The new chief executive of South West Water owner Pennon has stated that the company must work to "rebuild trust" following a record fine of nearly £2 million for a parasitic outbreak in its Devon water supply.
Keith Haslett, who took over as CEO on April 1, said Pennon "must learn lessons from this incident" after the group was prosecuted at Exeter Magistrates' Court earlier this month for supplying water unfit for human consumption.
This comes as Devon County Council is considering legal action to address sewage spills and poor water quality in parts of the county.
The company was fined £1.853 million, along with a £2,000 surcharge and £75,000 in costs, totalling £1.93 million. The water supply in the Brixham area of Devon was contaminated in 2024 by cryptosporidium, a parasite that causes sickness and diarrhoea.
In Pennon's annual results released on Wednesday, the group—which also owns SES Water, Bristol Water, and Bournemouth Water—reported a return to profit. Pre-tax profits reached £114.4 million for the 12 months to March 31, compared to losses of £72.7 million the previous year.
The results follow further significant bill increases for customers in April this year as the group accelerates its investment plan.
Mr Haslett expressed that 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 customers and communities we serve, both in Brixham and beyond," he said.
However, the group now faces the possibility of additional legal action as Devon council investigates whether it has a case against South West Water regarding its environmental performance and water quality, amid ongoing community concerns.
The council's leader, Councillor Julian Brazil, told BBC Radio 4's Today programme that he believes executives should face surcharges for poor performance on supply, water quality, and environmental standards.
Mr Haslett told the Press Association that the group could not comment on Devon council's plans but stated it "fully respects the outcome of the legal process."
In his new role leading the group, he said he is focused on improving the company'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 expressed a desire for the group to lead the sector in all areas of performance but admitted "we clearly have a lot of work to do."
Mr Haslett, an industry veteran who previously served as 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 that so-called outcome delivery incentives (ODI) penalties from the water regulator amounted to approximately £42 million for its water and wastewater performance over 2025-26. The company stated this was due to "exceptional storms and sustained rainfall coupled with a step up in targets and penalty rates."
ODI is a system where a company can receive financial rewards or pay penalties based on performance targets set by water regulator Ofwat. A net penalty indicates the company is paying more for underperformance than it receives for exceeding targets.
Pennon insisted it is 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.
