Water bills in England and Wales will drop by an average of £3 over the next five years following regulator Ofwat’s announcement of its final decision on prices.

The regulator had proposed a bigger average cut of £14 in July, but said that its decision today meant average bills would still be £34 lower than under price plans proposed by the water companies.

As a result of Ofwat’s decision, the average bill in England and Wales will be £340.

Water bills rise in some areas

Although bills will fall on average, some customers will face big rises depending on where they live. Customers of Essex and Southern Water will fare the worst – bills will go up 13% over the same five year period – while Bristol Water's bills are set to rise by 7%.

Although Ofwat had initially called for no increase in its prices, the UK's biggest water company, Thames Water, will now be allowed to raise prices by 3%. Earlier this year, Thames Water revealed it wanted to increase prices by 17% over five years in order to invest in London's ageing water network.

Some customers will see bigger than average cuts – in the Anglian Water and Welsh Water regions, bills will go down by 7% over the five year period.

'Seven out of 10'

Consumer watchdog, the Consumer Council for Water cautiously welcomed Ofwat's final decision, awarding it 'seven out of 10', and saying the regulator's original price cutting plans were 'arguably unrealistic'.

Chairwoman Dame Yve Buckland said: 'Even though prices are generally flat, there is still an issue of affordability for many water customers.

'When we ask them "are your water bills affordable?", one in five customers tells us no. We are concerned that this reduction in prices still isn't sufficient to solve the problem, so we will continue to press government to provide better support for such households.'