Homes with water butts and permeable driveways could see their bills reduced while those with swimming pools and hot tubs could pay a premium, Ofwat has suggested.
The regulator called on water firms to trial “creative and targeted ways” to charge customers for their usage.
Ofwat said it was pushing companies to “think differently” amid cost-of-living concerns, to differentiate between customers and better help those who are struggling.
Customers’ bills are currently set on a flat standard amount based on their type of property, or a flat rate based on their use as measured by a water meter.
Some of the ideas the regulator is asking companies to consider include seasonal charging to help lower water bills in the winter when energy costs are higher, or reducing bills for homes with water butts and permeable driveways, which can help to reduce risk of flooding and pollution to rivers.
Those who use a lot of water, such as households with swimming pools, hot tubs or large-scale sprinkler systems, could be charged a premium for very high use, particularly at times when water is scarce.
Ofwat chief executive David Black said: “We are all very aware of the impact of the rising cost of living and we want to see the water sector become more active, assertive and inventive to support customers who are struggling to make ends meet.
“Now more than ever, it is time for water companies to show they get and can respond to the needs of their customers.
“Bills are a huge concern to customers, and we need to see radical fresh thinking from companies.”
Ofwat’s consultation runs until November 3.
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