Anglian Water says the pegged rise is very tough

In draft price limits published on Thursday, Ofwat said customers should pay no more than was necessary to deliver safe and efficient services.

The proposed rise would take an average Anglian Water bill from �294 to �303.

However �6 of the average increase would be required in the first year to help meet the company's costs.

The �9 average rise is for customers who are billed by the company for both water and sewerage services.

Customers of Anglian would be paying significantly less than the �33 average bill increase for England and Wales as a whole Philip Fletcher of Ofwat

Bills for customers of two of the three companies which provide water services only in the eastern region will also rise.

Cambridge Water prices will go from an average of �91 to �98 over the five years - just over half of the company's proposed increase of 17.3%.

Essex and Suffolk Water's average bill will go up by �11 in the same period - from �132 to �143.

Tendring Hundred customers will actually be paying less in five years. Their bills will go down from an average �162 to �152.

'Fair' proposals

Ofwat's director general of water services, Philip Fletcher, said he believed the proposals were fair to customers and companies and would benefit the environment.

"Customers of Anglian would be paying significantly less than the �33 average bill increase for England and Wales as a whole," he said.

"We have worked hard to protect customers from unnecessary bill increases and ensure that water companies continue to offer them value for money for the services they receive."

He said by 2009 Anglian Water customers would be paying 3% less on average, before inflation, than they were in 1999.

'Tough and demanding'

The proposed rise would give the company �1.4bn - �400m less than the �1.8 it sought over the next five years.

An Anglian Water spokesman said: "We will be evaluating this over the coming weeks but at first glance it is a very tough and demanding draft determination.

"We were only looking at an increase of �17. What we are looking at now is an increase of just 3%. We will have to look at the detail very carefully to see what we will and what we won't be able to do."

Water companies have until 15 September to make representations on the proposed prices.