Pennon reports storm damage to pollution record

Pennon Group has reported a shortfall in headline levels for storm overflows and wastewater pollutions highlighting the impact of a “50% increase in rainfall over the long-term average” in its latest trading statement for the year to 31 March 2024. It described “sustainable progress on delivering environmental improvements across the region”, with improvements to water quality at 49 of 151 beaches in its regions through 78 interventions at storm overflow sites. 

The group reported its expectation of capital expenditure for the PR19 price control period to land at about £850m with 90% of its strategic reservoir storage in place ahead of its April 2024 target. 

“We are on track to reach our target of a 45% increase in Cornwall water resources by 2025, having already achieved our targeted 30% increase in Devon water resources one year ahead of schedule,” the group announced.

It said all of its programme to diversify its portfolio of water resources in Devon was complete, along with 70% of the programme of work in Cornwall. Other projects highlighted included the repurposing of four quarries as strategic reservoirs, along with a desalination plant in South Cornwall “on track to be operational in 2024/25”, and its Porth Rialton water abstraction and treatment scheme which it forecast as being “operational under its winter licence in 2024/25”. 

The company said it anticipated retaining its two-star Environmental Performance Assessment achieved in 2022 for 2023, “assuming Environment Agency confirmation of our improved water resource position”. It added that its target for four star status in 2024 had been put back to 2025 because: “current operating conditions have meant the benefits of our Pollution Incident Reduction Plan will not be seen until 2025.”

Pennon reported that £95 million in customer support had been delivered over the PR19 period to date. It said its water efficiency initiatives had helped customers save money on their bills and reduced demand by 2%.

According to the trading statement, the Competition and Markets Authority's review of the group's acquisition of SES Water in January 2024, was “underway, with potential for clearance at phase 1 in summer 2024.”

The group said it was “well-positioned with liquidity for the current regulatory period” having secured £700m through its Sustainable Financing Framework since March 2023.