Melbourne Water has received regulator approval to carry out $10 billion in water, sewerage, waterways and drainage services across the city over the next five years.

The Essential Services Commission (ESC) made its final decision on Melbourne Water’s prices for the 2026–31 regulatory period that will back this expenditure, but it was seven per cent lower than the utility’s initial proposal.

From July 1, 2026, Melbourne Water’s prices will increase by 4.1 per cent to reflect inflation, alongside annual price adjustments for water retailers and the recovery of costs associated with the 2026–27 desalination order.

The determination sets the maximum prices Melbourne Water can charge over the next five years and establishes the revenue required to maintain and expand critical infrastructure while meeting service, environmental and regulatory obligations.

Under the final decision, Melbourne Water will be permitted to invest $7.3 billion in essential infrastructure between 2026 and 2031 and while less than planned, represents a $2.9 billion increase – or 51 per cent – compared with the previous five-year regulatory period.

The investment program includes upgrades to sewerage and drainage infrastructure to support Melbourne’s growing population, maintain service reliability and strengthen long-term network resilience.

ESC chair and commissioner Gerard Brody said the final determination balances the need for continued infrastructure investment with efficient expenditure.

“The final prices balance Melbourne Water’s need to deliver safe drinking water and sewerage services, healthy waterways and invest in infrastructure, while making sure customers are not asked to pay more than is needed,” Brody said.

The commission’s final decision allows Melbourne Water to recover approximately $434 million more in revenue than was approved for the previous five-year period, reflecting increased investment requirements across the network.

As Melbourne’s wholesale water authority, Melbourne Water supplies water and sewerage services to metropolitan retailers and provides water to some regional retailers. It is also responsible for managing major waterways and drainage assets across the city.

The regulator said its assessment considered the efficient costs required to deliver safe and reliable services, maintain environmental standards and support population growth.

The final determination also introduces new connection pricing principles for commercial and industrial customers seeking significant water supplies, including data centres. The framework is designed to provide greater pricing transparency while ensuring the costs associated with servicing large users are recovered from those developments rather than the broader customer base.

In reaching its final decision, the commission considered Melbourne Water’s response to its draft determination, stakeholder submissions and feedback received during a public forum held in April. The determination also incorporates updated inflation forecasts and revised cost information provided by Melbourne Water.

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