A PLANNED $88 Melbourne Water price hike has been scrapped as the state government scrambles to deal with the fallout from the overcharging blunder.
A billing bungle by Melbourne Water has led to $306million being "over-recovered" as customers were billed for running costs of the unfinished Wonthaggi desalination plant.
The mistake means City West Water customers, including residents from the Maribyrnong municipality, have been overcharged an average of $177 per household, a situation described by Premier Ted Baillieu last week as a "hiccup".
The government has collected $118million from Melbourne Water this year - up from $26million in 2010-11.
Liberal MP Andrew Elsbury conceded it wasn't a perfect situation but argued customers would eventually be reimbursed.
Western suburbs Greens MP Colleen Hartland said the blunder added up to a substantial amount across the state.
"I think it is the responsibility of the government to fix it. They came into power saying they would reduce the cost of living and there hasn't been anything of the sort - they have to fix it now."
Despite pressure to reveal exactly how customers will be reimbursed, Melbourne Water is yet to release the details.