Higher water bills on the way?

WaterVoice says that this year's planned average 31% price rise will still leave providers underfunded.

The main question mark hanging over the issue is how far companies will have to go to meet European Union rules.

Power companies said on Monday that the UK's tough enforcement of EU directives would lead to higher prices.

'Distracting' regulations

Some industry leaders and observers have complained that the government requires them to go further than required by the EU, costing them extra money and placing unnecessary burdens on the companies.

The process is called "gold-plating" and while improving many of the services offered, can at the same time lead to other problems.

Maurice Terry, chairman of WaterVoice, said such demands may "distract water companies from work which has more direct impact on and urgency for consumers such as measures to tackle sewer flooding".

Extra costs

According to the group, Yorkshire Water claims that one EU directive alone is set to cost it an extra �347m ($628.4m; 501.8m euros).

The total cost to the industry, estimated at �4.7bn, will probably now be many billions more, WaterVoice said.

The companies will also have to implement new accounting and tax rules.