Ofwat probes South West Water for leak figures

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One of England’s big water monopolies is to be investigated by the regulator for the accuracy of the information it provides on water losses and consumption.

Water regulator Ofwat said on Tuesday it was trying to figure out how Southwest Waterwhich is owned by FTSE 100 listed Pennon Group, calculated its performance on losses and per capita water consumption.

David Black, Chief Executive Officer of Ofwat, said: “We are committed to holding companies accountable for performance and sharing timely, accurate and comprehensive data with us and their customers. We want to make sure that’s the case here.”

Pennon said he would work “openly and constructively” with Ofwat.

If Ofwat discovers that Pennon misreported data, the company could face a financial penalty of up to 10% of the company’s turnover, which was £792 million last year.

The inquiry is the latest in a series of regulatory inquiries into water companies. Six companies, including South West Water, are already being investigated over concerns they may breach wastewater regulations, including potential illegal discharges into more than 2,000 sewage plants.

About a fifth of treated water is lost in leaks, and unknown amounts of rainwater and sewage are poured into rivers and coastal waters, threatening to close some beaches this summer.

Shares of Pennon fell more than 3% in early trading, while fellow London-listed water companies Severn Trent and United Utilities also fell.

Martin Young, an analyst at Investec, said: “With the performance and behavior of water companies scrutinized, the investigation is clearly pointless for SWW, which is also the subject of an environmental performance enforcement investigation.”

South West Water was fined £2.1m by the UK Environment Agency last month for pollution crimes in Devon and Cornwall over four years.

Tuesday’s new investigation comes as water and sewage companies in England and Wales face the biggest wave of protests since they were privatized 34 years ago, with activists demonstrating on beaches in Plymouth, Falmouth, Brighton and Hove last weekend.

Businesses are also under pressure to paying £1.4 billion in dividends in the year to March 2022, according to research by the Financial Times, as well as high pay packages for executives. Five chief executives, including the head of South West Water, have waived their bonuses this year in recognition of the public interest.

The investigation into the accuracy of the data leak isn’t the first time water companies have been criticized for providing misleading information.

Ofwat said in 2017 that the data provided by many of the water companies was so bad that customers shouldn’t take it at “face value”. The regulator slammed four companies for “basic data errors” in everything from customer bills to the number of leaks they’ve suffered.