The owner of South West Water said normal operations had been restored for 85% of its customers after unsafe drinking water led to more than 100 cases of water-borne illness in Devon, and increased its dividend payout to shareholders.
After cryptosporidium, a disease that can cause unpleasant symptoms such as diarrhea and vomiting, was discovered in the water supply in the Brixham area of Devon last Wednesday, 16,000 homes and businesses were told by South West Water not to drink their tap water without boiling and boiling first let cool down.
Pennon Group, the owner of South West Water, said it had offered compensation of £215 per household via bank payment or bill credit to all customers served with a boil water notice, costing £3.5 million have.
The UK Health Authority has confirmed 46 cases of cryptosporidium infection in the Brixham area, while more than 100 other people have reported symptoms including diarrhoea, stomach pain and dehydration.
On Saturday South West Water lifted boil water notices for 14,500 properties in Brixham but apologized after including 28 properties whose water supply was still unsafe, causing anger among residents. They were told they could drink tap water, only to receive another message hours later advising them to continue boiling it.
The company blamed the error on a problem with its digital card system and said it had offered an additional £75 compensation to people who received incorrect advice.
Susan Davy, managing director of the FTSE 250-listed company, said: “We are 100% focused on restoring a safe water supply to the people and businesses in and around Brixham.”
“Normal service has returned for 85% of customers, but we will not stop until local drinking water returns to the quality that all of our customers expect and deserve.”
She said the company’s operational teams were working “tirelessly around the clock to make this happen.”
Davy added that Pennon had cut its final dividend by £2.4 million, equal to South West Water’s record fine last year, “which signals we are listening”. However, the total dividend payout is still higher year-on-year at £44.37m per share, or £126.9m – compared to £111.7m last year.
South West Water provides water and wastewater services to 1.8 million residents in Devon, Cornwall and small parts of Dorset and Somerset.
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The company was fined £2.15 million last April for pumping wastewater into rivers and the sea in a series of incidents in Devon and Cornwall over a four-year period, which Environment said was due to “numerous general failings The agency was responsible for the implementation of the company’s management systems.
Pennon reported an underlying pre-tax profit of £16.8m, the same as last year, and a statutory loss of £9.1m. Underlying revenue rose 10% to £908m, boosted by inflation-related billing increases. The mountain of debt grew to £3.5 billion by the end of March, up from £3 billion a year earlier.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: “The weather was both friend and foe last year, particularly in the second half of the year. Across the Southwest, it was the fifth wettest year on record, causing groundwater levels to rise and increased use of storm spillways.
“This is effectively a release valve to help prevent flooding of homes and businesses, but it means untreated water is ending up in local rivers. On the other hand, the extreme weather has led to a recovery of the water reservoir, ending the drought cycle for Devon and Cornwall and improving the overall water resilience of the group.”
Chiekrie said the company’s revenues would benefit from bill increases and also from the £380m takeover of Sutton and East Surrey Water last year.