The corporation attributed the loss to continued investment in water security projects.

The annual report was released yesterday and Coliban Water chairman John Brooke said the loss was forecast.

“This is something we expected - in fact, at this time last year I predicted a loss of about the same size,” Mr Brooke said.

“Water restrictions have been in place in every one of our towns except one, and they have been severe and those restrictions have cut our revenue by about $7million.”

Mr Brooke said Coliban Water had insured water security by $4.5 million on buying water from outside their catchments.

“Water security is our priority - we are not going to back away from that, no matter what the cost.”

He said Coliban Water was working to rectify expenditure by setting a working party with the help of DSE and other government departments.

Managing director Gavin Hanlon said Coliban Water would not axe jobs as part of the cost-cutting regime.

Coliban has also signalled that more price rises are under consideration. Its current water plan has a 60 per cent price rise over five years.

“At the moment Coliban Water’s pricing is the 13th lowest in Australia for households with an average yearly usage of 200 kilolitres, so prices in Bendigo are comparatively low,” Mr Hanlon said.

The report also detailed Coliban Water’s continued commitment to invest in capital works projects.

Projects vary from $20,000 to $27 million and include the development of a pipeline between Castlemaine and Bendigo, maintaining pumps and a Bridgewater treatment plant.

Meanwhile, Melbourne Water revealed that it had defied the drought and water restrictions to post a net profit of $128 million in 2008-09 - almost doubling its previous year’s profit.