Ofwat has said water bills can rise by £86 next year and by £157 over the next five years to fund a huge investment in the sector.
The average bill increases by 36% over the next five years. The average bill increase in 2025-26 will be £86 (20%), excluding inflation, with smaller percentage increases in each of the next four years.
Ofwat has removed £8bn (7%) of costs from companies’ business plans and reduced the allowed rate of return on investment compared with companies’ requests.
This it says has led to a reduction in bills for most companies, compared with their most recent proposals; companies proposed bill increases of 44%. For example, in comparison with proposed 2029-30 bills, Southern Water’s bill has been reduced by £126 (16%), Thames Water by £79 (12%), Hafren Dyfrdwy by £73 (12%) and Wessex Water by £44 (7%).
Investment targets
The money raised will form part of a £104 billion package to invest in water services, leaks, sewage spills and infrastructure upgrades.
Nine new reservoirs will be created, including in Lincolnshire, Cambridgeshire and Oxfordshire, to create enough additional capacity to serve the daily needs of 2.5 million households.
In total, the 30 major infrastructure projects will provide enough water to meet the daily needs of around a third of England and Wales’ population.
Water companies have been told to increase support for customers who need it, so the proportion of customers that will receive help with their bills rises from 4% to 9%.
The price rise won’t be welcomed after recent news of the sector’s failings but the boss of Ofwat said they will hold water companies to account.
Trust
David Black said: “It provides water companies with an opportunity to regain customers’ trust by using this £104bn upgrade to turn around their environmental record and improve services to customers.
“We recognise it is a difficult time for many and we are acutely aware of the impact that bill increases will have for some customers. That is why it is vital that companies are stepping up their support for customers who struggle to pay.
“Water companies now need to rise to this challenge, customers will rightly expect them to show they can deliver significant improvement over time to justify the increase in bills.”
