South West Water owner taps investors to fix infrastructure after sewage spills

Pennon, the parent company of South West Water, has announced plans to raise £550 million from investors to fund infrastructure improvements. The decision comes after the company was hit with a £7.9 million fine for multiple sewage spills, marking the largest environmental fine in the region. South West Water supplies water to 3.5 million customers across the south-west of England and 380,000 business customers nationwide.

Pennon's new CEO, Keith Haslett, conducted a comprehensive review of the business and identified areas for improvement, including customer service and environmental performance. The company's fine was imposed due to hundreds of sewage spills during a six-year period at popular bathing spots and sensitive habitats, such as the River Camel. The fine will be paid by shareholders rather than through bill increases.

In addition to the £550 million cash call, Pennon is slashing its shareholder dividend by approximately 30%, including the impact of the raised funds. The company aims to address operational pressures stemming from exceptional storms, sustained rainfall, and increased targets and penalty rates. Haslett stated that the adjustments will not result in further bill hikes for customers.

South West Water has faced mounting complaints, with the number more than doubling over the past year, according to the Consumer Council for Water. The watchdog rated the company "poor" for handling complaints. The company has already implemented plans to raise £2.5 billion in infrastructure investment over the next decade.