On Thursday the water regulator Ofwat will announce how much it thinks average water bills should rise in England and Wales over the next five years.

But how are bills set and what can you expect to pay?

Most people in England and Wales get their water from one of 17 companies and have their waste water taken away by one of 11 companies.

Households cannot choose which supplier they use – it is down to here they live.

The water regulator Ofwat determines the levels of service all customers can expect and how much it will cost to keep services running efficiently under five-yearly “price reviews”.

Each water company creates a plan for services and household bills for the next five years.

Ofwat assesses the plans and takes decisions on how much money water companies should invest in protecting the environment and upgrading the water system. This determines future water bills.

The results of Ofwat’s next price review will be announced on 11 July and will help companies set bills for the period 2025-2030.

While Ofwat sets limits, it is ultimately up to water and sewerage companies in England and Wales to decide what they charge households.

Typically this means bills differ regionally, while factors such as inflation, water company performance and a household’s income may also affect what individuals pay.

Households in England and Wales are typically billed for water in one of two ways:

• Unmetered customers pay a set amount for their water and sewage services, regardless of how much water they use. This is usually based on the rateable value of their home – an approximate assessment of the annual rental value of a property.
• Metered customers only pay for what they use. They have readings from their water meters collected by the water company.

All households pay for sewerage services as well, either as part of their water bills or separately if their water company doesn’t deliver wastewater services.

The water industry has called for bills to rise by an average of 33% over the next five years, starting from the next financial year (2025-2026). But we’re unlikely to know the final figure until December following a consultation period.

The average bill is set to increase by a forecasted £27.40 in the current financial year (2024-25) to £473, according to Ofwat – something water companies attribute to having to invest more in their networks.

Nevertheless, bills remain below what they were in 2019-20 when they stood at £503 a year.

As part of its price reviews, Ofwat sets performance targets to encourage water companies to meet their commitments to customers and the environment.

They are expected to reduce leakage, pollution incidents and sewer flooding.

If a company beats its targets it may get a financial reward. If it performs worse it may face a penalty.

The companies reflect these costs in annual adjustments to customer bills. In 2024-25 water companies will have to pay back £114m to customers after missing key targets.

A small number of Scottish households have water meters, but most pay for water and sewerage as part of their council tax, with charges varying depending on their council tax band.

Average bills will rise by £35.95 in 2024/25, according to Scottish Water. Someone living in a council tax band C property will pay on average £485.68 for water and sewerage services this year.

Households in Northern Ireland are not billed for water. Last year there was a consultation on introducing water charges to raise revenue.

Following the restoration of the Northern Ireland Executive after a two-year hiatus, First Minister Michelle O’Neill ruled out introducing water charges.

Social tariffs: Every water company has a social tariff scheme which can help reduce your bills if you’re on a low income. Who is eligible and the level of support varies depending on your water company

Get a water meter: Meters can save you money on your bills. Every household can apply to have one installed and if that is not possible, the water company must offer something called an “assessed charge” which may also save you money.

Sewage service rebates: Households may be able to get a rebate for certain sewerage services if they can prove they do not use them.

Use less water: Many water companies now offer customers free water-saving devices. Look out for unexplained increases in your bills – it may mean you have a leak.

Individual water companies may offer debt support programmes, financial hardship funds or payment breaks among other measures.

For advice on what to do if you are struggling visit the Consumer Council for Water’s website.