West Country water firm prevented from hiking bills by as much as they wanted

Five water firms have been told they will not be allowed to increase customer bills by as much as they wanted following a review by the UK’s competition watchdog.

Anglian Water, Northumbrian Water, South East Water, Southern Water and Wessex Water will be allowed to raise an additional £463 million in revenue, short of the £2.7 billion they had asked for.

The extra funding is expected to result in an average increase of 2.2% in bills for customers of the five water firms, on top of the 24% average hike they had already been granted by water regulator Ofwat.

This is less than the £556 million extra funding, equating to an average increase of 3% to customer bills, that had been provisionally granted in October.

The Competition and Markets Authority (CMA) said it wanted to balance minimising the impact on people’s bills with the need for the suppliers to have enough funding for things like their environmental and drinking water quality legal obligations. 

The regulator decided that some extra money was needed to support their investments, but that the majority of their funding requests had been rejected.

Kirstin Baker, chairwoman 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 supplies and cut pollution.

“A significant part of this extra money reflects market movements since Ofwat’s decision.”

The five companies had requested approval to raise more money through customer bills after arguing that Ofwat’s decision left them unable to meet the regulatory requirements set out for them.

This refers to a decision made in late 2024, when Ofwat said it would allow water firms to raise bills by an average of £157, or 36%, over the next five years to help finance investment into crumbling infrastructure.

The amount that customer bills are going up varies between each supplier.

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