Melbourne Water

About the Utility

Melbourne Water is the wholesale water and sewerage business for Greater Melbourne, supplying drinking water to over 5 million Melburnians. It provides bulk water and bulk sewerage services alongside the retailers Greater Western Water, South East Water and Yarra Valley Water, with which it shares a 50-year water strategy; its wholesale costs make up around half of a household bill. It is also floodplain manager for the 13,000 square kilometre Port Phillip and Westernport region, responsible for waterway health and regional drainage, funded by a charge on property owners. Its revenue is regulated by the Essential Services Commission, and its corporate plan is prepared under the Water Act 1989.

Water System

Melbourne’s supply depends on reservoir storages fed by the Thomson, Upper Yarra, O’Shannassy and Maroondah catchments, backed by the Victorian Desalination Plant at Wonthaggi. Inflows have weakened: storages averaged 615 GL a year from 1913 to 1996 but only 376 GL a year during the Millennium Drought, and recent rainfall and inflows have been among the lowest on record. The desalination plant, operated by AquaSure, can supply around one-third of Melbourne’s annual needs, and a maximum-capacity order was announced for 2026-27. Demand has grown with population, residential use remains above the government target, and a supply-demand imbalance could emerge within ten years under some scenarios.

Wastewater System

Wastewater is a core responsibility. Melbourne’s sewage is treated at two large plants: the Eastern Treatment Plant at Bangholme, upgraded to advanced tertiary standard to produce Class A recycled water, and the Western Treatment Plant at Werribee, an internationally significant wetland that regularly generates more power from biogas than it consumes. In 2023-24 the eastern plant received 155,757 ML of sewage and the western plant 210,110 ML, with major trunk sewers carrying flows west to Werribee. The utility reports no spills due to sewerage system failure, though the western plant fell short of full discharge licence compliance.

Investment & Priorities

Investment is stepping up for the 2026-31 regulatory period. Melbourne Water proposed $7.9 billion of capital expenditure, and the Essential Services Commission’s final decision adopted a forecast of $7,307.7 million. The programme targets ageing infrastructure, dam safety and sewerage capacity. On the Hobsons Bay Main Sewer, a duplicate tunnel under the Yarra was completed in November 2023; Western Trunk Sewer relining is scheduled to run to late 2029, and Maroondah’s ageing outlet tower is to be replaced.

Sustainability & Resilience

Climate pressure shapes Melbourne Water’s floodplain role as much as its supply. More than 200,000 properties face at least a one per cent annual chance of flooding, average annual flood damage is estimated at $735.5 million, and climate-informed flood modelling has been accelerated. Net operational emissions after carbon credits have been halved, meeting the interim goal ahead of a 2030 net-zero target, with hydroelectric stations, solar farms and biogas supplying renewable power.

Key Challenges

1. Securing supply as inflows weaken and demand grows.
2. Delivering a larger 2026-31 capital programme while keeping capital-city bills lowest.
3. Renewing ageing trunk sewers and dam assets.
4. Protecting a growing region as climate change raises flood risk.
5. Reaching net zero by 2030 while sewage treatment dominates emissions.

Major Projects