Pennon Group Acquires Sutton East Surrey Water for £380 Million

Pennon Group acquires Sutton and East Surrey (SES) Water for £380m to enhance its presence in Southern England. In October, the water regulator Ofwat urged SES and other sector firms to improve financial performance amid challenges in water quality and leak reduction.

Pending approval from the Competition and Markets Authority, the deal adds SES’s 750,000 customers to Pennon Group, which owns South West Water.

This move follows Pennon’s earlier acquisitions of Bournemouth Water and Bristol Water. The sale occurs amid concerns over the UK water industry’s issues with excessive executive compensation and environmental failures.

East Surrey Water
East Surrey Water

Unmet objectives
SES found itself among various water companies directed to refund millions to customers through reduced bills due to failure to achieve critical targets established by Ofwat, the regulator

In a report naming a dozen water companies, including SES, Ofwat highlighted their shortcomings in performance metrics related to leakages, supply, and pollution reduction.

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Ofwat also voiced apprehension regarding the financial stability of several companies.

The regulator assesses water companies in England and Wales against ambitious targets set in 2019 for a five-year duration.

If these targets are not met, Ofwat limits the funds these companies can collect from customers.

It concluded that, to compensate customers, companies must reduce bills in 2024-25 instead of providing a lump sum refund to each bill payer.

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