The new chief executive of Pennon, owner of South West Water, has declared the group must “rebuild trust” following a record near-£2 million fine for a parasitic outbreak in its Devon supply.
Keith Haslett, who took the helm on 1 April, stated Pennon “must learn lessons from this incident” after being prosecuted for providing water unfit for human consumption.
The £1.93 million penalty, including surcharges and costs, was imposed after the Brixham area of Devon experienced cryptosporidium contamination in its water supply in 2024, causing widespread sickness.
This comes as Devon County Council considers legal action to address persistent sewage spills and poor water quality across the county.
Despite these challenges, Pennon reported a return to profitability in its annual results.
The group, also overseeing SES Water, Bristol Water, and Bournemouth Water, posted pre-tax profits of £114.4 million for the year ending 31 March, a turnaround from the £72.7 million loss last year. This recovery follows further bill hikes for customers in April, intended to fund investment plans.
Mr Haslett said he was “deeply saddened by the impact our business had on customers in the Brixham area during the 2024 cryptosporidium incident”.
“Whilst I have only been chief executive for a few weeks, it is very clear that we must learn lessons from this incident and work hard to rebuild trust with the customer and communities we serve, both in Brixham and beyond,” he said.
But the group is now facing the possibility of further legal action as Devon council looks at whether it has a case against South West Water over its environmental performance and water quality as local communities remain concerned.
The council’s leader councillor Julian Brazil told BBC Radio 4’s Today programme he believed executives should face surcharges for poor performance on supply, water and environmental performance.
Mr Haslett told the Press Association the group could not comment on Devon council’s plans but said the group “fully respects the outcome of the legal process”.
In his new role leading the group, he said he was focused on improving the group’s performance for customers.
Mr Haslett told PA: “Water quality is paramount and we absolutely should be focused on (supplying) wholesome drinking water every day, 24/7 for our customers.”
He said he wants the group to be leading the sector in all areas of performance, but admitted “we clearly have a lot of work to do”.
Mr Haslett – an industry veteran who was previously boss of Affinity Water and held executive roles at Northumbrian Water and United Utilities – replaced former chief executive Susan Davy when she retired after 18 years with Pennon.
In its latest results, Pennon revealed so-called outcome delivery incentives (ODI) penalties from the water regulator of around £42 million for its water and waste water performance over 2025-26, which it said came as it faced “exceptional storms and sustained rainfall coupled with a step up in targets and penalty rates”.
ODI is a system whereby a company can receive financial rewards or pay penalties based on performance targets, which are set by water regulator Ofwat.
A net penalty means it is paying more for under-performance than it receives for performing ahead of targets.
Pennon insisted it was making improvements, with pollution incidents down by more than a third (34%) and storm overflow use reduced by 17% in 2025-26.
The group is also investing £3.2 billion over the five years to 2030 as part of a plan agreed with Ofwat, with £644 million invested in the past financial year.
