Pennon Group, the parent company of South West Water (SWW), is hoping to raise £490m to fund infrastructure improvements.

The Exeter-based utility company, which also owns Bristol Water, is planning to raise the cash by issuing almost 186 million additional shares at 264p each, according to reports.

The aim is to improve water infrastructure by investing a record £3.2billion in the South West and elsewhere in the country (up from £1.9bn during the previous five year period, from 2020-25).

Pennon said the investment will cover a range of projects, such as storm overflows and improving water resources via a new reservoir in the South West.

This will reportedly include upgrading a third of water treatment works in Devon and Cornwall, reducing leakages to under 10 per cent and expanding its nature recovery program, including planting 300,000 trees by 2030.

The news coincides with the announcement by the Environmental Agency (EA) this week, saying that SWW has pledged to nearly double its investment to £2.5b over the next five years to reduce pollution in waterways.

The latest data taken from the Surfers Against Sewage site on sewage spill incidents (up to January 30) shows there were pollution alerts at eight sites in the South Hams, five of which were along the River Dart.

Storm overflows were also operational at Salcombe South Sands and Thurlestone South, close to the South Milton Sands beach.

SWW’s own water quality map showed 15 alerts along the whole of South Devon during the same period.

Critics have in recent years accused water firms of paying out huge dividends to shareholders instead of addressing sewage spills and investing properly in crumbling infrastructure.

Analysis by The Guardian newspaper found that shareholders were paid more than £57bn in dividends between 1991 and 2019, the equivalent of £2bn a year.

The figure is even higher according to more recent research by the University of Greenwich, showing that shareholders in 10 of the largest water companies in the England and Wales withdrew a whopping £85.2bn since the industry was privatised in 1989.

Water companies have countered by saying that shareholders need to be financially rewarded in order to encourage investment.

But to fund the upgrades, SWW along with other water firms across the country will also be hiking bills.

In the case of SWW, bills will go up from April this year, resulting in a 23 per cent jump by 2030.

SWW will be hoping for a better year after 2024 was marked by the cryptosporidium outbreak in South Devon, which caused dozens of people to fall ill with vomiting and diarrhoea symptoms.

The incident cost the firm £16m, and in October, there was further bad publicity for SWW when it was forced to do a U-turn after introducing a controversial water tariff trial for 3,500 customers.

SWW said the two-year scheme would be “kind to the environment” and fair for customers as they would be saving money “by using less water”, but many people complained that the trial was not optional.

The firm subsequently relented and allowed customers to opt out.