The Concerned Waterways Alliance has lodged a detailed submission to the Essential Services Commission (ESC) on its 2028 Water Price Review – Draft Guidance, arguing that Victoria’s water pricing framework must do more than deliver affordable services to customers: it must also recognise the environmental consequences of pricing decisions and properly fund the stewardship of rivers, wetlands and aquifers.
The ESC’s final guidance will shape the price submissions prepared by Victoria’s water authorities for the 2028–33 regulatory period. What is required — or omitted — from that guidance will strongly influence which issues water corporations analyse, cost and ultimately fund.
CWA’s submission welcomes several important improvements in the draft guidance, particularly the new framework for large and complex connections, stronger disclosure requirements for large-load customers such as data centres, protections against stranded assets, greater recognition of regulatory obligations, stronger long-term planning requirements and improved engagement with Traditional Owners.
But we argue that significant gaps remain.
Water pricing is not environmentally neutral
A central theme of the submission is that pricing structures actively shape environmental outcomes.
Water prices can encourage conservation, make Integrated Water Management projects viable, support recycled water and stormwater use, fund leakage reduction and ensure environmental costs are properly attributed.
But poorly designed pricing structures can do the opposite — obscuring environmental expenditure, undervaluing the environmental cost of extracting water, discouraging long-term environmental programs and allowing environmental performance to disappear within broader measures of service delivery.
The submission argues that the environment cannot participate in customer panels or express a willingness to pay. Rivers, wetlands and aquifers therefore risk being structurally disadvantaged when investment decisions rely too heavily on conventional customer-preference methodologies.
CWA is asking the ESC to establish a clear principle:
An essential environmental or water-resource function should not be excluded from a price submission simply because its benefits are shared across a catchment, accrue over the long term, extend beyond paying customers or cannot readily be captured through a willingness-to-pay exercise.
Properly fund water-resource stewardship
The submission also places greater emphasis on the role of Victoria’s rural and resource-management water authorities.
These authorities do much more than supply water to customers. They regulate access to surface water and groundwater, administer licences and entitlements, manage storages, support environmental water delivery and make decisions affecting entire catchments and water-dependent ecosystems.
CWA argues that functions such as:
- compliance and enforcement;
- licensing;
- metering and data management;
- resource monitoring;
- environmental water and passing-flow delivery;
- environmental incident response; and
- participation in reviews of water-allocation settings
should be explicitly identified, costed and reported as core stewardship responsibilities.
Where these essential functions fall outside regulated prices, the responsible agency and alternative funding source should be clearly identified rather than allowing important environmental responsibilities to become effectively “orphaned”.
Protect households and rivers as Victoria moves to manufactured water
Victoria is moving towards greater reliance on climate-independent sources such as desalinated water and potentially purified recycled water.
CWA supports that transition, particularly where it enables reduced extraction from stressed rivers and the return of water to the environment and Traditional Owners.
However, manufactured water is more expensive than traditional surface-water supplies. The submission therefore argues that an increasingly important question is who should pay when major industrial demand brings forward or increases the scale of new supply infrastructure.
Where new supply is required because of population growth or declining rainfall, broadly sharing those costs may be appropriate.
Where augmentation is brought forward or enlarged by a small number of very large industrial users, however, CWA argues that those costs should not simply be averaged across household bills.
The submission therefore calls for water authorities to identify climate-independent supply costs, transparently attribute what is driving new augmentation, and recover costs attributable to major industrial connections from those connections rather than shifting them onto residential customers.
Data centres and very large water users
Data centres are a particular focus of the submission.
CWA welcomes the ESC’s decision to strengthen the treatment of large and complex connections, but argues that the guidance must go further.
The submission notes that very large industrial loads can emerge through expressions of interest, planning applications and confidential negotiations well before becoming “firm commitments”. Limiting disclosure to firm commitments risks excluding major emerging demand from water planning until after price determinations have been made.
CWA therefore recommends that water corporations be required to assess large-load demand through scenarios, including enquiries and applications as well as confirmed connections.
The submission also calls for:
- clear disclosure of the water sources proposed for major industrial users;
- assessment of recycled and other fit-for-purpose supplies before drinking water is committed to industrial cooling;
- transparent pricing of firm or drought-proof supply;
- annual reporting of major industrial water use and, for data centres, measures such as Water Usage Effectiveness (WUE) and Power Usage Effectiveness (PUE);
- proper assessment of trade waste and discharge impacts; and
- safeguards to prevent households being left to pay for stranded infrastructure if anticipated industrial demand does not eventuate.
Seventeen recommendations for the 2028 review
Across the submission, CWA makes 17 principal recommendations covering environmental pricing, water conservation, community engagement, compliance and monitoring, climate-independent water, household affordability and the rapidly emerging challenge of large industrial water demand.
The underlying principle is straightforward: as Victoria’s water system becomes more expensive and complex, pricing decisions must make environmental consequences visible rather than treating them as incidental.
Water prices should support the recovery of stressed waterways, ensure core stewardship responsibilities are adequately funded and make sure that the costs created by very large water users are attributed fairly.
As our submission concludes, the 2028 Water Price Review presents an important opportunity to ensure that environmental consequences are recognised, stewardship functions are properly funded, and the costs of large-load-driven augmentation are borne by the demand that causes them rather than simply being transferred to households and the wider community.