South West Water bills will fall for the first time in more than a decade as the Government's £50 per household rebate kicks in this year.
The Exeter-based utility announced yesterday its average water and sewerage charge would fall by £40 to £499 from April.
The bill remains the highest of all water companies in the UK, a reflection of the botched privatisation of the industry in the 1980s, and would have gone up by £10 without the state assistance.
In 2011, Chancellor George Osborne announced the Treasury would hand the region £35 million a year as recompense for a tiny population on the peninsula picking up the £2 billion tab to end raw sewage being dumped into the sea, leading to the sky-high annual charge.
The Government bail-out is available for the first time this year, and all 780,000 households will get £50 off their bill each year until the end of the decade, regardless of how much water they use.
South West Water said its average bill has only fallen once since it was privatised in 1989. This year bills will be cut by 7.3%.
South West Water Chief Executive Chris Loughlin said: "We know the cost in the past of modernising particularly our sewerage network has been high for customers which is why we are particularly pleased the £50 reduction will be implemented from this year onward.
"Household customers will have the reduction automatically and clearly applied to their bills. They need take no action, just look out for the line 'Government Contribution' on your bill during 2013-14."
Without the state hand-out, the average charge would have risen by 2% and larger households are still likely to be paying up to around £1,000 a year. Bills will this year pay for a £168 million investment in treatment works, reservoirs and even wetlands, as agreed with water regulator Ofwat.
South West Water is the only firm to see its charges fall in 2013-14. Southern Water, for instance, will hike bills by £23. Customers in neighbouring Wessex Water will on average pay £478 for water and sewerage this year, an increase of £22 or 4.9%.
While the gap between what customers in Devon and Cornwall pay compared to the rest of the country is closing, the average bill nationwide is still £111 cheaper than the typical South West Water charge.
Ofwat said the average bill will rise to £388 from April this year to March next year – 0.5% above the rate of inflation.
Meanwhile, National Debtline said the number of calls it took last year relating to water bills was higher than those for rent or mortgage difficulties.
It went on that it took a record 19,667 calls for help with water debts last year, up from 12,226 in 2010 and 597 in 2003. The figure is an increase of 251% since 2007.
A spokesman said: "It's one of the fastest-growing debt problems we're dealing with."
Some critics have called for water customers to be allowed choice of supplier.
Exeter MP and former Environment Minister Ben Bradshaw said: "We need fundamental reform of our water industry. Privatised monopolies where the consumer has no choice do not work.
"It is not acceptable when people's incomes and living standards are falling for charges to go up every year."