South West Water owner prepares to pay penalties after stormy weather

The owner of South West Water has said it is expecting to face penalties from the regulator after rainy and stormy weather led to leakage repairs and burst water mains.

Pennon Group said power outages during Storm Goretti and Storm Chandra had a widespread impact to South West Water’s operations.

The supplier said it responded quickly to minimise customer disruption, but that action was needed in relation to “mains bursts and leakage remediation”.

“Due to the exceptional and sustained rainfall creating operational pressures, ODI performance across water and wastewater for the full year 2025/26 is anticipated to result in a net ODI penalty position,” Pennon said.

ODI refers to “outcome delivery incentives”, 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 would mean paying more for under-performance than it receives for performing ahead of targets.

Pennon said it was expecting to return to profitability for the 2025-26 financial year, but that it is likely to be at the “lower end” of analysts’ expectations.

Earnings before tax, interest and other costs surged by about 55% between September 30 and March 9, compared with the same period the year before.