Finance
UK utility Pennon swings to pretax annual loss on investment costs
Published by Global Banking & Finance Review®
Posted on June 3, 2025
2 min readLast updated: January 23, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on June 3, 2025
2 min readLast updated: January 23, 2026
Pennon Group reports a pretax loss due to investment costs, amid regulatory pressures and rising water bills in the UK.
(Reuters) -British water utility Pennon Group swung to an annual pretax loss on Tuesday, hurt by costs associated with the Brixham water supply incident and higher investments to upgrade its infrastructure.
WHY IT'S IMPORTANT
Britain's water companies are facing increased scrutiny due to pollution issues and mounting pressure to improve environmental standards while managing rising costs and regulatory demands.
Water bills in England and Wales will increase by an average of 31 pounds per year between 2025 and 2030, according to industry regulator Ofwat's 2024 price review, to help finance essential investment in the sector. This is 8 pounds lower per year than what companies proposed in their plans, on average.
CONTEXT
Pennon, along with listed peers United Utilities and Severn Trent, agreed to Ofwat's price review, unlike several privately owned water firms that appealed. In exchange for higher permitted income, Pennon is committing to invest 3.2 billion pounds ($4.33 billion) over five years in infrastructure upgrades.
Ofwat's latest price review permits South West Water, the group's largest revenue contributor, to raise household bills by 23% leading to an average bill of 610 pounds by 2029-30. The group is partly relying on these higher tariffs to fund upgrades and meet tougher environmental standards, while restoring public confidence following recent pollution incidents.
KEY QUOTE
"While we have made the tough decision to put bills up in 2025-26, for the first time in over a decade, two-thirds of our investments are being funded by our supportive investors and debt providers," CEO Susan Davy said in a statement.
BY THE NUMBERS
Pennon reported adjusted loss before tax of 35.1 million pounds for the year ended March 31, narrower than market expectations of about 37 million pounds loss, according to data compiled by LSEG.
($1 = 0.7392 pounds)
(Reporting by Ankita Bora in Bengaluru; Editing by Eileen Soreng)
Pennon Group's annual pretax loss was primarily due to costs associated with the Brixham water supply incident and increased investments to upgrade its infrastructure.
Water bills in England and Wales are set to increase by an average of 31 pounds per year between 2025 and 2030, as per Ofwat's 2024 price review.
The average bill for South West Water is expected to rise by 23%, leading to an average bill of 610 pounds by 2029-30.
Pennon reported an adjusted loss before tax of 35.1 million pounds, which was narrower than the market expectations of about 37 million pounds.
Pennon decided to increase bills for the first time in over a decade in 2025-26, with two-thirds of their investments being funded by supportive investors and debt providers.
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