The parent company of South West Water has committed £16 million to address the recent contamination crisis involving cryptosporidium in Devon.

Over 17,000 homes and businesses in Brixham were impacted after the harmful parasite was detected in a local reservoir back in May. Cryptosporidium can lead to severe gastrointestinal issues, including diarrhoea and sickness.

Pennon, a company listed on the FTSE 250 and owner of South West Water, reported that its employees worked tirelessly, operating around the clock to clean and flush the 20-mile water supply network 27 times. This included utilizing ultra-violet treatment facilities and replacing certain segments of the water grid entirely.

A ‘boil water’ advisory was in effect for nearly eight weeks as the company provided £3.5 million in compensation and supplied bottled water to affected customers for a two-month period. Early investigations pointed to contaminated drinking water resulting from cattle manure leaking into a compromised air valve in a local farmer’s field.

Pennon remarked, “The cryptosporidium contamination incident in Brixham during the summer was an unusual occurrence for South West Water. We acted quickly and effectively to pinpoint the problem, cleanse the system, and restore full service to all our customers.”

In a recent trading update, the company observed a rise in sewage spill incidents over the six months ending September 26, attributing it to “the third wettest October to August on record,” which resulted in unusually high groundwater levels.

Despite the uptick in sewage spills, efforts to mitigate pollution at UK beaches led to a decline in spill incidents during the peak summer season, achieving one of the lowest averages since 2016.

Pennon indicated that its like-for-like revenue in the first half of the year was influenced by a decrease in water consumption, which it linked to its ‘Water is Precious’ efficiency initiatives. They added that the expected annual results would reveal that reduced demand has balanced out the effects of increased charges and a growing customer base.

Pennon faced scrutiny following the revelation in June that Chief Executive Susan Davy’s compensation surged by 58 percent to £860,000 in 2023-24, after she received a £298,000 bonus in shares, even as pollution incidents nearly doubled at South West Water the previous year. This information was disclosed in the company’s annual report, which showed her compensation rising from £543,000 the previous year.

Further controversy arose this year when Pennon increased its annual dividend to shareholders, despite handling a £2.4 million reduction in distributions following a record fine for sewage spills.

In June, regulators approved Pennon’s £350 million acquisition of Sutton and East Surrey Water, bringing in an additional 845,000 customers.

At market close, Pennon shares fell by 4.5p, or 0.8 percent, settling at 595.5p.