Latest news with #SouthWestWater
The Independent
3 days ago
- Business
- The Independent
Water sector suffering from ‘deep-rooted' failures, review warns
The water sector is beset with 'deep-rooted, systemic' failures, and needs fundamental reform of laws, regulation and infrastructure, a review has warned. The Independent Water Commission was tasked by the UK and Welsh governments to carry out the largest review of the sector since privatisation in the face of widespread public anger over pollution, bills and bosses' bonuses although ministers ruled out nationalising water companies. Its interim report has been published as Britain's biggest water company Thames Water is again facing the spectre of temporary nationalisation after private equity firm KKR pulled out of plans for a £3 billion bailout. Another of England's private water firms, South West Water, reported widening financial losses after an outbreak of a parasite in water supplies cost it millions. And water supplies are under pressure after the driest spring in decades has left farmers struggling and millions of households facing the possibility of hosepipe bans, while ministers have warned climate change, a rising population and crumbling infrastructure is putting future supplies at risk. In the interim report published on Tuesday, the commission said multiple issues need to be tackled to rebuild public trust in the ailing sector. It called for regulator Ofwat's role to be strengthened and for the watchdog to adopt a more 'supervisory' approach to oversight of water firms. Former Bank of England deputy governor Sir Jon Cunliffe, who led the review into the water sector in England and Wales, told the BBC that more effective regulation was a huge part of solving the problem, with a regulator that could step in early before things got worse. He said: 'Because when they get worse, as you can see, they are very difficult to sort out, and we need an environmental regulator with the capability to monitor and enforce.' He also said that having regulators with different remits and responsibilities for different parts of the process had made the water system 'expensive and incoherent'. The interim review urges the Government to provide clearer long-term direction on what is needed from the water system, and warns key elements of current legislation are 'badly in need of review and rationalisation'. It proposes greater regional decision-making around local water systems, and emphasises the need for a greater focus on long-term, responsible investment and ownership within the industry. It is also considering new standards for the water sector's crumbling infrastructure, warning there is insufficient understanding of the health of assets such as pipes and water treatment plants. Companies should plan for long-term resilience of 'critical assets', not simply fix things when they fail, it warned. Sir Jon said: 'There is no simple, single change, no matter how radical, that will deliver the fundamental reset that is needed for the water sector. 'We have heard of deep-rooted, systemic and interlocking failures over the years – failure in Government's strategy and planning for the future, failure in regulation to protect both the billpayer and the environment and failure by some water companies and their owners to act in the public, as well as their private, interest. 'My view is that all of these issues need to be tackled to rebuild public trust and make the system fit for the future. We anticipate that this will require new legislation.' Anger has been growing over the polluted state of rivers, lakes and coastal waters, leaks and sewage spills at the same time as significant shareholder payouts and bosses' bonuses, and bills which were hiked in April to pay for investment to fix creaking infrastructure. On Tuesday, Thames Water announced private equity giant KKR has pulled out of plans to invest in the company, in the latest blow to the struggling and heavily indebted utility. Thames Water – which supplies 16 million customers – had hoped KKR would invest more than £3 billion of new equity amid fears the supplier was running out of cash, and its withdrawal from the deal raises the spectre of a temporary government nationalisation once more. And South West Water's owner Pennon has reported widening losses after a parasite outbreak in Brixham, South Devon, cost it around £21 million. The outbreak put some people in hospital and left thousands of homes without safe drinking water – some for weeks. Though the interim review points to the need for better regulation of water companies, it does not recommend the wholesale scrapping of watchdog Ofwat which some have urged, and nationalisation – which some campaigners have called for – was excluded from its terms of reference. Environment Secretary Steve Reed said he had commissioned the water commission to outline recommendations for a 'once in a generation' opportunity to transform the water industry and delivered for the public. 'The Government will respond to the Commission in full in due course and outline next steps to benefit customers, attract investment, and clean up our waterways for good,' he said. Environmental campaigners called for the final report, expected later in the summer, to reshape the water sector to put public health and the environment first – and for the Government to implement ambitious reforms. Richard Benwell, chief executive of the Wildlife and Countryside Link (WCL), a coalition of 89 nature organisations demanded: 'politicians must stop equivocating and set clear strategic direction for environmental recovery'. Giles Bristow, chief executive of Surfers Against Sewage, said: 'The criminal behaviour, chronic lack of investment and woeful mismanagement which has led to sewage filled seas is a direct result of our profit-driven system. 'This interim report begins to recognise this, but as yet does not spell out the need to end pollution for profit. 'The commission's final recommendations must reshape the water industry to put public health and the environment first.' A spokesperson for industry body Water UK said: 'Everyone agrees that the water industry is not working. 'We hope this report will be a starting point for the fundamental reforms the sector needs. 'We need a less complicated system which allows investment to get quickly to where it needs to go,' they said, adding the sector was spending £104 billion in the next five years to secure water supplies, cut sewage and support economic growth.
BBC News
3 days ago
- Business
- BBC News
Water firm's losses deepen after Devon parasite outbreak
South West Water's parent company has reported widening losses following a parasite outbreak in Group posted a pre-tax loss of £72.7m for the year ending March, a sharp increase from the £9.1m loss recorded the previous year. A major contributor was the cryptosporidium outbreak in Brixham, south Devon, which cost the company about £21m, it increased water bills by 28% on average from April, which it said would fund ongoing investment plans. The parasite outbreak, which contaminated the local water supply, led to hospitalisations and more than 100 reported cases of illness, including symptoms such as diarrhoea. Pennon said about 800 staff and supply chain partners worked intensively over eight weeks to restore safe drinking water to the affected addition to the outbreak costs, the company also absorbed £15.8m in restructuring expenses over the the financial hit, Pennon said it was pushing ahead with plans to invest £3.2bn in its infrastructure by 2030. The investment will fund new reservoirs, storm overflow repairs, net zero initiatives, and service support this, SWW customers saw their bills rise by an average from April. Customers of Bristol Water and Sutton and East Surrey Water, also owned by Pennon, faced increases of 5% and 3%, respectively. Pennon said the bill hikes would cover about a third of the planned investment. 'Tough decision' "We know customers are worried about rising bills to fund this level of investment," said Susan Davy, chief executive of Pennon. "While we have made the tough decision to put bills up in 2025/26, for the first time in over a decade, two-thirds of our investments are being funded by our supportive investors and debt providers."Ultimately everyone will benefit from the investments we are making, from building reservoirs, to fixing storm overflows, powering our net zero ambitions and helping to create economic growth."Despite ongoing dry weather, Ms Davy said the South West was not expected to face a hosepipe ban this summer. Pennon said it anticipates a return to profitability in the coming year, driven by increased revenues and streamlined business operations. A landmark review by the independent Water Commission found the water sector in England and Wales is failing and needs stronger regulation to better protect billpayers and the environment.
Daily Mail
3 days ago
- Business
- Daily Mail
South West Water owner's losses rise by £63million after Brixham parasite outbreak
Pennon saw losses widen last year as restructuring costs and the impact of the Brixham parasite outbreak weighed on the South West Water owner. The group, whose customers saw bills surge by an average of 28 per cent in April, posted a pre-tax loss of £72.7million for the year 31 March, up from a £9.1million loss the prior year. The parasite outbreak in Brixham, south Devon, which left some people hospitalised, cost Pennon about £21million, as around 800 staff and supply chain partners were dispatched for an eight-week effort to return safe clean drinking water to the area. Pennon also faced £15.8million in costs related to restructuring actions over the year. Plans to ramp up investment in infrastructure, and encourage customers to use less water to save money, also hit profitability, according to the group. Pennon is targeting £3.2billion of investment by 2030, incorporating work to build new reservoirs, fix storm overflows, meet its net zero commitments, and improve services for customers. Bills for South West Water customers surged by 28 per cent on average from April, while bills for Bristol Water and Sutton and East Surrey (SES) customers are rising by 5 and 3 per cent respectively. Pennon, which expects to return to profitability in the year ahead, said the bill hikes would help fund around a third of its investments. Susan Davy, Pennon's chief executive, added: 'We know customers are worried about rising bills to fund this level of investment. 'While we have made the tough decision to put bills up in 2025-26 - for the first time in over a decade - two-thirds of our investments are being funded by our supportive investors and debt providers. 'Ultimately everyone will benefit from the investments we are making - from building reservoirs, to fixing storm overflows, powering our net zero ambitions and helping to create economic growth.'
Reuters
3 days ago
- Business
- Reuters
UK utility Pennon swings to pretax annual loss on investment costs
June 3 (Reuters) - British water utility Pennon Group (PNN.L), opens new tab swung to an annual pretax loss on Tuesday, hurt by costs associated with the Brixham water supply incident and higher investments to upgrade its infrastructure. Britain's water companies are facing increased scrutiny due to pollution issues and mounting pressure to improve environmental standards while managing rising costs and regulatory demands. Water bills in England and Wales will increase by an average of 31 pounds per year between 2025 and 2030, according to industry regulator Ofwat's 2024 price review, to help finance essential investment in the sector. This is 8 pounds lower per year than what companies proposed in their plans, on average. Pennon, along with listed peers United Utilities (UU.L), opens new tab and Severn Trent (SVT.L), opens new tab, agreed to Ofwat's price review, unlike several privately owned water firms that appealed. In exchange for higher permitted income, Pennon is committing to invest 3.2 billion pounds ($4.33 billion) over five years in infrastructure upgrades. Ofwat's latest price review permits South West Water, the group's largest revenue contributor, to raise household bills by 23% leading to an average bill of 610 pounds by 2029-30. The group is partly relying on these higher tariffs to fund upgrades and meet tougher environmental standards, while restoring public confidence following recent pollution incidents. "While we have made the tough decision to put bills up in 2025-26, for the first time in over a decade, two-thirds of our investments are being funded by our supportive investors and debt providers," CEO Susan Davy said in a statement. Pennon reported adjusted loss before tax of 35.1 million pounds for the year ended March 31, narrower than market expectations of about 37 million pounds loss, according to data compiled by LSEG. ($1 = 0.7392 pounds)
The Independent
3 days ago
- Business
- The Independent
South West Water owner Pennon says losses deepened after Devon parasite outbreak
South West Water owner Pennon has reported widening losses following a parasite outbreak in Devon, while it said hiking water bills this year would help fund its £3.2 billion investment plans. The utilities firm reported a pre-tax loss of £72.7 million for the year to the end of March, widening from the £9.1 million loss reported last year. Last year's incident in Brixham, south Devon, cost it about £21 million, pushing it deeper into an annual loss, it said. An outbreak of cryptosporidium – a parasite that causes infection – in the water supply left some people in hospital, while more than 100 others reported symptoms including diarrhoea. Pennon said about 800 of its staff and supply chain partners spent eight weeks over the summer working to return safe clean drinking water for people and businesses in the area. The wider annual loss also reflects £15.8 million in costs related to restructuring actions over the year, it revealed. Meanwhile, Pennon said plans to ramp up investment in its infrastructure, and encouraging its customers to use less water to save money, had affected its profitability. The group is targeting £3.2 billion worth of investment by 2030, incorporating work to build new reservoirs, fix storm overflows, meet its net zero commitments, and improve services for customers. Bills for South West Water customers surged by 28% on average from April, while bills for Bristol Water and Sutton and East Surrey (SES) customers are rising by 5% and 3% respectively. Pennon said the bill hikes would help fund around a third of its investments. Susan Davy, Pennon's chief executive, said: 'We know customers are worried about rising bills to fund this level of investment. 'While we have made the tough decision to put bills up in 2025/26 – for the first time in over a decade – two-thirds of our investments are being funded by our supportive investors and debt providers. 'Ultimately everyone will benefit from the investments we are making – from building reservoirs, to fixing storm overflows, powering our net zero ambitions and helping to create economic growth.' She added that, despite persistent dry weather, 'we're predicting that the South West won't need a hosepipe ban this summer'. It is also expecting to return to profitability in the year ahead through increased revenues and shaking up business costs.
