One of England’s large water monopolies is to be investigated by the watchdog over the accuracy of information it provides on leakage and water consumption.
Water regulator Ofwat said on Tuesday it was seeking to understand how South West Water, which is owned by FTSE 100 listed Pennon Group, calculated its performance on leakage and per capita consumption of water.
David Black, chief executive of Ofwat, said: “We are committed to holding companies to account for performance and for sharing timely, accurate, and complete data with us and their customers. We want to ensure that is the case here.”
Pennon said it would work “openly and constructively” with Ofwat.
If Ofwat finds Pennon has misreported data the company could face a financial penalty of up to 10 per cent of the company’s turnover, which last year stood at £792mn.
The investigation is the latest in a series of regulatory inquiries into water companies. Six companies including South West Water are already being investigated over concerns that they may be breaching sewage regulations, including potential illegal discharges at more than 2,000 sewage works.
About one-fifth of treated water is lost in leakage and unknown quantities of storm water and sewage are being tipped into rivers and coastal waters, threatening to close some beaches this summer.
Shares in Pennon were down more than 3 per cent in early trading, while other London-listed water companies Severn Trent and United Utilities also fell.
Martin Young, analyst at Investec, said: “With scrutiny of water company performance and behaviour, the investigation is clearly unhelpful for SWW, which is also under an enforcement investigation for environmental performance.”
South West Water was fined £2.1mmn last month by the UK’s Environment Agency for pollution offences across Devon and Cornwall spanning four years.
Tuesday’s fresh investigation comes as England and Wales’ water and sewage companies face the biggest wave of protests since they were privatised 34 years ago, with campaigners demonstrating at beaches in Plymouth, Falmouth, Brighton and Hove last weekend.
The companies are also under pressure for paying out £1.4bn in dividends in the year to March 2022, according to research by the Financial Times, as well as high executive pay packages. Five chief executives, including the boss of South West Water, have given up their bonuses this year in recognition of public concern.
The investigation into the accuracy of data leakage is not the first time that water companies have been criticised for providing misleading information.
Ofwat said in 2017 that data provided by several of the water companies was so bad that customers should not take them at “face value”. The regulator criticised four companies for “basic data errors” in everything from their customer bills to the number of leaks that they suffered.