Five water companies have been informed they will not be permitted to raise customer bills by as much as they had requested following an examination by the UK’s competition watchdog. Anglian Water, Northumbrian Water, South East Water, Southern Water and Wessex Water will be allowed to generate an additional £463 million in revenue, falling short of the £2.7 billion they had sought.
The additional funding is anticipated to result in an average rise of 2.2% in bills for customers of the five water companies, on top of the 24% average increase they had already been granted by water regulator Ofwat. This is lower than the £556 million extra funding, equivalent to an average rise of 3% to customer bills, that had been provisionally approved in October.
The Competition and Markets Authority (CMA) stated it aimed to balance minimising the impact on people’s bills with the requirement for the suppliers to have sufficient funding for matters such as their environmental and drinking water quality legal obligations. The regulator determined that some additional money was necessary to support their investments, but that the bulk of their funding requests had been turned down.
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 firms had sought approval to raise additional funds through customer bills after arguing that Ofwat’s decision left them incapable of meeting the regulatory requirements imposed on them.
This refers to a decision made in late 2024, when Ofwat stated it would permit water companies to increase bills by an average of £157, or 36%, over the forthcoming five years to help fund investment into deteriorating infrastructure.
The extent to which customer bills are rising varies amongst each provider. 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.”