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By Bloomberg

Households in England and Wales received a boost today when Britain’s water regulator published a final price ruling that means the average customer bill will fall about 5 percent beginning in April.

Ofwat published the prices that 19 water and waste companies, including United Utilities Group Plc and Severn Trent Plc, can charge for the five-year period starting 2015. Average water rates will drop by 5 percent before inflation, reducing bills by about 20 pounds ($31) to 376 pounds a year, Ofwat said.

The water regulator sets limits on how much utilities can charge users every five years. The decision is designed to support 44 billion pounds of investments in infrastructure and repairs to curb leaks and sewer flooding including into the Thames River while keeping household costs as low as possible. The price review had been subject to consultations, with some utilities tweaking and re-submitting lower rate plans.

“We are bringing down bills so customers can expect value for money while investors can earn a fair return,” Jonson Cox, Ofwat’s chairman, said in a statement. “Companies will need to stretch themselves to deliver much more with the same level of funding as in previous years.”

The decision means United Utilities, Britain’s largest publicly traded water company, will see its water and sewer bills decline an average of 3 percent over the five-year period. The company on Oct. 3 proposed cutting bills 4.1 percent.

‘Relative Winners’

United Utilities and Thames Water Utilities Ltd. are viewed as “the relative winners following Ofwat’s announcement,” said Neil Griffiths-Lambeth, associate managing director of project and infrastructure finance at Moody’s Investors Service Ltd.

Rates at Severn Trent, the U.K.’s second-largest publicly traded utility, will drop 5 percent. Severn Trent today said it disagreed with Ofwat’s ruling excluding two maintenance projects totaling about 60 million pounds.

Ofwat reduced the allowed weighted average cost of capital to 3.74 percent compared with 3.85 percent in an earlier draft. The cut in WACC, a measure of the cost of debt and equity financing, should provide scope for attractive returns, according to a note from Deutsche Bank AG.

Shares of United Utilities, which serves northwest England, were 2.6 percent higher to 895 pence at 12:45 p.m. local time while Severn Trent rose 1 percent to 1,934 pence.

Takeover Attempts?

Clarity over customer tariffs with today’s ruling means Britain’s water companies are now more vulnerable to takeover attempts, Michael McVeigh, director of corporate finance at Ernst & Young Global Ltd., said on Dec. 10.

Severn Trent in June 2013 rejected a 5.3 billion-pound takeover proposal as too low that was led by Borealis Infrastructure Management Inc. of Canada.

Companies will have two months to accept Ofwat’s decision or challenge it.

“With bills held down by 5 percent and service driven up over the next five years, customers will get more and pay less,” said Cathryn Ross, chief executive officer of Ofwat.

The regulator also said people benefiting from financial support will more than double to about 1.8 million by 2020 from 760,000 who benefit from some financial assistance from their water company. “Over the next five years, companies are putting in place measures such as social tariffs which are forecast to help an additional 1 million people,” Ofwat said.