YORKSHIRE Water's owners have welcomed a review that will see prices go up by 18% in the next five years.
Water utility group Kelda made the comments as it posted an 8.2% rise in profits.
It described the announcement by industry regulator Ofwat last week that its Yorkshire Water business will be able to raise bills to around £288 by 2009-10 as "reasonable and acceptable".
Kelda said the price hikes would allow it to strike a balance between improving and maintaining levels of service and keeping bills affordable for customers.
Chief executive Kevin Whiteman said: "We don't like price rises and we work hard to keep them down.
"But as a result of environmental investment and increases in the tax regime they are necessary."
Yorkshire Water is Kelda's main UK subsidiary, providing water and waste water services to more than 4.7m people and 140,000 businesses.