Ofwat has launched an enforcement investigation into South West Water, relating to the accuracy of information reported by the company for its performance on leakage and per capita consumption (PCC).

Enforcement action for breaches of licence conditions and relevant requirements under the Water Industry Act 1991 can include issuing an enforcement order to bring a company back into line with its obligation and/or imposition of a financial penalty of up to 10% of the company’s turnover.

The water sector regulator sets performance targets for companies on leakage and PCC. The water companies are assessed against these targets annually and can be penalised or rewarded, depending on their performance.

In November 2022, Ofwat deferred a decision on the progress South West Water has made towards its leakage performance commitment, as it sought to understand how the company calculated its reported performance.

Ofwat said it will not provide further information on the investigation until it reaches a conclusion.

David Black, Ofwat CEO, 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. A thorough investigation will now be carried out and we will provide updates in due course on our findings and whether there is any further action Ofwat needs to take.”

Ofwat investigates water companies when it believes there may be a breach of an obligation that Ofwat has powers to enforce.

A statement issued this morning by Pennon Group, owners of South West Water, said:

“This operational performance data was reported in South West Water's Annual Performance Report 2021/22. This report is subject to rigorous assurance processes which include independent checks and balances carried out by external technical auditor.

“We will work openly and constructively with Ofwat to comply with the formal notice issued to South West Water as part of this investigation.”

Pennon Group shares are currently trading at 806.50 since the market opened this morning – a 1.89% fall on yesterday’s closing price of 822.00.