Severn Trent Water has confirmed a £2.3bn investment programme across the East and West Midlands over the next five years.
The firm supplies water to about eight million customers
The company says the money will mean improved drinking water quality, more flooding protection and upgraded sewerage infrastructure.
Bills will rise by £31 a year to an average £252 from April. The company has already announced 350 job losses.
Consumer watchdog, WaterVoice Central, said price rises must be kept low.
Jonathan Bailey, Severn Trent Water's director of customer relations, said: "We've already invested £1.50 for every £1 profit we've made since 1990 to achieve the record levels of quality and service our customers now get.
"We all know how hard it can be simply keeping your home or car in good working order and we have to do a similar job but on a massive scale as parts of our system and equipment wear out, need maintenance or replacing."
Work will include cleaning more than 1,285km of water pipes, dealing with more than 1,600 sewer flooding problems and tackling smells from at least 9 sewage works which cause occasional nuisance.
Sir James Perowne, WaterVoice Central chairman, said: "Many customers find it hard enough to pay bills now.
"We continue to lobby hard to ensure that the government gives effective help through the benefits and tax credits system to customers who can't afford water bills, on fixed or low incomes."