Millions of households face higher water bills after five utility companies were provisionally granted permission to increase charges beyond initial regulatory limits.
The Competition and Markets Authority (CMA) confirmed that after an appeal, independent experts have allowed Anglian Water, Northumbrian Water, South East Water, Southern Water, and Wessex Water to raise their tariffs.
The firms had argued that Ofwat’s original decision would prevent them from meeting essential regulatory obligations.
Consequently, Anglian and Northumbrian Water can now increase bills by an additional 1 per cent, Southern Water by 3 per cent, South East Water by 4 per cent, and Wessex Water by 5 per cent.
Southern Water had already secured a 53 per cent average bill hike over the next five years, yet still sought a further 15 per cent increase.
Anglian Water had been allowed 29 per cent and asked for 10 per cent more, while South East Water had been granted 24 per cent and asked for a further 18 per cent.
Wessex and Northumbrian – who were each allowed a 21 per cent increase originally – asked for another 8 per cent and 6 per cent respectively.
The CMA said a provisional decision allowed for 21 per cent, or an additional £556m in revenue, of the total £2.7bn the five companies requested.
Kirstin Baker, who chaired the independent group of experts appointed by the CMA to consider the price controls, said: “We’ve found that water companies’ requests for significant bill increases, on top of those allowed by Ofwat, are largely unjustified.
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“We understand the real pressure on household budgets, and have worked to keep increases to a minimum while still ensuring there is funding to deliver essential improvements at reasonable cost.”
The CMA said the extra money would fund more resilient supply, reduce pollution, and reflect increased financing costs.
In December, Ofwat said it would allow water firms to raise bills by an average of £157, or 36 per cent, over the next five years to help finance investment into crumbling infrastructure.
But in March, Ofwat formally referred requests from the five companies for a redetermination of their bill increase allowance after they argued that the decision left them unable to meet the regulatory requirements set out for them.
This started a six-month period for the CMA to consider their appeals.
Water minister Emma Hardy said: “I understand the public’s anger over bill rises – that’s why I expect every water company to offer proper support to anyone struggling to pay.
“We’ve made sure that investment cash goes into infrastructure upgrades, not bonuses, and we’re creating a tough new regulator to clean up our waterways and restore trust in the system.
“We are laser-focused on helping ease the cost of living pressure on households: we’ve frozen fuel duty, raised the minimum wage and pensions, and brought down mortgage rates — putting more money in people’s pockets.”
