Anglian Water could see its bills reduced from next April

Ofwat said it saw a case for customers to seek lower bills from the firm, which trades under the name AWG.

Anglian, along with other firms in the sector, has sought to raise bills to fund higher construction costs and provide better quality drinking water.

But the industry regulator said it felt the company already had enough money in place for an investment drive.

Ofwat said it believed "it would be entitled to reduce the prices Anglian Water may charge customers from April 2004".

Lower bills

The watchdog said the move could amount to a 2.4% price cut in real terms from the amount determined at the 1999 price review.

"This would mean that the average bill for domestic customers would be �279 from next April, compared with the �285 in 1999," Ofwat said.

Anglian Water said it was disappointed with Ofwat's provisional decision.

The company said it would continue to present its case for higher bills to the regulator before a final decision is made in December.