South West Water to pay £24m to settle wastewater and sewer failures
Ofwat said on Thursday that South West Water did not construct and manage its wastewater treatment works and sewer networks to 'ensure they performed sufficiently'.
It said the company, owned by Pennon Group, lacked the systems to ensure it was satisfying legal obligations, including 'adequate oversight' from the board and senior management.
As a result, Ofwat has proposed that the business and its shareholders pay £24million to benefit customers and the local environment.
Of the funding, £20million over the coming five years will go towards reducing spills from storm overflows, particularly in environmentally sensitive areas.
South West Water has also agreed to establish a £2million fund aimed at combating sewer misuse and misconnections.
Errors: Ofwat found that South West Water did not construct and manage its wastewater treatment works and sewer networks to 'ensure they performed sufficiently'
A similar amount will be provided through a nature recovery fund to support groups delivering 'measurable environmental gains'.
Lynn Parker, senior director for enforcement at Ofwat, said: 'Water companies should be in no doubt that they will be held to account if they fail to meet their legal obligations to customers and the environment.
'Our investigation found a range of failures in how South West Water has gone about managing its wastewater business.'
Ofwat noted South West Water had taken steps to improve operations, including the introduction of new governance arrangements to enable better supervision of its environmental obligations.
The Exeter-headquartered firm has also made investments to scrutinise and improve the running of some of its treatment works and storm overflows.
South West Water manages the water and wastewater services for 1.8 million customers across Devon, Cornwall, parts of Dorset and Somerset.
Its parent company saw losses climb by about eightfold to £72.7million last year, partly owing to a parasite outbreak in Brixham, Devon, that left some people hospitalised.
Ofwat's announcement follows similar probes by the regulator into Yorkshire Water, Thames Water, and Northumbrian Water earlier this year, which collectively resulted in enforcement action of over £160million.
Parker added: 'As we continue to progress our sector-wide investigation, we are pleased that companies, like South West Water, are stepping up to acknowledge their failures and to put things right.
'We will continue to monitor the company to ensure that this work is carried out as quickly as possible so that customer confidence can begin to be restored.'
Pennon Group shares were 0.7 per cent higher at 497.4p on Thursday morning, although their value has contracted by around 61 per cent over the past five years.
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