Water firms in England and Wales will have to cut the average bill by £50 over the next five years, under plans published by the industry regulator.
The move is part of water regulator Ofwat’s approval of a huge investment plan for water companies, aimed at improving their performance.
The regulator also wants water firms to cut water lost to leaks by 16%.
Oftwat chief executive Rachel Fletcher said it was “firing the starting gun on the transformation of the industry”.
“Now water companies need to crack on, turn this into a reality and transform their performance for everyone,” she added.
The framework, which comes into effect on 1 April 2020, has been hammered out over the course of this year. The draft determinations were set out in July.
Building work will include a new reservoir in Hampshire and the construction of a pipeline connecting water supplies from North Lincolnshire to Essex, said the regulator.