Households in England and Wales will be hit by an average 3.5% rise in water bills in April, taking the typical bill to £388 a year, the regulator Ofwat has announced.
A leading debt charity said the increase was “very bad news for consumers” and criticised Ofwat’s decision to allow bills to rise by more than the rate of inflation.
Customers of Thames Water face the biggest percentage rise in water and sewerage bills, with an increase of 5.5% pushing the average bill up to £354.
Southern Water bills will rise by 5.3% with an average payment of £449, while households supplied by Wessex Water will face an average bill of £478 – an increase of 4.9%.
South West Water customers’ bill will fall by 7.3%, or £40, thanks to a £50 subsidy from the government designed to address the region’s disproportionately high bills. However, water and sewerage bills in the region remain the highest in the country, with households paying an average of £499.
New charges will vary for households depending on their supplier and whether they have a water meter.
The regulator said the increases will help pay for an investment programme worth about £25bn between 2010 and 2015.
Ofwat made decisions on pricing in 2009, and said since then increases had remained broadly in line with inflation. April’s rises are based on November’s Retail Price Index figure of 3%.
Ofwat’s chief executive, Regina Finn, said: “Back in 2009, companies wanted bill rises of 10% above inflation.
“That didn’t chime with what customers told us they wanted, so we said they could only increase bills in line with inflation. We understand that there is huge pressure on household incomes, and any rise is unwelcome. Inflation is driving these increases.”
“We will make sure customers get value for money and if companies fall short in delivering their investment promises, we will take action.”
However, a spokeswoman for the StepChange debt advice charity said above-inflation rises were a cause for concern at a time when households were already struggling with bills.
In 2011, 7.3% of the charity’s clients had water arrears worth an average £545, but in 2012 this rose to 10.3% and an average debt of £786. The highest debts were faced by single parents, at an average £1,090, the charity added.
“Water is a necessity, so an above-inflation price rise on an essential such as this means that many families will be forced to make very difficult choices in order to pay their water bill.”
The announcement comes at a time when water companies continue to bank healthy profits. In 2011-12 Southern Water made £80m profit, with its chief executive Matthew Wright receiving total pay worth £632,000. Similarly, in 2011-12 Thames Water made a profit of £247.2m, with chief executive Martin Baggs taking home total pay worth £896,000.
Finn, of Ofwat, said: “In the past seven years, we have made companies pay out around £550m where they have underperformed.”
The regulator also announced proposals to change the way it regulates the water and sewerage sectors to ensure more sustainable water use