Water companies could be allowed to charge customers more during droughts as watchdog considers giving green light to 'surge pricing'

By JOSHUA HAINING, NEWS REPORTER Published: 11:47, 16 August 2026 | Updated: 11:49, 16 August 2026 Water companies could charge customers more during droughts as Ofwat considers giving the green light to 'surge pricing'. The Water Services Regulation Authority will allow firms to fluctuate prices in a bid to reduce consumption. If the go-ahead is given, factors including 'water scarcity', the time of year and usage would contribute to suppliers hiking prices. But the proposals, which would come into force in April next year, have yet to receive a final approval from the water regulator Ofwat. Details of the pending price changes emerge as the UK is experiencing prolonged droughts, hosepipe bans and wildfires erupting across the nation. Water companies could utilise surge pricing if it comes into effect by imposing seasonal charges where users would pay more during summer and less during the winter months. Usage tariffs could similarly hike prices for homeowners if they pass a specific threshold of water use. Households would then be incentivised to conserve water if droughts scourged the UK next summer. Woodhead reservoir near Manchester, pictured, as more than two-thirds of the UK suffers under drought conditions The bed of Bottoms Reservoir begins to crack during low water levels as the heatwave continues People take part in a Parkrun at Perry Hall Park in Birmingham through fields of bone-dry grass Your browser does not support iframes. Both surge and block pricing have been trialled by water companies in small pockets of the UK. In Lincoln and Norwich, 14,000 households using Anglian Water were recipients of the largest trial. An Ofwat spokesperson said: 'The efficient use of water is in the best interests of everyone, including businesses. 'The options we are progressing would support greater consideration of water scarcity and efficiency by water companies when setting their charges, and encourage more tariff innovation. 'We recently carried out a period of consultation on the proposals and will reach a final decision in the near future.'   The potential green light for 'surge pricing' comes as Ofwat announced on August 13 that water bills would rise again for more than 30million people. The water regulator was branded 'toothless' after it granted five water suppliers permission to raise bills above previously agreed levels – despite them losing billions of litres to leaks. Prime Minister Andy Burnham said he was 'angry' at water companies using customers 'as a blank cheque' but has been challenged over what he is going to do about it. Dried fields as far as the eye can see in Weymouth, pictured on August as the fifth heatwave began A view of the ancient stone circle Stonehenge in Wiltshire surrounded by yellow, dried grass A wildfire alert issued by the UK Government seen on a mobile phone screen on August 14 Your browser does not support iframes. Your browser does not support iframes. Scandal-hit Thames Water was granted permission to hike bills again between 2027 and 2030, along with Southern Water, South East Water, Severn Trent and Wessex Water. Three water firms have imposed hosepipe bans on more than 20million people this summer. Ofwat said it had given suppliers the provisional go-ahead for the unexpected hike in bills to fund £3.4billion-worth of new projects, including infrastructure for housing and data centres. But the water regulator has already allowed suppliers to hike bills by 36 per cent between 2025 and 2030, with eye-watering increases last year and another 5.4 per cent on average bills from April. Some 13 water companies applied to increase bills to fund investment of £4.3billion, and Ofwat announced yesterday it had provisionally allowed five to do so for £3.4billion of new projects. The 2.7million people supplied by Southern Water will see bills rise by £80 over the next two years. Southern – which lost about 37 billion litres of water through leaks last year – has the most expensive bills, with customers paying an average of £759 a year after an 8 per cent rise this year. Thames Water – which Mr Burnham is expected to put into special administration to stave off its collapse as it sinks under £20billion in debt – was also allowed to increase bills for its 16million customers, as was Severn Trent, which services some 8 million. Devastating wildfires have hit parts of the UK including Stourbridge, pictured, during the drought Charred land and burnt houses following the huge wildfire in Stourbridge on August 14 Your browser does not support iframes. Thames Water caused fresh outrage this week after it emerged it had paid a £1million signing-on fee to its new chief financial officer, Steve Buck. Meanwhile the 1.4million people supplied by Wessex Water will see bills rise by £11 over the next two years, while the 2.3million supplied by South East Water will see a £1 rise. Ofwat will consult on the proposed rises until September 24, with a verdict due in December. A spokesperson previously said: 'We will track performance to ensure companies are delivering the expected improvements for customers and the environment. If they don't, expenditure can be clawed back.'