The new boss of under-fire South West Water owner Pennon has said the group must “rebuild trust” after being hit with a record near-£2 million fine following a parasitic outbreak in its supply in Devon.
Keith Haslett, who became chief executive on April 1, said Pennon “must learn lessons from this incident” after the group was prosecuted earlier this month at Exeter Magistrates’ Court for supplying water unfit for human consumption.
It comes as Devon County Council is now considering taking legal action to tackle sewage spills and poor water quality in areas of the county.
The company was fined £1.853 million, with a surcharge of £2,000 and costs of £75,000 totalling £1.93 million, after the water supply in the Brixham area of Devon was contaminated in 2024 by cryptosporidium, a parasite which causes sickness and diarrhoea.
In Pennon’s annual results on Wednesday, the group – which also owns SES Water, Bristol Water and Bournemouth Water – revealed a return to profit, with pre-tax profits of £114.4 million for the 12 months to March 31 against losses of £72.7 million the previous year.
It follows further painful bill hikes for customers in April this year as the group steps up its investment plan.
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.
