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UK Competition Watchdog Rejects Most Water Firms' Price Hike Requests
Published by Global Banking & Finance Review®
Posted on October 9, 2025
2 min readLast updated: January 21, 2026
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Quick Summary
The UK competition watchdog approved a limited 3% water bill hike, rejecting most requests. Thames Water faces financial struggles amid regulatory challenges.
UK Watchdog Approves Limited Price Hikes for Water Companies
Regulatory Decisions on Water Pricing
LONDON (Reuters) -Britain's competition watchdog will allow five water companies to raise their bills by an extra 3%, far below what they wanted, calling their requests "largely unjustified", in the latest challenge for the country's failing water industry.
Impact on Thames Water
Ministers have called Britain's water industry "broken" after repeated sewage spills and amid public anger that water companies have paid dividends and bonuses instead of investing in infrastructure.
Government's Response to Water Industry Issues
The government announced plans for a regulatory reset in July, but it is not clear when the new set-up, which will prioritise the environment, will be established.
CMA's Ruling on Price Increases
THAMES WATER BATTLING TO AVOID COLLAPSE
Meanwhile, the country's biggest water company, Thames Water, is battling to avoid financial collapse, hoping to secure rescue financing from lenders, before then also asking the competition regulator to allow it to lift bills.
In March, five other water firms said the bill increases permitted for the next five years were not enough for them to improve infrastructure to stop pollution, and had taken their cases to the competition regulator.
In its ruling on Thursday, the Competition and Markets Authority said it was rejecting nearly 80% of the increases sought by the companies, Anglian Water, Northumbrian Water, South East Water, Southern Water, and Wessex Water.
"We've found that water companies' requests for significant bill increases, on top of those allowed by Ofwat, are largely unjustified," Kirstin Baker, chair of the Independent Group at the CMA, said in a statement.
The companies had asked the CMA to allow bill rises of between 8% and 18% on top of the average bill increases of 36% already permitted by the water regulator over the next five years. They got 3% more.
Thames Water has until October 22 to decide if it wants to take its case for higher bills to the CMA. Its financial problems date back to last year, when its shareholders called the regulatory conditions "uninvestible".
(Reporting by Sarah Young in London and Yadarisa Shabong in Bengaluru. Editing by Janane Venkatraman and Mark Potter)
Key Takeaways
- •The UK competition watchdog approved only a 3% increase in water bills.
- •Five water companies' requests for higher hikes were largely rejected.
- •Thames Water is struggling financially and may seek further bill increases.
- •The government plans a regulatory reset to prioritize environmental concerns.
- •The CMA found most water companies' requests unjustified.
Frequently Asked Questions about UK competition watchdog rejects most water firms' price hike requests
1What is a regulatory framework?
A regulatory framework consists of the rules, regulations, and guidelines that govern the operations of industries, ensuring compliance and protecting public interests.
2What is infrastructure financing?
Infrastructure financing refers to the funding of large-scale public works projects, such as water supply systems, bridges, and roads, often involving public-private partnerships.
3What is a financial crisis?
A financial crisis is a situation in which the value of financial institutions or assets drops significantly, often leading to economic instability and loss of confidence among investors.