Melbourne Water's $306 million accidental bill just a hiccup, says Premier

Victorian Premier Ted Baillieu has described households being overcharged by $306 million for water as a ‘‘hiccup’’ in the state’s ongoing costs for the controversial desalination plant.

The Age yesterday revealed Melbourne Water consumers had already been slugged with the first bill for the multi-billion-dollar Wonthaggi project, despite not a drop of water flowing with construction continuing to be delayed.

Amid the outcry, the water authority confirmed last night it intended to keep charging people for the plant anyway.

Mr Baillieu said the water plant, commissioned by the former Labor government, will cost about $2 million a day for the next 27 years, as he tried to put the first bungled payment into a larger context.

‘‘This is a hiccup at the start of that 27-year plan,’’ he told ABC Radio.


‘‘What’s occurred is the desal plant hasn’t finished when they said they would finish it, so the payment schedule is not quite as it was intended to be at the start.’’

Mr Baillieu said the Essential Services Commission will sort out the repayment to consumers who shouldn’t have been charged for a plant that is still non-operational.

All the money will be returned with interest, he said.

No completion date for the water plant has been announced.

Melbourne Water says it needs to keep overcharging the public to maintain its financial stability because the extra money has been factored into its latest five-year financial plan.

It is relying on the same reasoning for its refusal to refund customers immediately, saying instead that the money will be repaid over five years as offsets to people's water bills.

In a statement, Melbourne Water admitted that it knew last November that the plant would not meet the initial completion deadline of December 2011, and that it was expected to be delayed until February 2013.

It admitted the amount owed to customers could end up being much higher if the completion date for the desal plant is pushed back further.

''We want to reassure customers that they have a voice in how the over-recovery of funds is managed going forward through our draft Water Plan consultation process,'' it said.

- AAP and Rachel Wells