Ofwat proposes enforcement package for South West Water

Ofwat proposes £24 million enforcement package on South West Water for failures in managing its wastewater treatment works and network

• £24m to be paid by the company and its shareholders for the benefit of South West Water customers and the local environment.
• As part of the enforcement package, South West Water has recognised its failures and is taking steps to put it right.
• A consultation will now follow which will be open for the public and key stakeholders to offer any final comments before Ofwat’s final decision.

Ofwat has proposed a £24m enforcement package following its findings that South West Water has failed to meet it legal obligations in managing its wastewater treatment works and network. These failures resulted in the company spilling wastewater to the environment when it should not have done.

This announcement represents the next stage of Ofwat’s largest and most complex set of investigations into all water companies and their management of their wastewater treatment works. It follows the conclusion of cases against Yorkshire Water, Thames Water and Northumbrian Water earlier this year that resulted in enforcement action worth more than £160m.

Ofwat’s investigation found that South West Water has failed to build and operate its wastewater treatment works and sewer networks to ensure they performed sufficiently. The company did not have in place adequate management systems to ensure it was meeting its legal obligations in this regard, including adequate oversight from its senior management team and Board.

In stepping up to acknowledge what has gone wrong and how it will put things right, South West Water has proposed a £24m enforcement package which includes:

• Investing £20m during 2025-30 to reduce spills from specific storm overflows. This investment will target overflows in environmentally sensitive areas or within focused community areas.
• Establishing a £2m local fund to tackle sewer misuse and misconnections, which can contribute to environmental pollution.
• Providing £2m of funding through a Nature Recovery Fund to support environmental groups in delivering local environmental improvements.

In addition the company will commit to taking the necessary steps to address the failures Ofwat has identified, securing its future compliance.

Lynn Parker, Senior Director for Enforcement at Ofwat, said:

“Water companies should be in no doubt that they will be held to account if they fail to meet their legal obligations to customers and the environment. Our investigation found a range of failures in how South West Water has gone about managing its wastewater business. That is why we have secured the £24m package and a commitment to put things right.

“As we continue to progress our sector-wide investigation, we are pleased that companies like South West Water are stepping up to acknowledge their failures and to put things right. We will continue to monitor the company to ensure that this work is carried out as quickly as possible so that customer confidence can begin to be restored.”

South West Water has taken already taken some steps to address its compliance issues. These include investment to investigate and improve the operation of a range of its treatment works and storm overflows, and the introduction of new governance arrangements to ensure greater oversight of its compliance with its environmental obligations.

A consultation is now to the public and stakeholders to offer any final comments on Ofwat’s proposed decision before it is finalised. The consultation can be found here: https://www.ofwat.gov.uk/consultations/

CEO, Susan Davy said: “We are pleased that Ofwat has completed its review into wastewater at South West Water as part of its sector wide investigation. For South West Water this related to historical issues. I have always said that when things go wrong, it is how we respond and put things right and that is exactly what we are doing. In response to Ofwat’s findings, we have proposed a ringfenced investment programme of £24m to spend more to further reduce spills, tackle sewer misuse and establish a Nature Recovery Fund, benefiting environmental groups in Devon and Cornwall and the wider community.  This is in addition to the £760m we are already investing over the next 5 years to reduce the use of storm overflows across the region."