Smart Meter Trials to Bring Surge Pricing for Water Use During Heatwaves
Millions of households across the UK could face higher water bills during summer and droughts as water companies begin surge pricing trials using smart meters.
Fifteen water companies are set to pilot new tariff structures over the next five years, targeting households with smart water meters. Under these schemes, water costs will rise during periods of high demand or water scarcity, such as heatwaves or when hosepipe bans are in place. Prices may also escalate as individual usage increases, with some customers paying more the more they consume.
The trials come as part of an effort to reduce national water consumption, backed by both Ofwat, the industry regulator, and the UK Government, which supports a nationwide rollout of smart water meters. Ministers believe these measures could help avoid water rationing and hosepipe bans during periods of extreme weather.
Ofwat has stated that these pricing models aim to reflect water scarcity, allowing utilities to “charge a premium for very high use, particularly at times when water is scarce.”
One model under trial is the “rising block” tariff, already being tested by Severn Trent, where:
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The first 5,000 litres per month are billed at a reduced rate.
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The next 5,000 litres are charged at the standard rate.
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Usage above 10,000 litres incurs a higher charge.
Thames Water’s version will see households using 685 litres a day—equivalent to running a hose for 40 minutes—charged double the normal rate.
Anglian Water is exploring seasonal tariffs that increase charges during summer to discourage discretionary water use, such as watering lawns, using sprinklers, or filling swimming pools. The company previously noted that smart meters could make it feasible to apply additional fees for high-consumption activities like hosepipe use or outdoor taps.
Currently, around 500,000 households in England and Wales have smart water meters installed, though the rollout has faced criticism, particularly in water-stressed areas where meters have been introduced without customer consent.
Meanwhile, parts of the South East and Yorkshire are facing hosepipe bans this month, as recent heatwaves and temperatures nearing 32°C have pushed regions into drought conditions. According to Southern Water, the average household of four already consumes 438 litres of water daily, a figure that can double during hot weather, increasing the risk of high charges under the new tariff systems.
Despite the controversy, water firms and regulators insist that surge pricing is necessary to promote conservation, protect supplies, and prepare for more extreme weather events driven by climate change.
Concerns Grow That Smart Meters Could Be Used to Penalise Hosepipe Ban Breaches
Concerns are mounting that smart water meters could be used to penalise households that breach hosepipe bans, as water companies expand their use of surge pricing and consumption tracking.
Although fines of up to £1,000 can be imposed on those who flout restrictions, enforcement has traditionally relied on neighbour reports and rarely results in penalties. However, with the increasing rollout of smart meters capable of closely monitoring usage, critics warn that companies may begin using the data to detect and punish excessive water use during official bans.
The issue has gained urgency after South East Water imposed a hosepipe ban on Friday, shortly after Yorkshire Water introduced similar restrictions. Thames Water is also considering a ban as parts of the country endure ongoing drought conditions.
South East Water is among 15 water companies trialling surge pricing schemes, which charge households more if they consume higher volumes of water. Under Thames Water’s proposed tariff, customers using more than 685 litres a day—roughly equivalent to 13 washing machine cycles or eight full baths—would pay double the standard rate.
In another example, a pilot programme by South West Water estimated that a keen gardener’s annual bill could rise by £22, while a resident in a small flat might save £1 per year under the usage-based pricing model. The company is now preparing to introduce “peak summer demand tariffs”.
As smart meter coverage expands and pricing structures evolve, both consumer advocates and industry observers are calling for greater transparency and safeguards to ensure customers are not unfairly penalised during times of water scarcity.
