Bristol Water allowed to increase prices on appeal
Bristol Water has been provisionally allowed to increase prices above the five-year limits set by Ofwat.
The company had rejected a decision from the water industry regulator which would stop it from substantially increasing water bills.
Its appeal went to the Competition Commission which decided the company could raise its bills by an average of 2.3% - £4 a year - after inflation.
Bristol Water had asked for a 6% increase, or £34 a year.
Ofwat wanted to keep the increase down to 1.7% a year after inflation.
The decision by the Competition Commission is provisional and a final decision must be made before 6 August.
Appeal group chairman Laura Carstensen said: "A decision to raise bills to customers, albeit only modestly, is only taken after very careful thought and consideration of the evidence.
"Indeed we rejected several projects proposed by Bristol Water, which would have increased its expenditure and hence bills, as well as upholding Ofwat's judgment in a number of other areas.
"However, we provisionally agreed that some extra expenditure - for example, to increase the rate at which Bristol Water can replace mains or to help reduce leakage - was necessary to maintain the quality of service it provides to its customers."
Bristol Water supplies more than one million people and businesses.
A spokesman said: "Bristol Water is studying the findings carefully and will need time to analyse them fully before making any detailed response."
The company has said previously that without its planned increase it will not be able to carry out adequate maintenance work or supply enough water to meet rising demand.
The price limits set by Ofwat for 2010/11 become effective this April, while limits determined by the Competition Commission will take effect from April 2011.