Bristol Water has been told it must reduce bills for householders after it rejected an earlier ruling by the regulator.
Ofwat had previously told the water firm to cut bills by 19% for the 2015-2020 period as part of its price controls.
Bristol Water however argued that would not leave sufficient funds to run the business and invest.
It was referred to the Competition and Markets Authority (CMA), which said the company should reduce water bills by 17% as part of its “provisional findings”.
Inquiry Group Chairman Anne Lambert said: “Our provisional findings would result in substantial reductions in bills as compared with Bristol Water’s plans, although they involve a small rise above the price limits set by Ofwat.
“As part of this process, we provisionally rejected several projects proposed by Bristol Water which would have increased its expenditure – and ultimately bills – because we did not consider they were fully justified and in the interests of customers.”
A final price determination must be issued by 3rd September.
Bristol Water’s CEO Luis Garcia added: “Following four months of challenge by the CMA panel, the provisional findings are positive in some areas. We will continue until the conclusion of the process on 3rd September to ensure we can deliver what our customers want – a reliable and quality water supply – at an appropriate bill level.”