Consumer bodies have criticised the increases

The 18% increase is larger than expected, although the figure falls short of the 29% increase demanded by water companies.

Water firms say the extra cash is needed for maintenance and improvement work and environmental projects.

Consumer bodies say help must be given to those already struggling to pay.

Regional variations

"These decisions... will enable water companies to meet the needs of customers and the environment while continuing to deliver a safe and reliable service," Philip Fletcher, director general of Ofwat's water services said in a statement.

But he admitted that the increases would be unwelcome, "especially to customers on low incomes".

Maurice Terry of consumer body WaterVoice said millions of water customers would find the increases "neither affordable nor acceptable".

Customers on low and fixed incomes will not describe six times inflation as affordable Dr John Ford, WaterVoice Wales Q&A: Why are water prices rising?

"The government must act immediately to ensure that customers on low and fixed incomes receive effective help to pay their water bills, through the mainstream tax credits and benefits system," he said.

Dr John Ford of WaterVoice Wales said: "The 2005 increase, averaging 14.2% plus inflation for Welsh Water, is more than six times inflation."

"The government gave its ministerial guidance that the increase should be 'affordable'. Customers on low and fixed incomes will not describe six times inflation as affordable."

The watchdog says the expected average rise also masks large regional variations between different water companies.

The biggest rise will see customers of Southern Water, South West Water and Wessex Water paying an extra 25% over five years on their current average bill.

South West Water will have the highest average bill by 2009-10, at �444 a year.

Sewer problem

Ofwat in a draft proposal in August said bills would rise by 13% but after listening to customers, consumer bodies and water companies, the watchdog decided a bigger rise was necessary.

"In particular, more investment is needed to prevent internal flooding of homes, as a result of overloaded sewers," an Ofwat spokesperson told BBC News.

Ofwat also said the increase was needed so pipes and treatment works can be maintained.

The increases are necessary to enable us to deliver all of the obligations required of us Bob Baty, South West Water

The body added that 3,000 schemes to improve rivers and coastal waters and 500 investigations to inform decisions on future and environmental protection would also require additional funds.

"The increases are fair to customers, fair to the environment and fair to companies," Ofwat said.

Thames Water has said it may appeal to Britain's Competition Commission over the rise - which is lower than the increase asked for by the water companies.

"This is not a decision we would take lightly, but it is a step we are prepared to take, if we conclude that Ofwat has not made adequate provision for the work we know is needed over the next five years," Thames Water said in a statement.

"The increases are necessary to enable us to deliver all of the obligations required of us," said Bob Baty, chief executive of South West Water.

AVERAGE ANNUAL HOUSEHOLD WATER BILLS
Water and sewerage
Company	2004/05	2009/10	Rise
Anglia	�294	�313	7%
Northumbrian	�232	�260	12%
Severn Trent	�221	�265	20%
South West	�357	�444	25%
Southern	�259	�324	25%
Thames	�210	�261	24%
United Utilities	�269	�322	20%
Welsh Water	�286	�352	23%
Wessex	�276	�347	25%
Yorkshire	�243	�288	18%
Source: Ofwat