Regulator approves modest price rises for five water suppliers
Millions in England face higher water bills even as the competition regulator tightens the reins on price demands. The Competition and Markets Authority (CMA) provisionally authorised five water companies to raise charges above what Ofwat had allowed, but rejected most of the companies’ larger increases. The decision aims to balance the need for infrastructure investment with relief for households already stretched by rising living costs.
What the CMA ruled and which firms are affected
The CMA’s independent appeals group concluded that five suppliers—Anglian Water, Northumbrian Water, Southern Water, Wessex Water and South East Water—could collectively charge customers an extra £556 million over the next five years. That sum represents about 21% of the £2.7 billion the firms had requested. The five companies together serve around 14.7 million customers.
While the CMA granted some increases, the majority of the firms’ proposed hikes were curtailed. The decision followed appeals filed in February by the companies to seek higher price rises than those allowed by Ofwat, the sector regulator responsible for five-year price controls. Ofwat had flagged that average household bills could rise substantially as it backed investment in infrastructure and environmental improvements.
Individual company outcomes
Under the CMA’s provisional ruling, several notable outcomes emerged:
- Anglian Water: sought an average rise to £649 but received £599, a 1% increase relative to Ofwat's baseline.
- Northumbrian Water: asked for £515 (6%), granted £495 (also 1%).
- South East Water: requested an 18% jump to £322; the CMA approved 4% to £286.
- Southern Water: sought a 15% increase to £710; approved at 3% to £638.
- Wessex Water: proposed an 8% rise to £642; granted 5% to £622—the most generous proportional uplift on appeal.
The CMA chair, Kirstin Baker, emphasised that while households are under financial pressure, the panel’s role is to ensure funding for essential improvements remains achievable without excessive charges. “We’ve found that water companies’ requests for significant bill increases, on top of those allowed by Ofwat, are largely unjustified,” Baker said. “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.”
Context: the wider debate over water bills and services
Water bills in England (and Wales) are regulated rather than market-driven because the utilities operate as local monopolies. Ofwat’s five-year price controls are designed to guarantee basic investment while protecting customers from excessive charges. December’s forecast suggested average annual bills could rise by around 36% to about £597 by 2030 to support upgrades and improve water quality, including tackling leaks and pollution concerns.
In parallel, Thames Water, the largest utility with about 16 million customers, has signaled potential further financial moves as it negotiates with Ofwat over debt restructuring. Although Thames initially appealed, it agreed to pause the formal challenge while negotiations continue. The broader political discourse around water quality, the cleanliness of rivers, and the affordability of bills has intensified scrutiny of how these networks are financed and regulated.
What this means for households and the regulatory outlook
The CMA’s provisional decision signals a cautious tightening of price expectations in a sector under pressure from leakage issues, environmental obligations, and the imperative to upgrade aging infrastructure. For households, the core takeaway is that while some bill rises are unavoidable given infrastructure needs, the extent of increases will be narrower than some companies requested. Regulators appear intent on shielding consumers from sharp, unplanned hikes while maintaining funding streams for essential services.
Minister Emma Hardy stressed the government’s position: support for those struggling to pay, and a focus on directing investment into infrastructure upgrades rather than executive bonuses. The coming months will see Ofwat, the CMA, and the utilities negotiating the shape of next price controls and any further measures to improve water quality and resilience.
Next steps
The CMA’s decision will be revisited as Thames Water’s restructuring discussions progress, and as Ofwat finalises its long-term price controls. Consumers should monitor their bills and support options for assistance if needed, while households and businesses alike watch for whether the regulatory framework can deliver reliable water services at fair prices.
