The decision will affect customers of five suppliers before the end of the decade, while other costs will be reflected in bills during the 2030s. According to The Guardian, the industry had asked for £4.3bn in additional spending after Ofwat said companies could seek further allowances where costs had previously been uncertain or unknown.
Five Suppliers Can Raise Bills before 2030
Southern Water, Thames Water, Severn Trent, Wessex Water and South East Water have been provisionally permitted to increase bills between 2027 and 2030 to help fund the additional investment. Water companies had already been allowed to raise bills by 36% between 2025 and 2030, with an average increase of 5.4% taking effect from April this year.
Southern Water customers face the largest additional rise. According to This is Money, they will pay £43 more next year and a further £37 by 2029. Thames Water bills will rise by £3 in 2027 and £5 a year by 2029, with the same increases applying to Severn Trent. Wessex Water customers will pay £4 more in 2027 and £7 more by 2029, while South East Water will add £1 in 2029.
The wider price settlement had already allowed Southern Water bills to rise by 53% by 2030 to £642. Severn Trent customers were facing a 47% increase, while customers of Dŵr Cymru and Hafren Dyfrdwy were set for rises of 42%.
Thames Water, which supplies around 16 million customers, is also under significant financial pressure. The Standard reported that the company has more than £20bn of debt and is seeking a rescue agreement with creditors as it tries to avoid temporary nationalisation.
Extra Funding Targets Housing, Data Centres and Water Quality
Ofwat said £1.2bn of the additional spending would be used to safeguard water services and assets, while £477m would support housebuilding and data-centre development. Another £34m has been allocated to reducing toxic chemicals in the water system and improving drinking water.
The regulator has linked some of the new allowances directly to infrastructure needed for planned development. According to The Guardian, United Utilities has been permitted to invest in new water infrastructure serving data centres in East Manchester, while spending at Newquay Wastewater Works is intended to support residents and growing tourism.
United Utilities was granted £995m of the £1.11bn it requested. Severn Trent received approval for £329m of a £481m request, while South West Water was allowed £180m against a request for £239m. Ofwat rejected £752m of proposed spending, including cases where companies had not delivered work that had already received funding.
Helen Campbell, Ofwat’s executive director for delivery, said the funding would help support housing development, business growth and improvements to drinking water, including the removal of PFAS and other “forever chemicals”. She said the regulator would monitor delivery and could claw back expenditure if companies failed to provide the expected improvements. Ofwat will consult on the draft determination until 24 September, with a final decision due in December.
