Households in England and Wales will see their water bills rise by at least 36 per cent by 2030 to fix the “twin crisis” of pollution and shortages.
The proposed bill rises would begin to take effect from April next year.
Figures released by Ofwat in October revealed water companies had subsequently asked to increase bills by even more than they originally requested.
The latest requests by firms would see the average consumer bill in England and Wales rise by 40 per cent between now and 2030, costing £615 per year.
Thames Water wants Ofwat to approve a 53 per cent hike, however they have been handed an £18.2 million penalty for breaking dividend payment rules.
Household could see an average rise of £20 a year per household and the average bill soaring from £448 a year to £542.
Southern Water wants to be allowed to increase bills by 84%
SOUTH WEST WATER
Environment Secretary Steve Reed said “the public are right to be angry” about the state of the water industry but promised the Labour government would “clean up our rivers, lakes and seas for good”.
Ofwat said the increase would pay for a £104 billion upgrade of the water sector to deliver “substantial, lasting, improvements for customers and the environment”.
However, despite the average £31 a year increase figure, households will face a heavy average hike of £86 or 20 per cent in the next year, excluding inflation, with smaller percentage increases in each of the next four years.
The average bill will rise by a total of £157 or 36 per cent over the next five years.
Thames Water is to be allowed to hike consumer bills by 35 per cent by 2030 following a decision by the industry regulator, as it was also handed an £18.2 million fine for paying “unjustified” dividends to shareholders.
The average annual bill will rise to £588 by 2030, Ofwat said, up from current levels of £436.
The ruling falls well short of the 59 per cent Thames Water had said it needed in the run-up to the decision, as the embattled water company tries to negotiate a bailout.
The company, which serves about 16 million people in London and the South East, is in the grip of a funding crisis and needs a £3 billion loan from creditors to keep operating beyond March.
Ofwat said the £18.2 million fine was for paying £158.3 million in dividends to shareholders which it said were not justified.
The regulator said it will claw back £131.3 million of the payments so it does not come out of customer bills.
Ofwat chief executive David Black said: “Today marks a significant moment. It provides water companies with an opportunity to regain customers’ trust by using this £104 billion 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.
“We have robustly examined all funding requests to make sure they provide value for money and deliver real improvements, while ensuring the sector can attract the levels of investment it needs to meet environmental requirements.
“This has seen us remove £8bn of unjustified costs compared with companies most recent requests. In addition, our approach to setting a rate of return has saved customers £2.8 billion.”