Regulator Ofwat is set to block Thames Water’s plans to put up prices next year.
The UK’s largest water and sewage company had asked to put up prices by 8%, adding £29 to average household bills.
Yet the watchdog has ruled in a draft decision that Thames Water only supplied evidence that would justify a rise of £7.
Thames Water has had proposals to put up bills rejected
A final decision is due early next month.
Thames Water, which supplies water to Dartford, Sevenoaks and Orpington in Kent, claims it needs to boost prices to deal with bad debts and pay £273 million for land to build its Thames Tideway Tunnel sewer.
However the regulator disagrees with the majority of Thames Water’s assessment of costs due.
Every five years, Ofwat sets the prices that water companies can charge.
The current average Thames household bill is around £354.
Thames Water spokesman Stuart White said: “We will review Ofwat’s draft proposals, and submit our response in due course.”
Ofwat’s chief regulation officer Sonia Brown said: “We said we would challenge Thames Water’s request.
“We have looked at the details and do not believe the current evidence justifies an increase in bills.”