Owner of South West Water reports £38.8 million loss due to Brixham parasitic outbreak

An outbreak of parasites in Brixham has caused South West Water's owner Pennon deep financial losses after it was compelled to pay out large sums in compensation to those made ill by contaminated water. The London-listed firm reported that the incident in Brixham, south Devon, had cost them a hefty £16.3 million after an outbreak of cryptosporidium in the water supply resulted in hospitalisations and over 100 people suffering symptoms such as diarrhoea.

For the six months leading up to September, the parent company disclosed a significant pre-tax loss of £38.8 million. Capital expenditure, which includes upgrades to water infrastructure, increased to £331.8 million, about a 25 percent increase from the previous year. Pennon has asked regulator Ofwat to increase average bills by 23% over the next five years in order for it to return to profit.

Pennon allocated the £16.3 million for customer compensation, supplied bottled water for eight weeks to those affected, and undertook "extensive interventions to clean and filter the network". Chief Executive Susan Davy commented: "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 companies have faced public ire due to pollution levels and other issues, alongside proposed bill hikes, substantial dividends, and executive remuneration. Pennon has requested permission from regulators to raise average consumer bills at South West Water by 23 percent over the forthcoming five years, with Ofwat set to make its final decision in December.

South West Water has seen a dip in first-half revenues after launching a campaign in February encouraging customers to reduce water usage. Ms Davy commented: "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 reported spending around £4 million on restructuring following its acquisition of Sutton and East Surrey (SES) Water for £350 million. Despite SES Water being loss-making during the period, Pennon is focusing on "right sizing the cost base to improve profitability" for the new addition to the group, which brought an additional 845,000 customers from south-east England.