Sweeping reforms designed to begin a new era in sewage and business water rates trading will also encompass household water bills, according to UK water regulator Ofwat.
Consumers will see a £1 billion benefit if the 18 supply firms based in the UK increase the amount of water they trade.
Human sludge will also be traded under the new rules, allowing companies to use it to power facilities or to sell to farmers for use as fertiliser.
Plans to increase prices by lower levels of inflation in order to keep bills down are also being considered.
Cathryn Ross, Ofwat boss, said: “We want to kick-start water trading where this will help keep bills down and stop us taking too much water from our rivers.”
The plans also include using the consumer prices index inflation to set price increases rather than the higher retail prices index measure.
As CPI is normally lower than RPI, the average cost of £385 per year for water per household is likely to increase by less in the future.
Only around 4% to 5% of water supplies are traded between UK supply companies, a figure that has remained constant since the 1990s.
By trading between companies, those with scarce water supplies will need to spend less on treatment facilities, a saving which can be passed on to consumers.