Water bills across Sussex are to rise by almost three times the rate of inflation as Southern Water pumps £1.8 billion into a huge improvements package.

Four million householders across the region will pay an extra £17.60 a year for the next five years to fund the work if industry regulator Ofwat approves the proposed price increase.

The 7.2 per cent rise, which is on top of the annual inflationary increase of 2.9 per cent, would be introduced in 2005.

It will pay for a host of work aimed at improving water supplies as well as wastewater treatment works, pumping stations and sewers worth an average of £1,000 to each customer.

Half the £1,800 million will be used to bring the service up to European environmental standards.

The company's five-year draft business plan is open for public consultation after being submitted to Ofwat.

Southern Water managing director Stuart Derwent said: "Since 1990 we have invested approaching £3,000 million to dramatically improve service levels and environmental quality. If this is to continue, water charges have to rise to meet the enormous cost.

"We are committed to providing high quality water and wastewater services but at prices that represent good value for money. Therefore, we must always consider our investment plans against the overriding need to moderate prices to customers."

The Southern Water proposals include:

A £784 million programme of new improvement schemes to meet higher quality standards, required by the Environment Agency and the Drinking Water Inspectorate
Spending £696 million to maintain and improve mains, sewers, treatment works and pumping stations
Plans to upgrade levels of service at a cost of £105 million
The provision of £213 million worth of additional water and sewerage infrastructure to further safeguard water supplies and to start addressing the Government's plans for new housing.

The company believes the plans will help address concerns of customers about flooding from sewers, smells from wastewater treatment works and the taste of drinking water.

The company will not be carrying out some areas of investment sought by the Environment Agency, questioning the need to spend £1,000 million more during the five years in the belief that the environmental benefit is not yet proven.

The increase would potentially add an extra £55 over five years to the average bill.

A final decision on Southern Water's business plan will be made next year when Ofwat sets the level of water charges for customers from 2005 to 2010.

Customers can obtain a copy of the plan or comment on it by writing to Southern Water, Southern House, Yeoman Road, Durrington BN13 3NX.

The bill increase reflects national concern among water companies about the future of their industry.

Last month, 26 firms outlined their concerns to Ofwat, that there was a lack of investment in the industry.

Water UK, which represents private water companies in England and Wales, warned a Railtrack-style crisis could ensue unless old pipes are replaced.