But it denies it is trying to escape from a poor public image, pointing out the South West Water will remain the name of its water utility business.
The new title, which must be approved by shareholders at an annual general meeting at the end of July, is intended to underline the company's move into new business sectors, it says.
South West Water is keen to expand in areas not covered by government regulation. It has highlighted waste management, environmental instrumentation and specialist contracting.
Pennon, headed up by the existing chairman, Ken Harvey, will be a holding company with two subsidiaries: South West Water and Viridor.
A spokesman for the company said: "Changing the name will help with investor relations and emphasise the fact that we are not just a regulated utility. Customers will still deal with South West Water."
Yesterday the company revealed plans to cut 135 jobs and streamline divisional offices in Exeter and St Austell in a bid to further reduce overheads. The announcement came as South West Water unveiled a 20 per cent fall in pre-tax profits to pounds 106.6m. The figures were hit by exceptional items but were welcomed by the City which marked the shares up 4p to 960p.