Water bills set to be cut by £50 over five years in UK
Ofwat said firms would also have to invest an additional £6m each day in improving services for customers.
It comes amid widespread dissatisfaction with the performance of many water companies.
Ofwat said the measures would mean "better services, a healthier natural environment and lower bills".
Ofwat said the bill reductions would vary widely - falling by £7 at Hafren Dyfrdwy to £110 at Northumbrian Water compared with 2017-18 prices.
It comes after only three out of 17 water firms in England and Wales passed the last review by Ofwat, published in January.
All firms submitted plans to cut bills over the 2020-25 period, while reducing leaks and helping vulnerable customers. But only plans from Severn Trent, United Utilities and South West Water were approved. ■