Victory against water companies after Ofwat limits amount they can raise bills by

The regulator said water firms proposed increases averaging £144 over five years (Picture: Getty)

Household water bills in England and Wales are to rise by an average £19 a year over the next five years – a third less than the increase requested by companies, under draft proposals announced by Ofwat.

The regulator said water firms proposed increases averaging £144 over five years.

For example, Thames Water’s proposed increase of £191 by 2030 has been reduced to £99, while Severn Trent’s proposed rise of £144 has been cut to £93.

Ofwat chief executive David Black said: ‘Customers want to see radical change in the way water companies care for the environment. Our draft decisions on company plans approve a tripling of investment to make sustained improvement to customer service and the environment at a fair price for customers.

‘These proposals aim to deliver a 44% reduction in spills from storm overflows compared to levels in 2021. We expect all companies to embrace innovation and go further and faster to reduce spills wherever possible.

‘Today’s announcement also increases the resilience of our water supplies to the impact of climate change and will reduce how much water is taken from rivers by enabling a range of long-term water supply projects, which includes plans for nine reservoirs.

‘Let me be very clear to water companies – we will be closely scrutinising the delivery of their plans and will hold them to account to deliver real improvements to the environment and for customers and on their investment programmes.’

Ofwat said it has imposed a ‘turnaround oversight regime’ on Thames Water and opposed the utility firm’s planned 44% hike in consumer bills over the next five years.

The cash-strapped firm said the bills hike will help fund £19.8 billion of improvements to its network of drains, sewers and reservoirs.

It has also asked Ofwat to lower the amount it fines the water company for incidents such as sewage spills and leakages.

Thames Water said the bills hike will help fund £19.8 billion of improvements to its network of drains, sewers and reservoirs (Picture: Reuters)

Thames warned on Tuesday that it has only enough money to last it until the end of May 2025 before it goes out of business.

The water firm is drowning in more than £15 billion of debt, and said on Tuesday that it needs fresh investment in the coming months to keep it afloat.

Already, existing shareholders pulled the plug on £500 million worth of emergency funding in March.

Thames said Ofwat’s initial assessments of its business plan had made the company “uninvestable”.

If it ultimately fails to attract fresh funding, Thames’ fraying finances will present Sir Keir Starmer’s newly elected Labour Government with a significant industrial crisis.

A blueprint codenamed Project Timber was being drawn up in Whitehall in the spring, according to reports, which could see the company effectively nationalised.

Ofwat’s ruling on Thursday is only a draft decision, and kicks off a period of negotiation until its final verdict in December.

But the regulator has rarely made major deviations between its draft and final rulings in previous years, meaning Thursday’s statement will give all parties an indication of how lenient it is likely to be later on.

The draft decision comes against a backdrop of public anger over the water companies and their role in the degraded state of the country’s rivers, lakes and coastal waters, which are facing a perfect storm of creaking water infrastructure, intensive farming, a growing population and climate change.

In this aerial view, discharge is seen flowing into the River Thames at Crossness sewage treatment works on March 27, 2024 (Picture: Getty)

Not a single river in England is considered to be in good overall health, and beauty spots including Windermere in the Lake District have been hit by sewage spills.

Figures released earlier this year showed storm overflows – which release untreated wastewater into rivers and seas when there is heavy rain to prevent sewers becoming overwhelmed – dumped sewage into the environment for more than 3.6 million hours in 2023.

The releases are legal, but environmental watchdog the Office for Environmental Protection is investigating the Environment Department (Defra), the Environment Agency and Ofwat over possible failures in regulating sewer overflows.

It is concerned that discharges have been permitted more often than the ‘exceptional circumstances’ allowed by law.

Water utilities have also been hit by large fines for illegal pollution in recent years, with a record £90 million fine handed to Southern Water in 2021 for 6,971 unpermitted sewage discharges.

Other companies including Thames Water, Severn Trent, South West Water and Yorkshire Water have been handed fines that ran into the millions for massive, damaging or repeated pollution incidents.

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