THE prospect of a £100million reservoir being built in a Somerset village has been thrown into doubt following a decision by the water regulator.

In June, Bristol Water was granted planning permission to build a second reservoir in Cheddar.

But before it can carry out the works, it needs approval from water regulator Ofwat – and that now looks doubtful.

Over the past two years, Ofwat has been reviewing the water industry. This involved consultation with more than a million customers in England and Wales.

Companies, including Bristol Water, submitted business plans for investments and improvements between 2015 and 2020.

But Ofwat has not allowed for any spending on the reservoir project in its ‘final determination’.

A Bristol Water spokesman said: “Bristol Water will now consider the final determination carefully and in detail before deciding on its next step.

“It can either accept the outcome or refer it to the Competition and Markets Authority.

“The company has until February to do so – and is not going to rush to make a quick decision.

“It needs time to consider the best interests of its customers.

“We have full planning permission for the reservoir and believe strongly it is in customers’ interests.”

Bristol Water said the development is necessary due to the growing strain on water supplies following a surge in house-building and an influx of people.

But Ofwat said the reservoir was intended to meet the demand of businesses, not houses.

It said Bristol Water has no duty to supply water for non-domestic purposes unless it receives a specific request to do so.

Ofwat says its final determination means water and waste bills will fall by around five per cent before inflation is taken into account.