Water companies have warned that a proposed 21% increase in average bills in England and Wales will not be enough to tackle problems including sewage leaks.
Companies have been locked in a stand-off with regulator Ofwat over proposed bill increases.
Ofwat said it wanted companies to limit increases to an average of £19 a year until 2030.
But water companies have hit back, saying the regulator “got this wrong” and warning that bill increases would not be enough “to deal with the water shortages we know are coming”.
Although the proposed average increase will put more pressure on households, it is about a third less than the amount requested by water companies.
The bill’s increase is intended to fund investment in improvements such as replacing leaky pipes and reducing sewage discharge into rivers and oceans.
This comes as suppliers have faced increasing scrutiny over their environmental and financial performance over the past years, as well as anger over executive pay.
The bill increase varies by region, with Thames Water customers facing a £99 or 23% increase over the next five years, Anglian customers facing a £66 or 13% increase, and Southern Water customers facing a £183 increase, a 44% increase.
Water companies can appeal proposed bill increases, and a final decision is due at the end of the year, with increases due from April.
“We think they are,” David Henderson, chief executive of the UK Water Industry Group, told BBC business editor Simon Jack. [Ofwat] I was wrong about that.”
“This is an unrealistic and unfair decision by Ofwat and our economy and environment will pay the price,” he said.
A spokesman for the lobby group said the proposed plans were “the biggest cut in investment ever”.
“As a direct result, more housing will be blocked, our rivers will recover more slowly and we will fail to deal with the water shortages we know are coming,” the government spokesman said.
Labor has pledged a crackdown on the industry, promising consumers higher compensation for sewer failures and the ability to hold executives to account.
New Secretary of State for Environment, Food and Rural Affairs Steve Reid will meet water company bosses on Thursday to discuss performance issues and ways to improve them.