Committee publication · Correspondence · 2 September 2025
Correspondence from Pennon Group regarding legal fees, dated 1 August 2025
From: Environment, Food and Rural Affairs Committee
Inquiry: Reforming the water sector
Summary
Pennon Group's CEO responds to the Environment, Food and Rural Affairs Committee's July 2025 inquiry into water company legal spending. The letter provides a five-year breakdown of external legal fees incurred by Pennon's water businesses in response to regulatory actions and third-party claims. Total regulatory legal costs were £3.75m (mostly CMA merger clearances); third-party claim costs were £17,380. The company employs 16 FTE lawyers group-wide, 3 dedicated to regulatory compliance.
Key findings
- Pennon Group incurred £1.96m and £1.5m in legal fees for CMA clearance of Bristol Water and SES Water acquisitions respectively.
- South West Water spent £82,255 on a DWI prosecution (Bratton Fleming) and £212,207 on EA prosecutions across five sites; courts reduced EA's original culpability assessments in several cases.
- Only £17,380 spent on legal fees from complaints or claims by individuals, campaign groups, or NGOs—five loss of amenity claims against South West Water.
- Pennon Group maintains 16 FTE lawyers across the business, of which 3 FTE focus on regulatory compliance with Ofwat, EA, and DWI frameworks.
- South West Water faced nine completed regulatory actions over five years; all other Pennon subsidiaries (Bristol Water, Bournemouth Water, Isles of Scilly, SES Water) recorded no regulatory actions during the period.
Tone
FactualTopics
Key actors
Susan Davy, Pennon Group, South West Water, Bristol Water, Bournemouth Water, Isles of Scilly Water, SES Water, Alistair Carmichael MP
Notable line
“All legal fees disclosed in this report are solely in response to regulatory actions initiated by the Regulators, or in response to legal actions initiated by third parties such as individuals …”
Key Quotes
“We appreciate the opportunity to clarify and expand on the Committee's questions regarding legal fees.”
“Pennon Group has not initiated any legal action against Regulators, and no legal costs have been incurred in doing so.”
“Across the Pennon Group, 16 full-time equivalent (FTE) lawyers work across our businesses providing legal advice and support across regulatory compliance, environmental law, commercial contracts, and corporate governance.”
“Our expenditure reflects one-off events rather than ongoing disputes with regulators.”
“Spend on legal matters initiated by individuals or campaign groups has been minimal. This reflects a low volume of such claims and a preference for resolution without escalation.”
Source · parliament.uk record ↗