23% increase in South West Water bills confirmed - as water firms pledge 'largest ever commitment to environment'

South West Water today confirmed bill increases over the next five years

The way we pay for water and environmental protections are in the spotlight today
Author: Vicky Haines, Andrew Kay and PAPublished 29th Jan 2025
Last updated 29th Jan 2025

South West Water will raise dividends to shareholders as they confirmed consumer bill increases of 23% over the coming five years.

Today the Environment Agency said it has also secured the 'largest ever commitment from water companies to clean up the environment and invest in new infrastructure since privatisation'. 

South West Water's parent company Pennon said they had agreed the bill increases negotiated with regulator Ofwat last year. The regulator's decision, made in December, means the typical billpayer across the UK will see their payments rise by an average of £86 this April and the increases come amid claims by camapigners of high levels of sewage spills and underinvestment in pipes, sewers and reservoirs over the last decade.

Pennon, whose companies serve about 1.8 million customers, said it will tap investors for £490 million via a sale of new shares. It said the money will go towards a £3.2 billion investment in its pipes and sewers over the coming years. The group's chief executive Susan Davy said the company has "listened to customers" and that the bill rises would pay for "record levels of investment". She said the money would go towards "fixing storm overflows, building new reservoirs and creating natural habitats for wildlife".

The smaller SES Water, which Pennon also bought last year and serves Surrey, Sussex and Kent, will reduce bills by 3% over the five-year period. The companies had the option of appealing Ofwat's decision on bills to the competition regulator, but the announcements on Wednesday signal they will not.

What has been announced today?

South West Water

South West Water plans to nearly double its investment to £2.5 billion from 2025-30. This investment includes £764 million spent to deliver a 62% reduction in storm overflow spills compared to its performance in 2023-24, driving improvements to over 290 storm overflows by 2030. A requirement to reduce pollution incidents by 30%. £150 million to prevent nutrient pollution. £3 million to improve biodiversity and conservation. £2 million to meet Water Framework Directive requirements.

South West Water will install biosecurity measures at 12 recreational activity sites. This includes washdown facilities for boats, boot scrubs, drying racks and a raised awareness of the importance to ‘Check, Clean, Dry’, to limit the impact of invasive non-native species on recreational activities, sports and water supply operations. South West Water abstracts water from the De Lank River, in the River Camel catchment in Cornwall, to supply clean drinking water to homes and businesses. When this abstraction licence was originally issued in 1984, the approach towards protecting flows in the River Camel catchment were different than they are today. The River Camel (including the De Lank River) has a higher level of environmental protection than all other rivers in Cornwall - mainly to support the populations of otter, Atlantic salmon and bullhead.  Thanks to flow targets advised by Natural England, South West Water will reduce the amount of water taken from the De Lank River by 31 March 2030, easing pressure on this highly valued river system. 

Other actions driven by the Environment Agency include increasing the number of water company schemes to prevent nutrient pollution and remove phosphates from 5 to 21 as part of £150m investment in this area.

instructing the water company to carry out an additional 10 investigations to identify whether its assets are impacting waterbodies plus investigations into any water company assets on the recently designated Dart Estuary bathing waters.

Bristol Water, which is owned by Pennon, is expected to invest £709m (£534m increase) to: reduce leakage by 16%, household water use by 1% and business water use by 2%. Reduce its operational greenhouse gas emissions by 4%.

WESSEX

Wessex Water is expected to invest £4.2 billion (£1.6 billion more than 2020-25). This investment includes £515m to reduce use of storm overflows by 17%.  Reduce pollution incidents by 48% compared to 2023-24. £820m to reduce phosphorus entering rivers from water company activities by 49%. A sector-wide target to conserve and enhance biodiversity, Reduce its operational greenhouse gas emissions by 9%. Reduce leakage by 13%, household water use by 5% and business water use by 6%

Phillip Ham, Area Environment Manager for Wessex, said: “We take water for granted and assume the environment we enjoy today will simply be there waiting for future generations. That’s only possible by giving back wherever we can.

“Cutting how much water we take from some areas and investigating new sources are just some ways this necessary investment will leave nature fit for tomorrow.”

Natural England has also pushed for environmental improvements through WINEP, securing 37 improvement schemes and 22 investigations in Dorset alone. The improvement schemes will benefit chalk streams, rivers, mires, watercourses, lakes and estuarine waters across several designated areas including SSSI, SAC and Ramsar sites.  Also expected is over 120ha of new habitat for biodiversity by protecting raw water resources from agricultural pollution."

What has the Environment Agency said?

Alan Lovell, Chair of the Environment Agency said: “This unprecedented level of investment represents a vital step forward towards ensuring we have clean, safe, and abundant water now and for future generations.

“Working with the water companies on this £22bn programme is a crucial way to realise the government’s goals of stimulating development and boosting economic growth, while ensuring the sector can meet its ambitious environment commitments.”

“We will work closely with Defra, Ofwat and other regulators to monitor water company progress and ensure they deliver what has been promised. If water companies fail to carry out their legal obligations to the environment, we will take action.”

What has the Government said?

Steve Reed, Secretary of State for the Environment said: “It is no secret that our water system needs fixing and that our rivers, lakes and seas are choked by pollution.

“Customers deserve the money they pay in bills to go towards improving the service they receive, and that is why the Government will ringfence money earmarked for investment, so it can only be spent on projects like these.

“We are also going further to fix our water system through the Water (Special Measures) Bill, by introducing new powers to ban the payment of bonuses for polluting water bosses and bring criminal charges against lawbreakers.”

The Environment Agency and other regulators will drive water companies to embrace state-of-the-art technologies and groundbreaking innovations when delivering the actions set out under WINEP.

These collaborative efforts are crucial to cutting pollution, managing water efficiency, and increasing resilience to climate change for the benefit of both nature and people. By doing so we and industry can stimulate development and support the Government’s objective of boosting economic growth

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