Melbourne Water catches $128m profit

Melbourne Water has defied the drought and water restrictions to post a net profit of $128 million in 2008/09, while a regional water authority suffered a massive $30 million loss.

While Melbourne Water almost doubled its previous year's profit, north-central Victorian authority Coliban Water blamed the drought and water restrictions for its $29.5 million loss.

Coliban chairman John Brooke warned customers would face price hikes to help it manage growing debt.

"Any price increase is unpopular, but our reality is that in order to remain sustainable we must review our pricing," Mr Brooke said in Coliban Water's annual report tabled in parliament on Thursday.

Coliban Water covers 20 per cent of Victoria and 49 towns including major regional hubs such as Bendigo, Echuca and Kyneton.

Mr Brooke said the $29.5 million loss in 2008/09 was expected.

He said inflows into the Coliban Water storages during the year were the second lowest in history.

"The drought continues to present us with challenges and opportunities and we continue to embrace them all," Mr Brooke said.

Melbourne Water chair Cheryl Batagol said the Victorian bushfires and unyielding drought had made 2008/09 one of the most challenging years experienced by Melbourne Water.

"The Black Saturday fires that devastated so much of Victoria posed a serious threat to Melbourne's water supply system," she said.

"About one-third of our total catchment area was damaged - but the most important parts were protected by the dedication of people working for Melbourne Water and other agencies."

She said the impact on reservoir levels was stark, reducing total storage to 25.6 per cent of capacity.

"While this was an extremely difficult year for Melbourne Water, it was ultimately one of our most successful," she said.

The positive results reflected cost-savings from a 23 per cent increase in use of renewable energy, the delivery of more than $1 billion of capital works, and the opening of the Tarago water treatment plant last June, which is lifting water supply by 15 billion litres a year.

Goulburn-Murray Water posted a $34 million loss, while Lower Murray Water's loss was $2.6 million.