Water/wastewater
The funding sits outside the regulator’s standard five-yearly price review.
The decision cites PFAS contamination alongside demand growth from housebuilding and data centres as drivers of the extra spending.
The regulator confirmed the decision on 13 August 2026. It was reached through Ofwat’s Cost Change Process, a mechanism introduced to let companies access extra funding between full price reviews.
The process covers cases where costs or requirements were uncertain when the 2024 Price Review (PR24) final determinations were set in December 2024.
It sits on top of, rather than instead of, the existing £104bn AMP8 investment programme already under way.
The 13 companies had requested £4.3bn in total. Ofwat ruled £752m either fell outside the agreed scope of the process or lacked sufficient evidence of need.
A further £143m was rejected over gaps in cost estimates and options analysis submitted alongside the requests.
Of the remaining £3.533bn judged eligible, £3.39bn, around 96 per cent, has been provisionally allowed in the draft determinations.
Ofwat said requests were scrutinised over a three-month period to confirm they represented the right option and offered value for money.
It also checked that customers were not being asked to pay twice for work already funded under PR24.
Within the approved total, £1.2bn will safeguard existing services and assets for future generations.
A further £477m is earmarked for growth pressures including housebuilding and data centre development. £34m will go toward managing PFAS and other forever chemicals to protect drinking water supplies.
The PFAS allocation includes funding brought forward for Wessex Water treatment works originally scheduled for the 2030 to 2035 period. This follows additional requirements from the Drinking Water Inspectorate.
Company allocations across the wider package vary widely, ranging from £1m or less for Welsh Water and Hafren Dyfrdwy, to almost £1bn for United Utilities.
United Utilities received the largest single allowance, at £995m, followed by Southern Water with £749m and Northumbrian Water with £554m.
Severn Trent Water was allowed £329m and Thames Water £301m. Together these five companies account for the great majority of the total approved.
Some of the approved funding remains conditional on companies supplying further information ahead of Ofwat’s final determinations.
All allowances carry Price Control Deliverables. Companies that fail to deliver the associated outcomes will be required to return the funding to customers.
Ofwat said: “We will track performance to ensure companies are delivering the expected improvements for customers and the environment. If they don’t, expenditure can be clawed back.”
The vast majority of the additional cost will be recovered from customers after 2030. Five companies, however, have been allowed to raise bills within the current period.
According to reporting citing Ofwat data, the additional cost added to bills across 2027 to 2030 will reach £80 for Southern Water customers.
By comparison, the increase is £8 for both Thames Water and Severn Trent customers, £11 for Wessex Water customers and £1 for South East Water customers.
These increases sit on top of rises already agreed under PR24 for the current price control period.
The draft determinations are open for public consultation until 5pm on 24 September 2026. Ofwat expects to publish final determinations in December.
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