Water bills across England and Wales are about to get cheaper, partially thanks to the lower cost of borrowing enjoyed by utility companies.

Regulator Ofwat on Wednesday published its final methodology for an upcoming price review and said that it would set limits on the prices that customers pay on water between 2020 and 2025.

As a result of regulated utilities facing a record low cost of capital – the amount they have to pay to borrow money – Ofwat said it expects an average saving per customer of between £15 and £25 a year from 2020 onwards.

“The next decade will see profound changes in customers’ expectations and we are pushing the water sector to be at the very forefront of that,” said Ofwat chief executive, Cathryn Ross.

“The methodology we’ve published today outlines how we will use our price review to get the very best for customers, through higher quality of service and support for those who need it most, all with scope for lower bills,” she added.

Ms Ross said that the review would be a “tough” one for companies but that she has “no doubt that the sector can step up and meet the challenges we’ve laid before them today”.

Ofwat on Wednesday said that it was also pushing companies to improve the service they provide.

Help for vulnerable customers will, for the first time, be an explicit part of Ofwat’s price review. Water companies will be required to devise and deliver plans to identify and help customers in vulnerable circumstances. The regulator said that it would report publicly on these plans.

It also said that it was pushing companies to “develop smart solutions to address the pressures of a growing population and climate change”. Companies are being urged to address the issue of leakages in a bid to save as much as 170 billion litres of water a year.