London-listed Pennon said on Wednesday it would raise £550m from investors as part of a £1bn investment programme "to drive improved outcomes for customers and communities". The announcement, codenamed "project Proteus" after a sea god in Greek mythology, sent its shares down as much as 22%, making Pennon the biggest faller on the FTSE 250 index.
Pennon, which supplies water to about 3.5 million customers across south-west England as well as 380,000 business customers around the UK, also owns Bristol Water and SES Water. Its new chief executive, Keith Haslett, appointed in April, said he had conducted a comprehensive review and identified areas for improvement, including customer service and environmental performance.
The cash call follows a record fine last month, when a judge issued South West Water with the largest environmental penalty in the region at nearly £8m over reckless failures in management systems and response to known risks. The fine will be paid by shareholders rather than through bill increases. The company was penalised after hundreds of sewage spills over a six-year period at popular bathing spots including Harlyn in north Cornwall and sensitive habitats such as the River Camel.
In June, South West Water was fined £1.85m in a separate case after pleading guilty to supplying water unfit for human consumption, linked to a 2024 parasite outbreak in Brixham, Devon, that made hundreds of people sick and forced thousands of households to boil their water.
Haslett told reporters the reaction to the plans had been mixed, saying: "Investment is needed to achieve improvements, we're funding the plans in the right way." He said the investment would not be funded by further increases to customers' bills, and that critical roles, including leakage teams previously outsourced, were being brought back in-house.
In results for the year to 31 March, Pennon said it had incurred outcome delivery incentives from the water regulator Ofwat of about £42m for its water and wastewater performance, citing operational pressures from "exceptional storms and sustained rainfall coupled with a step up in targets and penalty rates". The company anticipates it will continue to incur the penalties until 2030 but aims to reduce them by at least 50% a year.