Ofwat has said water customers in England and Wales should save between £15 and £25 a year on their bills following its 2019 price review, which sets the limits on prices customers will pay for water between 2020 and 2025.

The reduction has come as financing costs for water companies have fallen from 3.7% in 2014 to 2.4% now. The regulator said the difference should now be passed on to customers.

Ofwat is also calling for water companies to improve the service they provide to customers, such as help for vulnerable customers.

It also wants to address the pressures of a growing population and climate change by addressing water leakages. As such, it wants to see water companies save 170bn litres of water a year, enough to meet the annual needs of 3.1 million people.

Water companies have until September 2018 to submit business plans outlining how they’ll deliver these challenges.

Ofwat chief executive, Cathryn Ross, said: “Today, we unveil our blueprint for how we will push water companies to deliver more for customers through to 2025. The next decade will see profound changes in customers’ expectations and we are pushing the water sector to be at the very forefront of that. The methodology we’ve published today outlines how we will use our price review to get the very best for customers, through higher quality of service and support for those who need it most, all with scope for lower bills.

“We’ve said many times already that this will be a tough price review for companies. We will cut the financing costs they can recover from customers and, with this lower guaranteed return, they will need to be more efficient and innovative than ever before. I’ve no doubt that the sector can step up and meet the challenges we’ve laid before them today.”