Great news for consumers’ water bills - we can expect our water bills to fall significantly over the next couple of years, nullifying many water companies’ plans to increase prices by - in some cases - as much as 17%, reports Times online.

Ofwat has decided that the monopolistic position of many water companies has allowed them to get away with price rises, whereas in other markets consumers can shop around for better value, and has thus mandated that prices will fall over the next couple of years.

Water companies will have to juggle lower revenue with an expectation for the same amount of investment, which has lead to criticism that neither can be achieved simultaneously. The chief executive of Water UK, Pamela Taylor, has voiced concerns that the propositions will undermine investment, alluding to Ofwat’s myopia and stating that they had ‘lost their longer term imperative’.

The announcements to curb revenue obviously led to a steep fall in the share prices of the bigger water companies, in particular Severn Trent and United Utilities.

Water companies will be expected to further invest in network improvements, reducing leaks, improving flood defences and replacing antiquated Victorian sewerage networks. Regina Finn, Ofwat’s chief executive, assures that there will be £21bn still available to fund the investment despite price and revenue cuts.

The announcements came as part of the draft recommendation for the period 2010 to 2015, in which Ofwat decides on how much should be invested and how much they are allowed to earn for their shareholders.

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