Water firm's losses deepen after parasite outbreak

South West Water's parent company has reported widening losses following a parasite outbreak in Devon.

Pennon 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 said.

SWW 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 communities.

In addition to the outbreak costs, the company also absorbed £15.8m in restructuring expenses over the year.

Despite 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 improvements.

To 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.

"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 ive 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.

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