Millions of households and businesses across England are bracing for yet another hike in their water bills after a crucial ruling by the Competition and Markets Authority (CMA) on October 9, 2025. The decision, which follows months of deliberation and appeals, allows five of the country’s largest water companies—Anglian Water, Northumbrian Water, South East Water, Southern Water, and Wessex Water—to impose additional charges on their customers, albeit far less than the companies had originally sought.
These five firms, which collectively serve more than 7 million customers and rake in around £4 billion in annual revenue, had challenged the initial price controls set by Ofwat, the sector’s main regulator. Ofwat’s determination, published in December 2024 as part of its PR24 price review, had already allowed for an average 36% increase in water bills over the next five years—a jump of about £157 per customer. But the companies argued that even this steep rise wouldn’t cover the costs of urgently needed upgrades to aging infrastructure, environmental improvements, and compliance with regulatory standards.
So, the companies took their case to the CMA, requesting permission to raise an extra £2.7 billion from customers—an ask that would have meant even higher bills for households already feeling the pinch from the cost-of-living crisis. After a seven-month investigation, the CMA’s independent panel delivered its provisional verdict: nearly 80% of the companies’ requested increases were rejected. Instead, the panel approved just £556 million in additional revenue, or about 21% of what the firms had wanted.
The upshot? According to the CMA, the ruling will result in an average extra 3% increase in bills for the affected customers—on top of the 24% increase already set in stone by Ofwat’s earlier decision. For the average household, that means paying about an extra £12 a year, or roughly £1 more per month. While that might sound modest, it’s on top of an already hefty rise, and for many, every pound counts.
Here’s how the numbers shake out for customers of the five companies, based on the CMA’s provisional ruling: Anglian Water customers will see their average annual bill rise to £599 (down from the £649 the company had requested, but up 1% from Ofwat’s figure). Northumbrian Water’s average bill will be £495 (down from £515 requested, up 1%). South East Water customers will pay £286 (down from £322, up 4%). Southern Water’s average bill lands at £638 (down from £710, up 3%), and Wessex Water’s at £622 (down from £642, up 5%).
The CMA’s panel, led by Kirstin Baker, made it clear that their role was to strike a delicate balance between the financial needs of the water companies and the realities faced by households. “We’ve found that water companies’ requests for significant bill increases, on top of those allowed by Ofwat, are largely unjustified,” Baker said, as reported by the BBC. “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.”
Why allow any increase at all? The panel pointed to several factors. One key reason is the rising cost of borrowing: water companies finance much of their infrastructure investment with loans, and recent hikes in interest rates have made those loans more expensive. The CMA said it had modestly adjusted investor returns to reflect these increased financing costs, aiming to ensure the companies can still attract the capital needed for long-term projects.
Another driver is the urgent need to upgrade the country’s creaking water infrastructure. According to the Environment Agency, serious pollution incidents linked to water companies jumped by around 60% in just one year—a statistic that has fueled public anger and political scrutiny. The additional funds allowed by the CMA are explicitly earmarked for improving supply resilience, reducing pollution, and meeting legal obligations on drinking water quality. The panel was adamant, however, that funding for new activities and projects beyond those already approved by Ofwat would be largely rejected. Only a handful of exceptions were made, and even then, spending was tied to clear outputs and performance targets, with penalties for companies that fail to deliver.
The debate over water bills and sector reform has become a flashpoint in UK politics. The Independent Water Commission recently concluded that the sector “requires fundamental reform on all sides,” issuing 88 recommendations for a complete overhaul. The government, in its response, admitted that the current system is “failing the environment, customers and investors,” and promised “root and branch reform.” Yet, for now, the CMA’s hands are tied to the existing regulatory framework, and its job is to make the best of a flawed system. The redetermination process, which the CMA must complete in just 12 months (compared to Ofwat’s four-year cycle), is a stopgap while bigger changes are debated.
Not everyone is happy with the outcome. Consumer advocates warn that even a modest increase will push some families to the brink. Anne Pardoe of Citizens Advice told the BBC, “Ramping up water bills, when people up and down the country are already rationing showers and cutting down on laundry, is going to stretch budgets beyond breaking point.” She called for a national social tariff—similar to those offered for broadband and energy—to help low-income households afford essential water services.
Water Minister Emma Hardy echoed the need for support, saying she expected every water company to “offer proper support to anyone struggling to pay.” Meanwhile, David Henderson, chief executive of Water UK, which represents the industry, defended the need for additional investment. “They [investors] don’t have to put money into this sector, they don’t even have to put money into this country,” he told the BBC, noting that eight water firms had made a loss in 2024 and that many shareholders “haven’t made a profit in years. This isn’t an industry awash with cash. It is an industry providing vital infrastructure.”
One notable absentee from this round of appeals is Thames Water, which has deferred its own case until later in October while it seeks a rescue bid. The company’s predicament underscores the wider challenges facing the sector: mounting debts, aging assets, and growing public and political impatience with both service failures and pollution incidents.
The CMA’s decision is not yet final. Ofwat and the water companies have a window to respond before the authority issues its concluding ruling in the coming months. For now, though, customers of the five companies know what’s coming: another rise in bills, justified by regulators as necessary for fixing pipes and rivers, but for many, it’s another unwelcome squeeze on household budgets.
As England’s water sector faces calls for sweeping reform, this latest ruling offers a glimpse of the difficult trade-offs ahead—between investment and affordability, environmental targets and economic realities. The debate is far from over, but for millions of customers, the impact will soon be felt in their wallets.
