Millions of homes are expected to face larger increases in their water bills as five companies have been granted approval to raise prices by more than initially proposed. The companies involved are Anglian Water, Northumbrian Water, South East Water, Southern Water, and Wessex Water, who argued that the original price hikes set by water regulator Ofwat were insufficient.
In December, Ofwat announced that water companies could raise bills by 36% over the next five years, amounting to an average increase of £157 per household. Following an appeal by the companies in March, the Competition and Markets Authority (CMA) launched an investigation.
CMA’s recent decision allows Anglian and Northumbrian to raise bills by an additional 1% beyond the previous announcement, Southern by 3%, South East by 4%, and Wessex by 5%. These companies collectively cater to seven million households in the UK. The firms sought to generate an extra £2.7 billion in revenue, but CMA only approved 21% of this, resulting in an additional £556 million in revenue.
Consumer groups have cautioned that households already faced substantial bill increases in April, with the average water bill rising by around £123 annually. Kirstin Baker, head of the independent expert group appointed by CMA to review the price controls, emphasized the need to keep increases to a minimum while ensuring essential improvements are made at reasonable costs.
Mike Keil, Chief Executive of the Consumer Council for Water (CCW), expressed concerns that further bill increases would burden customers who are still grappling with the impact of previous rises. He highlighted the potential to reduce financing costs for the companies, which could have led to lower bills but noted that the CMA chose to increase their rate of return instead.
Water minister Emma Hardy acknowledged public frustration over bill hikes and stressed the importance of water companies offering support to those struggling to pay. Hardy emphasized the government’s focus on investing in infrastructure upgrades and creating a new regulator to enhance water quality and build trust in the system.
While customers cannot switch water providers, there are ways to save money, such as reducing water usage through simple actions like shorter showers and turning off taps when not in use. Installing a water meter and using water-saving devices can also help cut costs. Financial expert Martin Lewis recommends assessing if a water meter would be beneficial using the CCW website’s free calculator.
Households can access free water-saving devices through Save Water Save Money, including shower heads, tap inserts, and cistern bags designed to reduce water consumption. Stay updated on money-saving tips and exclusive offers by subscribing to the Mirror Money newsletter.