We have released our final decision on Melbourne Water's 2026 price submission, which sets out the maximum prices Melbourne Water can charge for its services for the next five years, starting from 1 July 2026.
Melbourne Water price review 2026
- Guidance released19 November 2024
- Price submission due1 October 2025
- Consultation opens10 October 2025
- Consultation closes12 December 2025
- Draft decision2 April 2026
- Consultation on draft decision opens2 April 2026
- Consultation on draft decision closes1 May 2026
- Final decision and price determination5 June 2026
Overview
Our review and assessment
In early October 2025, Melbourne Water provided us with a price submission outlining the key outcomes for its customers and prices to apply from 1 July 2026 to 30 June 2031.
We assessed the price submission, released a draft decision and consulted with interested parties between 2 April and 1 May 2026.
We received seven public submissions alongside Melbourne Water's formal response to our draft decision. All feedback, including verbal submissions received during our public forum, informed our final decisions.
Our final decision allows up to $7.3 billion in investment for Melbourne Water to continue delivering safe drinking water and sewage services for Victorian communities. This amount will also support the maintenance of vital sewerage and drainage infrastructure over the next five years and is a 51 per cent increase compared to the previous five years (current regulatory period).
You can find out more on how we engaged on this review at Engage Victoria.
Key facts from our final decision
Bills
1 July 2026, metropolitan Melbourne water bills will reflect inflation of 4.1 per cent, plus an additional amount to recover the 2026-27 Desalination Plant Water Order cost. The retailer-specific bill impacts set out in our final decision show the combined impact of Melbourne Water’s approved wholesale prices and the retailer’s approved annual tariff adjustments.
Tariffs
We have approved Melbourne Water’s proposal for bulk water tariffs reflecting the South-Central Pool Bulk Entitlement reform approved by the Minister for Water on 23 April 2026, and sewerage tariff structures.
Core waterways and drainage tariffs will:
- for residential customers – increase by 4.4 per cent to $130.56 (including inflation) in 2026‑27 followed by a decrease of around 0.5 per cent (before inflation) in 2027-28
- for non-residential customers – increase by 4.4 per cent to $196.16 (including inflation) in 2026‑27 followed by a decrease of around 0.7 per cent (before inflation) in 2027-28.
Outcomes
Melbourne Water worked with its customers to develop five customer outcomes for the 2026–31 period:
- Safe and reliable bulk water supplies for now and the long term
- Environmentally sustainable and reliable bulk sewerage services
- Healthy, resilient waterways
- Urban drainage and flood resilience
- A valued partner in water cycle services
Melbourne Water will maintain its existing Guaranteed Service Levels (GSLs) for the metropolitan water businesses and add a new GSL for water quality to apply to all connected water retailers.
View our final decision and price determination
Consultation on our draft decision
We consulted on our draft decision between 2 April and 1 May 2026. All feedback received informed our final decision. We received seven public submissions alongside Melbourne Water’s formal response to our draft decision.
The submissions can be viewed in the resource tab of this page.
Public forum
On 23 April 2026, we held a hybrid public forum for interested parties to find out more about our draft decision on Melbourne Water's prices and outcomes to apply from 1 July 2026.
Topics of discussion during the forum included:
- the commission’s role in reviewing Melbourne Water’s pricing proposal
- how we assessed the price submission and our draft decision
- level of engagement, fairness and balance in decision making
- communication of changes to capital and operating expenditure during the regulatory period.
Attendees in the room and those online asked questions of interest to the commission and Melbourne Water.
A recording of this forum can be accessed below.
Guidance to Melbourne Water
In November 2024, we provided Melbourne Water with guidance on what it should include in its price submission.
The guidance paper explained our approach and methodology to assessing water businesses’ price submissions and making a price determination. It also introduced the backward-looking 'Performance' element of PREMO, which holds a business accountable for its price and service commitments from the previous price review.
As this is the second review under PREMO for Melbourne Water, which participated in the 2021 review, we indicated that Melbourne Water's price submission must demonstrate how it is building on the previous proposals to deliver great value to its customers.
Learn more about water price regulation
Read more about how we regulate the water sector.
Resources
Our final decision and price determination
Our draft decision
Submissions on our draft decision
Feedback on Melbourne Water's price submission
We consulted on Melbourne Water's price submission until 12 December 2025. We received 12 submissions including two anonymous submissions.
We considered each submission in our draft decision on Melbourne Water's proposals. See our Submissions Policy for how we approach anonymous and confidential submissions.
Guidance
Customer fact sheet
2026 water price review customer fact sheet
Melbourne Water has provided its price submission on proposed prices and key outcomes for its customers. We will assess the price submission and make price determinations on the maximum price Melbourne Water can charge for its services from 1 July 2026 to 30 June 2031.
Snapshot of Melbourne Water's price submission
| Bills | Tariffs | Outcomes |
|---|---|---|
The bill impact of Melbourne Water’s proposal on average household bills in metropolitan Melbourne will be flat in 2026-27 and then increase by up to 1.5 per cent or $17 per year to 2030-31. This excludes inflation, which is added to bills each year*. The impact to average household bills in other areas is mixed. | Melbourne Water proposes significant reforms to bulk water tariffs and other reforms to bulk sewerage tariffs. Melbourne water proposes a minor reduction to waterways and drainage charges. | Melbourne Water worked with its customers to develop five customer outcomes for the 2026–31 period. The outcomes have been simplified and reduced in number, from six to five. It will maintain its existing Guaranteed Service Levels for the metropolitan water businesses and add a GSL for water quality to apply to all connected water retailers. |
*Melbourne Water’s forecast customer bill impacts are based on the change in total Melbourne Water bulk and sewerage costs only. They exclude the impacts of water corporation 2028 submissions, desalination water orders and other pass-throughs.
You can access latest independent forecasts for inflation at Australian Bureau of Statistics.
What are the changes to prices and tariffs?
Melbourne Water proposes:
- Reforms to bulk water tariffs associated with the Victorian Government’s implementation of the South-Central Pool Bulk Entitlements. This involves introducing new bulk entitlements that will enable all connected water corporations to access water from the South-Central Pool as needed within a collective volumetric cap, rather than with individual volumetric entitlements on which bulk water headworks pricing had been based in the past.
- To update the split between variable and fixed bulk water charges for more demand-revenue sharing between Melbourne Water and its customers.
- Reforms to bulk sewerage tariffs to more equitably recover fixed charges. This includes replacing separate disaggregated Eastern and Western bulk sewerage transfer charges with a common transfer charge.
Melbourne Water forecasts a minor reduction to the waterways and drainage tariffs (less than 1 per cent over the five-year period). A flat charge will replace the current rate in $ Net Annual Value for all non-residential customers.
What are the changes to bills?
Melbourne Water provides wholesale water supply and sewage management services to retail water corporations that we also regulate.
Melbourne Water provided us with indicative bills for average household customers in each of these retail water corporations, reflecting the impact of its proposed changes to bulk water and sewerage prices and tariffs only. Actual household bills also depend on factors such as the amount of water and services you use and will additionally include impacts from water corporation 2028 submissions, desalination water orders and other passthroughs.
Average household water and sewerage bills (not including inflation)
| Water corporation | 2025-26 | 2026-27 | 2027-28 | 2028-29 | 2029-30 | 2030-31 |
|---|---|---|---|---|---|---|
| Greater Western Water | $1,110 | $1,110 | $1,127 | $1,137 | $1,147 | $1,157 |
| South East Water | $1,057 | $1,057 | $1,072 | $1,073 | $1,074 | $1,075 |
| Yarra Valley Water | $1,114 | $1,114 | $1,130 | $1,123 | $1,115 | $1,107 |
| Barwon Water | $1,183 | $1,180 | $1,179 | $1,178 | $1,177 | $1,181 |
| South Gippsland Water | $1,405 | $1,428 | $1,437 | $1,447 | $1,460 | $1,476 |
| Westernport Water | $1,394 | $1,394 | $1,396 | $1,398 | $1,400 | $1,403 |
| Gippsland Water | $1,492 | $1,481 | $1,480 | $1,482 | $1,482 | $1,483 |
Waterways and drainage tariffs (not including inflation)
| Customer group | 2025-26 | 2026-27 | 2027-28 | 2028-29 | 2029-30 | 2030-31 |
|---|---|---|---|---|---|---|
| Residential ($/year) | $125 | $124 | $124 | $124 | $124 | $124 |
| Rural ($/year) | $69 | $68 | $68 | $68 | $68 | $68 |
| Non-residential ($/year)* | $188 | $186 | $186 | $186 | $186 | $186 |
*A flat charge replaces the current $NAV for all non-residential customers.
What are the outcomes for customers?
As part of their price submissions, water businesses must propose a set of outcomes that they will deliver to their customers over the pricing period. The set of outcomes, measures and targets are unique to each business, reflecting those performance elements that matter most to its customers, as revealed through the customer engagement process.
Melbourne Water worked with its customers to develop five outcomes:
- Safe and reliable bulk water supplies for now and the long term
- Environmentally sustainable and reliable bulk sewerage services
- Healthy, resilient waterways
- Urban drainage and flood resilience
- A valued partner in water cycle services.
Melbourne Water proposes to retain its current Guaranteed Service Levels (GSL) for each of the metropolitan retailers and introduce a new GSL for water quality where it will provide customer rebates for unplanned water quality interruptions. This would apply to all connected water retailers.
Melbourne Water also proposes to:
- Increase affordability assistance to vulnerable customers. This includes actions such as amplifying existing hardship programs and introducing a new waterways and drainage hardship grant.
- Make upgrades to water production and storage assets to improve Melbourne’s water supply security through optimising storage capacity and providing for more efficient water transfers.
- Better protect Melbourne’s natural environment through making investment in waterways management to improve vegetation conditions and towards their target of net zero emissions by 2029-30.
What are the major works that will go on around you?
| Project | Detail | Total ($ million) |
|---|---|---|
| Western Treatment Plant Full Preliminary Treatment Augmentation | This project will increase treatment capacity at the plant to ensure it can meet future demand while moving from lagoon-based treatment systems to more mechanical systems that will reduce environmental impacts. This project is currently in the design phase. | $337 ($291 in the 2026–31 regulatory period) |
| Eastern Treatment Plant Primary Settling Tanks and Grit Tank Augmentation | This augmentation will increase the plant’s capacity to handle growing sewage loads within the area and enhance the treatment system’s resilience to high demand conditions. | $304 ($178 in the 2026–31 regulatory period) |
| Maroondah Reservoir Outlet and Aqueduct –Stage 3A | Replacement of the outlet at Maroondah Reservoir and partial replacement of the Maroondah Aqueduct will increase water transfer efficiency, and ensure water quality and safety requirements are met. | $225 ($157 in the 2026–31 regulatory period) |
| Western Trunk Sewer – Shallow Conduit Rehabilitation | Renewing 4.4 kilometres of the Western Trunk Sewer to meet safety and reliability requirements while transporting sewage to the Western Treatment Plant. | $204 |
| Cardinia Dam Safety Upgrade Works | Safety upgrade works will allow the removal of current operating restrictions and enable the use of the dam’s full capacity, supporting the efficient use of Melbourne Water’s existing water resources. | $191 |
How much revenue is required from 2026 to 2031?
We require each business to tell us what revenue it will require for the next five years. This helps us understand how Melbourne Water calculated the prices in its submission.
Melbourne Water forecasts that it needs $5.5 billion of operating expenditure and $7.9 billion of capital expenditure to provide its services and cater for expected customer growth over the next five years. To fund this, Melbourne Water requires $10.1 billion in revenue, an average of $2.0 billion per year. This is an increase of $111.3 million per year on the annual average during Melbourne Water’s current regulatory period ($1.9 billion per year).
Send us your feedback on Melbourne Water’s proposal
Submitting your feedback to Melbourne Water’s price submission by 12 December 2025 will help us prepare for the release of our draft decision. You can upload your submission via Engage Victoria or send it to us via the below contact details:
- Email: water@esc.vic.gov.au
- Mail: Essential Services Commission, Level 8, 570 Bourke Street, Melbourne Victoria 3000
You can also call us on 03 9032 1300 to discuss your options.