Water regulator Ofwat launched an enforcement case against South West Water, owned by Pennon Group PLC (LSE:PNN, OTC:PEGRY), over sewage spills into rivers and the sea.
South West Water had been added as a result of “heightened concerns about its environmental performance across a number of metrics that may suggest it is not complying with obligations”, the regulator said on Tuesday.
It has asked the company for information to help in its investigation.
Pennon, which also owns Bristol Water, said it would work “openly and constructively” with Ofwat.
READ: Tougher regulation for water companies needed over river pollution, MPs say
The regulator is also engaged in enforcement cases against Anglian Water, Northumbrian Water, Thames Water, Wessex Water and Yorkshire Water.
South West Water has one of the worst sewage spillage records in the sector, having below targets from the UK Environmental Agency for 10 years in a row.
The company has enough money to improve its network, but regulations are loose enough to have allowed it to declare dividend of 38.53p per share for the past year and having paid a special dividend of £1.5bn and begun £400mln share buy-back after selling its Viridor arm.