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Water customers are paying £20 extra on annual bills to cover the cost of those who do not pay up and the figure could rise, it is claimed.

Bad debt written off by water companies and passed on to customers has increased by 430% over three years.

The Welsh government estimates the majority of debtors live in rented accommodation.

It is to force landlords to pass on tenants' details to water companies.

The bad debt comes from unpaid bills that are written off by a company as a loss either because it cannot be collected or the cost of doing so is more than the debt itself.

Since a ban on disconnection was introduced in 1999, water companies across the UK have seen a rise in bad debt in the industry.

The level in Wales has increased more than four times in three years with the most recent figure standing at nearly £12m.

Water prices are going up for customers in Wales again this year, but with the lowest increase in Britain.

The majority of households in Wales are served by Dwr Cymru Welsh Water and will see an increase of 1.7%, taking the average bill to £434.

Severn Trent and Dee Valley also serve a proportion of homes whose bills will increase by 2.2% and 4.1% respectively.

According to the Welsh government, the problem of bad debt in the water industry is most prevalent in the rented sector and it is consulting on new regulations to make it mandatory for landlords to supply tenants' details to water companies for billing purposes.

"This should make it much easier for outstanding charges to be collected and should ultimately reduce water bills for householders in Wales," said Natural Resources Minister Alun Davies.

If implemented, the new proposals will apply to Dwr Cymru and Dee Valley as they operate "wholly or mainly" in Wales and could come into force by March 2014.

Dwr Cymru customer services managing director Julia Cherrett said it has about 6,000 properties a year where tenants with an outstanding debt move on without giving a forwarding address.

"We have no real effective way of collecting that debt," she said.

The UK government is not pursuing similar regulations in England.

The proposal has been welcomed by the consumer body for water and sewerage in Wales and England.

"By knowing who's in a property, water companies will be able to identify those customers, to bill them sooner, to stop debt building up and, for those customers who are struggling to pay, to offer them payment arrangements in advance," said Barbara Leech, policy manager at the Consumer Council for Water.

Lee Cecil, head of the National Landlords Association in Wales, said it was the responsibility of the tenant to pay their bill but he insisted that all good landlords would take all details before allowing a tenancy to start.

He added: "This sounds like extra regulation compared to the existing gas and electricity agreements which have been in place for many years.

"Once we see the detail we will comment on that at the time."