Five water firms to hike customer bills by less than they wanted after ruling

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.

A public body representing water consumers said the additional bill increases were “still more than what many customers can afford”.

Mike Keil, chief executive of the Consumer Council for Water, 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.”

A spokesman for Water UK, the trade association for the industry, said the decision “marks the end of a process that should never have been necessary”.

He added: “The CMA has approved almost half a billion pounds of funding for investment that Ofwat refused.

“That Ofwat’s final determinations have been overturned by the CMA is further evidence, if any were needed, that the regulatory system has failed.”

Chris Walters, the interim chief executive for Ofwat, said: “The conclusion of the CMA’s work brings clarity.

“It means the companies can now fully focus on delivering on the record levels of expenditure to improve services for customers and the environment.

“We will reflect on the CMA’s decisions and their thorough examination of our final determinations, and they will be part of our considerations for the next price review.”