Pennon Group, the owner of South West Water, has announced it expects to face penalties from regulator Ofwat after stormy weather caused widespread disruption to its operations. The company cited power outages during Storm Goretti and Storm Chandra as key factors leading to mains bursts and leakage remediation.
In a statement, Pennon said it responded quickly to minimise customer disruption, but acknowledged that the exceptional and sustained rainfall created operational pressures. As a result, the company anticipates a net ODI penalty position for the full year 2025/26. ODI, or outcome delivery incentives, is a system where water companies can receive rewards or pay penalties based on performance targets set by Ofwat.
A net penalty means Pennon will pay more for under-performance than it receives for exceeding targets. Despite this, the company expects to return to profitability for the 2025-26 financial year, though 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 to the same period the previous year.
