Proposed increases to two water suppliers’ price caps have been challenged by Ofwat.
Bristol Water and Dee Valley Water said they are facing extra costs because of greater take-up of free meters by customers, rises in the levels of household bad debt and increases in charges to abstract water from rivers, streams and canals.
Ofwat agreed that the two companies were facing substantial costs, but have proposed lower increases than the water suppliers had asked for.
Bristol Water had asked for its cap to be increased from 0.7% in 2004 to 5.6% in 2008-09. Ofwat has recommended 4.6%.
Dee Valley Water proposed an increase from 0.6% to 8.1% but Ofwat said a 4% cap will be sufficient.
A consultation will now run until November 30.