THAMES Water’s request to increase its customers' bills by eight percent has been rejected by water regulator Ofwat.

The water company had asked if it could add an extra eight percent – about £29 – on to the average household bill for 2014-15.

But Ofwat has decided there is “no case” to allow the increase and ruled Thames Water must stick to a 1.4 percent-above-inflation maximum rise, as set in the latest price review.

Ofwat said: “Thames Water asked us to reset its price limits for 2014-15. We found that the evidence it submitted did not justify its proposed increase in customers' bills.”

Thames Water said it was reviewing the decision carefully and it has the option to take an appeal to the Competition Commission.

The company told Ofwat that it needed to increase prices as it faced extra costs of £291m from items including bad debt, land purchases and increases in charges by the Environment Agency.

Ofwat announced in October that it was minded to refuse the application. It formally rejected the proposals today. Read Ofwat's full report here.