We are the economic regulator of the water and sewerage industry in England and Wales. Our main areas of activity are described below. You can find out more detailed information for each work area by clicking on the links which will take you to other sections of our website.

We set price limits

Every five years we set a limit on the average change that each water company can make to bills in each year. The companies are only allowed what they need to meet consumers’ needs and to deliver national and EU requirements.

We last set price limits in December 2004 for the five years 2005-10. We announced new draft price limits for the period 2010-15 on 23 July 2009. More detailed information about the price setting process is included in our price review section.

Your water bill will vary according to where you live. We publish information on water and sewerage bills for consumers each year.

We protect your interests

We carry out a wide range of activity to ensure that your interests as a water and sewerage consumer are protected. This includes:

• Comparing the companies’ performance to make sure they maintain high levels of service to customers and the environment. As a result of regulation, the industry has achieved huge improvements across a range of services, bringing significant benefits for consumers.
• Working closely with the Environment Agency and the Drinking Water Inspectorate to ensure companies meet environmental and drinking water quality standards.
• Approving each company’s charges schemes to make sure that individual charges are fair for different types of customers.
• Checking that the companies are meeting their responsibilities to customers, such as reducing the number of properties at risk from being flooded with sewage, and undertaking the investment allowed for in price limits.
• Approving the companies’ codes of practice to help them deliver a better service, for example, to customers who need special services or who are in debt.

You can find out more about what we do to protect your interests in our consumer section.

We encourage companies to be more efficient

The price limits we set companies are based on demanding efficiency assumptions. This encourages companies that perform poorly to catch up with the more efficient ones.

We make comparisons between companies, against each individual company's targets, and with other sectors. We seek improvements if this is necessary.

We provide incentives to the companies to keep their running costs and the costs of maintaining their assets to the minimum necessary and to use cost-efficient solutions to achieve their outputs. Where companies are successful, they retain the savings for five years and customers benefit at the next price review through price limits which take account of the efficiencies achieved.

We encourage competition

At present, competition in the water industry is available through two routes:

• inset appointments, which allow one water company to replace another water company in a specific area; and
• water supply licensing, which is limited to very large business customers who are likely to use at least 50 megalitres of water a year, such as paper mills, big industrial sites and universities. A megalitre is one million litres.

We are currently working on a programme of market reform. You can find out more in our competition section.

We promote a sustainable water industry

We want the water companies to be sustainable in all respects. We must also make sure that the water companies can meet the social, financial and environmental challenges of the future. Each company must deliver high-quality services while causing as little damage as possible to the environment.

You can find out more in our sustainability section. This section also contains information about how we are responding to the challenges of climate change and the ways in which we expect the companies to respond.