The water regulator Ofwat announced the price hikes, which are less than the average 40% increase proposed by the water companies.
The average bill increase in 2025/26 will be £86 (20%), excluding inflation, with smaller percentage increases in each of the next four years.
The bill increases will fund a £104bn package of investment in the water sector, which Ofwat said will bring a raft of improvements for customers and the environment.
Ofwat said it had removed £8bn (7%) of costs from companies’ business plans and reduced the allowed rate of return on investment compared with companies’ requests.
This has led to a reduction in bills for most companies, compared with their most recent proposals. Water companies had previously proposed bill increases averaging 44%.
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‘Opportunity to regain customers’ trust’
The regulator said bills have been set at a level that is “fair for current and future customers”. It added that steps will be taken by companies to increase support for customers who need it, with the proportion of customers that will receive help with their bills more than doubling from 4% to 9%.
David Black, chief executive of Ofwat, said: “Today marks a significant moment. 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.
“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. Alongside the step-up in investment, we need to see a transformation in companies’ culture and performance. We will monitor and hold companies to account on their investment programmes and improvements.
“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.”
‘Still more than what many people can afford’
Customers of some firms will pay much more than the average increase. For example, Southern Water customers will see a 53% price hike. The company had sought an increase of 83%.
The price hike will be particularly galling for Southern Water customers, as almost 60,000 homes across Hampshire are currently without water, potentially until the weekend, because of a “technical issue” at a Southern Water supply works.
Other water companies levying more than the average increase include Severn Trent (47%), Hafren Dyfrdwy (42%), Dŵr Cymru (42%), and Yorkshire Water (41%). Customers of Welsh water company Dŵr Cymru will typically be paying £645 per year by 2029/30, the highest annual bill out of all the water companies.
Mike Keil, chief executive of the Consumer Council for Water (CCW), said: “These bill rises may be less than what water companies wanted, but they are still more than what many people can afford. Customers will be hit particularly hard from April, with a large chunk of these increases front-loaded into next year – on top of inflation.
“We know at least two in five households will find these increases difficult to afford, but the support being offered by some water companies lacks ambition. People want to see more investment, but this must be coupled with a strong safety net for customers who will struggle to pay. The case for a single social tariff to end the current postcode lottery of support has never been more compelling.”
The CCW warned last month that millions of households will struggle to afford the bill increases.
New rules announced earlier this week mean water companies could be forced to pay higher compensation to customers who suffer outages or flooding.
