The two companies claim they have experienced significant changes to costs and revenues that were too uncertain when Ofwat set the original price limits for 2005-2010.
Ofwat's Chief Executive Regina Finn said, "We set price limits at a level that is designed to protect customers and allow efficient companies to finance their functions so that they can continue to deliver high quality services to customers at a fair price.
"Both companies have come forward with proposals that would lead to increased prices to customers. We will challenge these proposals and question the companies strongly on their reasons.
"Proposed increases will only be allowed if they are fully justified," she said.
Bristol Water and Dee Valley Water say they need to increase their customer charges becasue:
- Customers are takin-up more free meters.
- Household bad debt and debt management costs have risen; and
- Costs to abstract water from rivers, streams and canals have risen.
Ofwat will publish its draft decisions for consultation at the beginning of November 2007, and final decisions in mid-December 2007.
Any revisions to price limits will apply to customers' bills from April 2008.
Chair of the Consumer Council for Water Western, Charles Howeson, said opf the potential increases in Bristol, "Any increase in prices is unwelcome, and a potential increase of £15 for the average householder spread over the next two years is a concern.
"However, at the same time the level of service provided by Bristol Water cannot be allowed to slip, and the company must also deliver the improvements to their infrastructure which they are committed to up to 2010.