Customers of five water companies will pay higher bills than expected in the coming years, following a review by the competition regulator.
However, the firms were told they will not be able to increase bills by as much as they wanted.
The Competition and Markets Authority (CMA) said Anglian Water, Northumbrian Water, South East Water, Southern Water and Wessex Water will be allowed to raise the average bill by 2.2 per cent on average, below the 3 per cent average increase that was provisionally granted last October.
The final decision by the competition watchdog comes in addition to the 24 per cent increase in customer bills that the water regulator granted the firms.
The five companies supply water and sewage services to nearly 15 million households.
Since privatisation, water companies are required to reach settlements with the regulator every five years. This includes how much they can add to customer bills, the amount they can invest and the returns they can make.
Millions of households face another increase to their water bills after the review
Ofwat set price controls for all water firms in December 2024, outlining the amount of revenue companies can recover through customer bills. It said the decision would lead to average bill increases of £157 – or 36 per cent – to £597, between 2025 and 2030.
However, the five firms appealed to the CMA last March, saying that the increases approved by Ofwat would not be enough to pay for network upgrades.
Today, the CMA said it had reduced the amount it would allow the five firms to add to bills from its provisional decision in October because of ‘market movements impacting financing costs for water companies’.
It said it had largely rejected funding requests for new activities and projects beyond those already granted by Ofwat.
Kirstin Baker, chair of the independent group appointed by the CMA said: ‘We’ve rejected most of the bill increases water companies asked for but allowed limited extra funding where that’s genuinely needed, balancing concerns about affordability with the need to secure our water’s supplies and cut pollution.
‘A significant part of this extra money reflects market movements since Ofwat’s decision.’
South East Water can push up bills by an additional 4 per cent, pushing up the average bill to £284 a year.
Meanwhile, Southern Water and Wessex Water will increase by 3 per cent, to £641 and £614 a year, respectively.
Anglian Water will add 2 per cent to costs, to £602, but the CMA ruled that Northumbrian Water will not be able to hike bills further.
Mike Keil, chief executive of the Consumer Council for Water (CCW), said: ‘The additional bill increases granted by the CMA may be less than what these five water companies wanted but they are still more than what many customers can afford or will consider fair.
‘We’ve seen almost a tripling in complaints brought to us about the affordability of water bills in the past year and further increases will add to the worries of some struggling households.
‘This long-winded appeal process needs reforming so customers are given the same right as water companies to challenge price increases. This would help address the power imbalance that currently exists between water companies and their customers.’
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