Water firm owner asks investors for £550m after record sewage fine

Pennon has announced a £550 million investor cash-call to help fund a wider overhaul, weeks after its South West Water business was handed a record £7.9 million fine for repeated sewage spills. Recently-appointed chief executive Keith Haslett said the rights issue will support plans for around £1 billion in extra investment as it aims to "deliver better outcomes for our customers and communities". London-listed Pennon, which also owns Bristol Water and SES Water, said this figure comes on top of approximately £2.6 billion already committed under agreed plans with regulator Ofwat .

The move follows last month’s record penalty handed down at Plymouth Magistrates’ Court over 18 environmental offences relating to pollution incidents across Devon and Cornwall over a six-year period. Mr Haslett, who took on the role in April, said: “It’s clear from my comprehensive review that Pennon has real strengths, but there are areas where we need to improve and deliver better outcomes for our customers and communities.” He added: “The operational plan, which is already under way, is practical and focuses on clearer accountability with key skills brought back in-house, and more investment where our assets need it most.” London-listed Pennon, which also owns Bristol Water and SES Water, said this figure comes on top of approximately £2.6 billion already committed under agreed plans with regulator Ofwat (Getty) He insisted the plan would “deliver a better service for customers, improve our environmental performance and generate sustainable, growing value for our shareholders”. In recent results, Pennon revealed so-called outcome delivery incentives (ODI) penalties from the water regulator of around £42 million for its water and waste water performance over 2025-26, which it said came as it faced “exceptional storms and sustained rainfall coupled with a step up in targets and penalty rates”.

ODI is a system whereby a company can receive financial rewards or pay penalties based on performance targets, which are set by water regulator Ofwat. A net penalty means it is paying more for under-performance than it receives for performing ahead of targets. Pennon insisted it was making improvements, with pollution incidents down by more than a third (34%) and storm overflow use reduced by 17 per cent in 2025-26.

The group is also investing £3.2 billion over the five years to 2030 as part of a plan agreed with Ofwat, with £644 million invested in the past financial year.

Source: The Independent