Pennon chair to go weeks after Devon water contamination scandal and dividend outcry

Pennon is one of the UK’s biggest water and utilities companies (Rui Vieira/PA Wire) (PA Wire)
Pennon is one of the UK’s biggest water and utilities companies (Rui Vieira/PA Wire) (PA Wire)

Pennon Group, the owner of South West Water, announced the departure of its chair today, just weeks after a wave of public anger over contaminated tap water in Devon.

Gill Rider will go after the company’s annual general meeting having been in the role for around four years. The firm announced a dividend payment of £127 million just days after scores of people in Brixham fell ill. .

A parasite causing diarrhoea and vomiting – cryptosporidium – was found in the water supply serving the picturesque seaside town of around 17,000 people. The tiny organism is found on human waste and sewage. There is no drug to treat the condition it causes.

The move to recommend the dividend provoked outrage and led to calls from local and Westminster politicians for the dividend to be pulled.

Pennon is paying total compensation of around £3.5 million to the households involved, after people were told to boil water before drinking it. Each will receive around £215.

It comes was much of the industry is calling for higher bills to pay for much needed infrastructure investment after long periods of under-investment by some firms.

The financial viability of the sector’s biggest name and London’s supplier – Thames Water – is in doubt as it teeters under a huge debt burden, raising the prospect of its nationalisation should its existing backers stop short of helping it refinance.

Pennon is on the FTSE 250 and also owns Bristol Water and Bournemouth Water. It was fined £2.2 million in 2023 relating to sewage discharge into waterways and the sea. It has a market value of around £1.7 billion.

The scandal-hit company revealed a rise of almost 60% today in the pay of is chief executive, Susan Davy. A  £298,000 shares bonus took her total pay to £860,000 in 2023-24 from £543,000 the year before. It would have ben even more had Davy not waived an annual bonus of £237,000 in cash and shares.

In the same year, the number of pollution incidents South West Water hit 194, up 80%.

South West Water serves almost 2 million customers in England’s west, including Somerset, Dorset and the Isles of Scilly as well as Devon and Cornwall.

Rider will be replaced by David Sproul, who will join the board at the start of next month as a non-executive director. He is also chairman of Starling Bank and an advisor to private equity firm Bridgepoint Europe.

He called it a “a pivotal point in Pennon's strategy”, adding: “There has never been a more important time to make a positive contribution to the sector and society. What Pennon does for customer, communities and the environment really matters.”

He will be paid £250,000 a year, as was Rider. She said: “I am honoured to have worked alongside such a talented Board over many years at Pennon ...  am delighted that David will be joining the group and will succeed me as chair. I wish him, Pennon and especially all our dedicated colleagues every success for the future."

Pennon’s shares were down almost 5p at 591p, trading around their lowest level since September last year.