Utility Week

UTILITY WEEK | 15TH - 21ST MARCH 2019 | 7 Interview C hris Loughlin doesn't like big egos, and he certainly doesn't want them in his company. Pennon's soly spoken chief executive entered the company want- ing to change things for the better, and that's just what he's done. When Utility Week meets Loughlin at Pennon's head office in Exeter to talk about its transformation from a laggard to a leader and its future plans, regulator Ofwat had just made public its verdict on the water sector's PR19 business plans. South West Water, Pennon's sub- sidiary company, was one of just three, along with Sev- ern Trent's and United Utilities, to have its plan placed in the "fast-track" category, meaning it has provisionally passed Ofwat's rigorous tests and doesn't require any fur- ther work. Loughlin is pleased to have been awarded this acco- lade and, he says, even more gratifying is the fact the company has managed to do it two times in a row. "We're the only one that's been able to achieve that." But things haven't always been like this. "If you look back 10 or 15 years, South West Water was not necessar- ily the highest regarded company in the sector," says Loughlin. In fact, questions were oen asked about what should be done about the "South West Water issue". "Not wanting to name names," he says. "But there are other industry players now who are the 'issue'." South West, which bought Bournemouth Water in 2015, has an inextricable link to the sea. Whether it's the caw of seagulls you hear when you open the office win- dows or the wall murals of surfers in the reception area – there are constant reminders that the company serves the coastal gem of England. And being the steward of a third of the designated bathing waters in England and Wales comes with its difficulties. At the time the water sector was privatised, 40 per cent of the sewage the country produced went straight into the sea with no treatment. This shocking statistic, Loughlin claims, underlines the "lack of investment" in the industry while it was owned by the state. Originally, the plan was to keep South West Water publicly owned because the capital investment needed to clean up the bathing water in its supply area was just too much for it to fund. However, the government decided at the eleventh hour to make it private along with the rest of the industry. By this time, it was too late for the company to get its share of the "green dowry" – the money, which came from government selling shares in the water sector, paid to the new water companies to help them meet their environmental obligations. This caused the "South West Water issue", which plagued the company for the first half of its life. An independent review, commissioned by the envi- ronment department at the time, calculated that the company was short £650 million as a result of missing out on this government cash injection. At one stage bills were twice as high as Thames Water's, Loughlin says, and people, quite rightly, considered this unfair. "The idea of getting £650 million from the Treasury was unlikely to happen," he says, "so we've been getting, for our customers, the interest equivalent of that in the £50 government contribution." The government has con- firmed that it will continue this contribution until 2020 at least. Loughlin was appointed chief executive of South

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