due in December.

South West Water also launched an awareness campaign in February aimed at getting customers to use less water, which also hit first-half revenues.

Ms Davy added: “We continue to lead the way in helping customers to use less and save more with a range of money-saving campaigns and pilots.

“Whilst that’s led to lower wholesale water business revenues, it’s the right thing to do.”

The company also said it spent about £4 million on restructuring the business, which came in the months after it bought Sutton and East Surrey (SES) Water for £350 million.

SES Water was also loss-making for the period, and Pennon said it is working on “right sizing the cost base to improve profitability” at the newly acquired business.

The deal brought an extra 845,000 customers to the group across south-east England.