The Competition and Markets Authority has just announced it has given five water companies the go-ahead to increase bills beyond the levels determined by Ofwat in its PR24 final determinations in December 2024.

Anglian Water, Northumbrian Water, South East Water. Southern Water and Wessex Water had appealed to the competition regulator to allow them to invest more in their infrastructure.

While the CMA has rejected nearly 80% of increases sought by the companies, the CMA has agreed that the water companies can increase bills by an additional 3% on average.

The extra money will be used to fund more resilient supply, reduce pollution and reflect increased financing costs.

The five companies had argued that Ofwat’s decision left them unable to meet the regulatory requirements set out for them. Following their individual final determinations, each of the companies chose to exercise its legal right to request a redetermination of Ofwat’s decision by the CMA. The disputing companies serve over 7 million household and business customers and have a combined annual revenue of around £4 billion.

The competition authority is required by law to undertake redeterminations under the current regulatory system, with more fundamental decisions about the water sector necessarily reserved for government. A maximum of 12 months is allowed for this complex process, compared to the 4 years in which Ofwat conducts its price control.

The provisional redetermination

Indicative impact of CMA’S provisional determinations on annual customer bills

The table contains forecasts of average water bills – actual bills will vary according to factors such as average customer water consumption and company performance. The prices have been adjusted for inflation using the consumer prices index including owner occupiers’ housing costs for 2022/23. Water bills for South East Water do not include the cost of wastewater services as it is a water-only company.

Next steps

The CMA will now consult on its provisional redecision Over the last 7 months, the Independent Group of experts appointed by the CMA has scrutinised extensive evidence from the disputing companies, Ofwat, and over 40 third parties (including representatives of investors, environmental and consumer groups).

In its provisional decisions, the CMA has balanced minimising the impact on people’s bills with the need for companies to have enough funding. This includes funding to meet their environmental and drinking water quality legal obligations, and for investor returns to reflect the risks involved – so companies can raise the money to deliver better outcomes for current and future customers.

The CMA has provisionally decided to allow 21% – an additional £556 million in revenue – of the total £2.7 billion the 5 firms requested. The extra funding is expected to result in an average increase of 3% in bills for customers of the disputing companies, which is in addition to the 24% increase for customers of these companies expected as part of Ofwat’s original determination.

The CMA said the additional funds should allow the companies to meet new legal requirements and to fund delivery in critical areas, like supply resilience and pollution reduction. The panel also accepted the need for slightly higher investor returns than allowed by Ofwat. This is in part because the cost of equity has increased due to rising interest rates over the last year which is making investment more costly to secure.

Howver, the CMA said it has decided to “largely reject companies’ funding requests for new activities and projects beyond the significant increases already allowed by Ofwat.” Some exceptions were made where the Group found that more spending was needed to deliver benefits to consumers, or that companies’ ability to invest had been underfunded.

The funding has also been tied to defined outputs and required levels of performance, making clear that customers should benefit from bill increases they are bearing and that companies should be penalised when they do not deliver.

Changes have also been made to Ofwat’s economic modelling so that allowances more accurately reflect differences in operating environments between companies, while applying a stretching efficiency challenge so that customers served by inefficient companies do not pay for poor operational performance.

Chair of the Independent Group Kirstin Baker said:

“We’ve found that water companies’ requests for significant bill increases, on top of those allowed by Ofwat, are largely unjustified. 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."

Commenting in response, an Ofwat spokesperson said:

“The CMA is an important part of the price control process, which is delivering record levels of expenditure to drive improvements for customers and the environment. We will now review and consider the CMA’s provisional determinations in detail and respond to their consultation.”

CCW: “further increases will be very unwelcome”

Mike Keil, Chief Executive of the Consumer Council for Water (CCW), said:

"Many customers are still trying to absorb the impact of April’s unprecedented rise in water bills, so any further increases will be very unwelcome.

“CCW’s own analysis suggests there was an opportunity to reduce these five companies’ financing costs, cutting bills by around £41 a year, but instead the CMA has chosen to increase their rate of return. There is a danger the customers of these companies will end up paying more, without seeing any additional improvements in return.

“Three of these five companies also have no plans to end water poverty by 2030 and yet their customers are being exposed to bill rises that at least 40 per cent of households say they will struggle to afford.”

The CMA is now inviting views on its provisional determinations to be sent to This e-mail address is being protected from spambots. You need JavaScript enabled to view it - deadline for providing views is 5:30pm on Thursday 6 November 2025. The CMA reserves the right to reject any submissions made after the deadline.