South West Water owner counts £16m cost of contamination in Devon

The parent company of South West Water has set aside £16 million to cover the cost of the parasite contamination crisis in Devon.
More than 17,000 households and businesses in Brixham were affected after cryptosporidium, a parasite that can cause diarrhoea and sickness, was discovered in a local reservoir in May.
Pennon, the FTSE 250 owner of South West Water, said its staff had worked “24 hours a day” to clean and flush the 20-mile network 27 times, with ultra-violet treatment plants deployed and some sections of the grid replaced entirely.
A “boil water” notice stayed in force for up to eight weeks. Pennon paid £3.5 million in compensation to households and provided bottled water to customers for two months. Investigations have suggested that the drinking water pollution was caused by cattle manure entering a damaged air valve in a farmer’s field.
“The cryptosporidium water quality event in Brixham this summer was an incredibly rare event for South West Water and we worked swiftly and diligently to identify the issue, clean the network and restore full supply to all customers,” Pennon said.
In a trading update, the company said that the number of sewage spills had increased over the half-year to September 26, blaming “the third wettest October to August since records began”, which had left groundwater levels “exceptionally high”.
It said action to focus on preventing sewage pollution on Britain’s beaches had led to a reduction during the peak summer bathing season, with average spills at one of the lowest levels since 2016.
Pennon said that like-for-like revenue in its first half had been affected by lower levels of water usage, which it put down to a Water is Precious efficiency publicity campaigns. It said its annual results would show that the lower demand had offset higher bills and an increase in customer numbers.
Pennon came under fire after announcing in June that the pay of Susan Davy, 55, its chief executive, had jumped by 58 per cent after she picked up a £298,000 shares bonus, despite pollution incidents nearly doubling at South West Water last year. The company’s annual report showed that Davy’s total pay had risen to £860,000 in 2023-24, from £543,000 the previous year.
The group faced further controversy this year when it increased its full-year dividend payout to investors, despite reducing it by £2.4 million after it was handed a record fine for sewage spills.
In June regulators cleared Pennon’s £350 million buyout of Sutton and East Surrey Water, adding 845,000 new customers.
Shares in Pennon were down by 7p, or 1.2 per cent, at 593p in afternoon trading.