South West Water has agreed to pay £24 million after the water regulator found it spilled wastewater in the environment when it should not have done.
Ofwat said its investigation found a “range of failures” in how the water company managed its wastewater treatment works and sewer network.
A lack of adequate management systems, including oversight from its senior leaders and board, meant it did not meet its legal obligations.
South West Water – owned by Pennon – proposed the £24 million enforcement package, to be paid by the company and its shareholders, to invest in its systems and address the failures.
It means the company avoided being fined by Ofwat – which the watchdog said would have amounted to £19 million.
South West Water serves some 1.7 million people in households across Devon, Cornwall, the Isles of Scilly, and some parts of Dorset and Somerset.
The proposed enforcement package incorporates £20 million worth of investment over the next five years to target specific storm overflows in environmentally-sensitive locations or particular communities.
A further £2 million will go towards establishing a local fund to tackle sewer misuse, and it plans to provide an additional £2 million of funding for environmental groups.
Lynn Parker, Ofwat’s senior director for enforcement, 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.
“That is why we have secured the £24 million package and a commitment to put things right.”
Ms Parker added that the watchdog will continue to monitor the company’s efforts so that “customer confidence can begin to be restored”.
The settlement comes just over a year after South West Water’s major water contamination incident in Brixham, south Devon.
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.
It cost Pennon about £21 million and pushed it deeper into an annual loss, with recent figures revealing losses widened to £72.7 million for the year to the end of March.
Pennon’s annual report last month showed chief executive Susan Davy picked up a near-£200,000 share bonus in spite of the steep losses, water contamination crisis and amid painful bill hikes.
Ms Davy was paid £803,000 overall in 2024-25, but Pennon said at the time the share award was paid in relation to the 2022 long-term scheme and insisted it was “not paid for by customers”.
