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The BBC understands that water bills will rise more than previously thought over the next five years to cover increased costs and further investment.
Regulator Ofwat is deciding how high customer bills will be allowed to rise.
In July, Ofwat tentatively agreed to allow bill increases of 21% above inflation between 2025 and 2030.
However, it is thought the bill is likely to rise even more after Ofwat makes its final decision at the end of the year.
The government is expected to announce plans later this week that are expected to lead to the biggest overhaul of the water industry since privatization in the late 1980s.
The aim is to protect customers from the effects of rising rates, while also securing funding for the huge investments needed to address population growth, the effects of climate change and aging water infrastructure.
The price increases proposed by Ofwat in July varied widely by company, as the whole sector faced challenges.
The highest agreed increase was 44% for Southern Water and the lowest was 6% for Affinity Water.
Thames Water, the UK’s biggest water company, was given the green light to increase prices by 23%, but has since said it cannot survive unless it increases prices by 59%.
Thames shareholders earlier this year rejected a promised infusion of funds into the company, saying it would be impossible to make a profit at the proposed level of legislation.
The BBC understands that one of the reasons Ofwat is considering allowing larger bill increases is to reflect rising funding costs.
A new independent commission with a prominent chair will be announced on Wednesday to advise the government on a “proper reset” for the industry to improve performance and attract new investment.
The committee’s review will seek opinions from a wide range of stakeholders, including customers, environmental groups, investors, and engineers, whose interests may not necessarily align.
“Doom Loop”
Customers are outraged by the scale of the spill and contamination, but investors say the amount awarded is not enough to attract the investment needed to fix the problem.
Some companies are stuck in what one executive described as a “loop of doom.” Underperforming companies are fined for sewage discharges and leaks, leaving them with even less money to fix the very problems they were fined for.
Investors have also been criticized for dividends and executive compensation paid amid rising pollution and leaks.
In short, no one is happy with their current setup.
Ofwat, the main regulator, is expected to welcome plans to establish a new commission.
But many see this as a reflection of broader dissatisfaction with the way the industry is regulated, with some arguing that Ofwat has struck the wrong balance between keeping customer bills low and encouraging investment. There is.
The new committee is not expected to report until Ofwat makes a final decision on how much the bill will rise by 2030.
