Image description: Water being boiled on a stove. Image by Anna Shvets / Pexels.

South West Water owner Pennon has revealed that a major water contamination incident in Devon last year has contributed to a cost hit of £36 million in “reshaping and transformation” costs.

Pennon was forced to add a “triple layer of protection” to its network after 17,000 households in South Devon had to boil drinking water in May last year after cryptosporidium was confirmed in the supply. The parasite, which causes sickness and diarrhoea, left some people in hospital and hundreds of others ill.

Despite the rising financial toll, the London-listed group said that its underlying earnings would be “broadly flat” compared with the first half and that it was on track with its own expectations for the full year to March 31. However, shares in the group reportedly fell 2% in Monday morning trading.

Pennon chief executive Susan Davy faced criticism after it was revealed that her pay package jumped 58% to £860,000 a month following the incident, after she picked up a long-term share award. She also told the MPs in a committee session that her base salary is rising from £494,000 to £511,000 this year.

Meanwhile South West Water customers are expecting bills to increase by 23% over the coming five years, to help the company pay for improvements to its infrastructure and reduce pollution incidents. The costs of the parasitic water outbreak saw Pennon report widened bottom line pre-tax losses of £38.8 million in the six months to September, against losses of £34 million a year earlier.