Ofwat consults on £24m wastewater penalty for South West Water

Ofwat has proposed a £24m enforcement package following its findings that South West Water has failed to meet its legal obligations in managing its wastewater treatment works and network. For comparison, South West Water’s reported underlying EBITDA for 2024/5 was £308.6 million.

Ofwat said these failures resulted in the company spilling wastewater into the environment when it should not have done. 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 noted that the company did not have in place adequate management systems to ensure it was meeting its legal obligations, including adequate oversight from its senior management team and board.

South West Water has recognised its failures and is taking steps to put them right by: 

• 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.

• Providing £2m of funding through the Nature Recovery Fund to support environmental groups in delivering local environmental improvements. 

Ofwat noted that the £24m enforcement package is greater than the penalty it would otherwise have imposed on the company (which would have been £19m, 6.5% of South West Water’s annual turnover). Instead, the £24m will remain in the water sector and be spent on making improvements to service for the benefit of customers and the local environment.