In August we welcomed a $3.7 million investment announcement by the Federal Government to develop a Detailed Business Case for rural modernisation within the Coliban Rural Channel System. The funding compliments our $2 million investment in the project.

The Coliban Water rural network supports lifestyle, agricultural and primary industries through twelve rural supply systems, comprising 360 km channels and 140 km pipelines. We typically supply 4-7 gigalitres (GL) of raw and recycled water to rural customers yearly.

The supply system was built to supply the former booming mining industry and associated services. The ageing and leaky system currently encroaches on or passes through urban districts, and its current configuration does not always support what’s best for the region.

The channels are largely unlined and highly inefficient. At only 60% efficiency, the channels collectively lose over 2 GL/year due to leaks and seepage. Similar levels of water loss are occurring in private supply channels.

Building on the work completed in the Preliminary Business Case in October 2022, this investment will enable the engagement work with our rural customers to develop options to modernise the rural network.

These options will improve customer service levels and provide greater water efficiency, as well as deliver water savings – potentially up to 6.76 gigalitres a year.

Over the coming months we will develop the approach to engage with customers, which will include seeking advice from our Rural Customer Advisory Group.

Each channel system will be thoroughly investigated, and when coupled with customer feedback, will fall into one of the following four categories:

1. No change – we do not receive any further funding and the system will remain as it is for the time being.

2. Modernisation – a rural piped supply will replace the existing channel system.

3. Rationalisation– if the system is not viable for modernisation, closure may need to be considered.

4. Potable supply – customers are converted to the town water supply.

We anticipate we will have a better understanding of where each channel system sits after the initial round of customer engagement. We will report back to customers when this is clearer to discuss next steps.

While these investigations and customer conversations are underway, we are not contemplating any major changes to existing rural arrangements.

We have implemented some interim policy positions to support this investigation period that relate to licence renewal and permanent water trading. More information is outlined in a factsheet accessible via the yellow button on the right-hand side of this text labelled "Interim Policy Positions".


  • Modernisation of Coliban Water’s Rural Water Supply System would be highly beneficial to the local community, with flow-on economic impacts to the broader economy.
  • Modernisation of the rural supply system would replace a network of open channels that are currently characterised by large losses of water through seepage and evaporation. Over 40 % of water supplied to the channels is lost before use.
  • An efficient rural supply network would benefit all Coliban Water customers (urban and rural).
  • A Rural Modernisation Project may boost future agriculture by providing opportunities for expansion and support primary industries that are currently constrained by the availability, reliability, and quality of water.
  • The efficiency gained by replacing leaking channels with a piped system would result in water savings that may become available for productive or environmental purposes.
  • As part of the investigations we may consider rationalising parts of the system where practicable. This means people should only have water allocations for the water they expect to use. Part of this investigation will look at whether customers would be interested in reducing their allocation.


Federal funding

The Federal government has made money available for large-scale water savings projects. We have now progressed to the stage where we have funding to develop a Detailed Business Case for the modernisation of the system.

Customer funded

Our customers fund our investments and services. Every five years, our prices, investment, and service levels are reviewed by the Essential Services Commission (ESC). We prepare a Pricing Submission demonstrating that our prices and investment are prudent, meet our business requirements and are fair regarding the impact on our customers and the community.

We have decided not to review rural customer pricing and services until we have completed the preliminary and detailed Business Case's. Therefore, rural pricing is on hold. As of 1 July 2022, rural prices will not increase (other than CPI).

Coliban Water is committed to continuing to provide a service to its wide base of customers, and this needs to be undertaken as part of a long-term sustainable water strategy.


Harcourt Rural Modernisation Project

A business case for the Harcourt Modernisation Project was completed in July 2011. The business case was endorsed by the then Victorian Minister for Water and approved by the then Victorian Treasurer in January 2012.

Highlighted benefits of the project included:

  • Estimated water savings of 950ML/y
  • Increased reliability of supply for Harcourt irrigators
  • Improved capacity to respond to a future shortage in urban supplies

Harcourt was chosen for modernisation as it had the highest water use of any of Coliban Water’s rural systems. Primarily the system is used for agriculture in contrast to some other systems, which often feature small water users and hobby farmers.

One of the unique drivers for Harcourt, in contrast to other rural systems, was the link between this project and the Southern Interconnector/Castlemaine Link project. The Harcourt modernisation presented as a step in a broader project to allow the transfer of water from Bendigo to Castlemaine, increasing operational flexibility and improving urban water security for the Coliban South system.

In modernising the system, the following principles were utilised:

  • Buybacks offered at $2,000/ML for full or $1,000/ML for partial entitlement.
  • Pipe sizing allows entitlements to be delivered over 18 weeks.
  • Customers must hold three days of water to allow for pipeline maintenance.
  • Tanks are required for all customers with licenses equal to or less than 5 ML.
  • Customers are expected to pay for any works downstream of their meter, with project benefits expected to offset the upfront costs.

Once modernised, a termination fee was introduced for customers choosing to leave the system, to ensure that remaining customers would see no change to their existing tariffs due to a lower customer base. This fee does not apply where entitlement is traded within the system.


A survey was sent to all rural customers for them to complete by 12 August 2022. We received 191 responses and the information shared will help us develop the modernisation options. Having accurate information from our rural customers gives us the best chance to obtain funding. Once we understand the outcomes of our bid for further funding through the Detailed Business Case, we will share the next steps.