South West Water claims it has taken another step to keep bills "as low as possible" by proposing to peg back price rises to below inflation.

The company is today presenting Ofwat, the independent water industry regulator, with updated plans that could see average prices falling by 13 per cent "in real terms" by 2020.

South West Water has already confirmed a price freeze on its standard tariff and standing charges to April 2015 and previously proposed to keep average bill rises below inflation to 2020. In addition, bills already include a £50 annual reduction from Government to 2020.

South West Water submitted its 2015-20 business plan to Ofwat in December last year, following its biggest ever consultation, a public approval rating of 84 per cent and the support of the independently-chaired WaterFuture Customer Panel.

Following "new evidence on the cost of financing", the company is now able to propose "even lower bills than before", bringing "further benefits to hard-pressed customers and businesses right through to the end of the decade".

South West Water also plans to spend £868million on improving services in 2015-20. This represents an increase in investment of 19 per cent over the current five-year regulatory period.

Planned investment includes a new high-tech water treatment works in North Plymouth, further improvements to drinking and bathing water quality, and the development of innovative water catchment solutions.

The latest plan, which is subject to regulatory approval, follows a decision today by South West Water to accept an invitation from Ofwat to adopt new regulatory guidance that balances the interests of customers and investors, keeping bills as low as possible and the investment flowing.

South West Water Chief Executive Chris Loughlin said: "Our business plan got a big thumbs up from customers who helped to shape it, and it has been praised by the regulator. It represents a real partnership with the communities we serve.

"We recognise that hard-pressed households and businesses want value for money and continued investment in services and the environment. We look forward to delivering on their behalf."

Welcoming today's news, Charles Howeson, Chair of the independent WaterFuture Customer Panel, said: "The WaterFuture Customer Panel offered constructive challenge to South West Water's 2015-20 business plan as it was developed. The company listened and acted upon what customers said, and this strong public engagement has had a direct impact on the contents of the business plan which has been recognised by Ofwat.

"The plan achieved an 84% acceptance rate from customers. Today's acceptance by South West Water of Ofwat's guidance is good news for customers, as bills are forecast to fall even lower than previously planned."

Dennis Osborne, from the Consumer Council for Water, said: "It is very gratifying that, in the spirit of the work that the company and the WaterFuture Customer Panel have done to date, South West Water has continued to recognise the issue of affordability."

Tim Jones, Chairman of Devon and Cornwall Business Council and Board Member of the Heart of the South West Local Enterprise Partnership, said: "South West Water's plan for 2015-20 will bring much-needed jobs and investment to Devon and Cornwall, as well as enhancing services for customers and improving the resilience of the region's essential infrastructure. This exciting plan will deliver £868million of investment.

"We calculate that this could sustain at least 4,000 jobs in the Peninsula and also generate indirect benefits to many small businesses and sub-contractors. There are also very important implications for skills development and apprenticeships. This will be widely welcomed by both the business sector and by the broader community. South West Water has demonstrated true partnership working in developing this plan."

Steve Meakin from Plymouth Citizens Advice Bureau commented: "We welcome today's news about water prices in the South West. In recent years we've worked closely with South West Water to develop a number of innovative services and tariffs to make water bills more affordable, especially for disadvantaged people. It is very encouraging that, having listened to its customers, South West Water has already eased the impact on hard-pressed households by taking such a positive step as introducing a price freeze to April 2015."