The rises came after Coliban Water applied to the commission for an adjustment from the five-year pricing system set on July 1, 2008.

The water company is the first in Victoria to use the ‘‘uncertain or unforeseen’’ events mechanism after prolonged drought had projected the company would be at a loss.

The ESC yesterday agreed to bring forward a two-year predicted increase on variable water prices but reduced fixed access charges over the same period.

Under the new tariffs households in Bendigo that use on average 170 kilolitres of water a year will pay an extra $110 from July 1.

Coliban Water managing director Gavin Hanlon said low water availability from inflows into catchment storages were unforeseen at the time of the formulation of the five-year water plan submitted in 2007-08.

He said the decision would put Coliban Water on a more sustainable financial pathway after several years of losses due to drought.

‘’The pricing announcement allows us to bring forward pre-approved water prices by two years which will improve our cash position,” Mr Hanlon said

‘’This pathway will see us return to a small profit in the final year of our water plan 2012-13 — all things being equal,’’ he said.

Nationals MP for Northern Victoria Damian Drum said Bendigo now faced huge water bill rises because the state government had lost control of any reasonable water management policy.

Mr Drum said he was astonished that the Essential Services Commission had accepted the government’s argument that it needed to massively jack up water prices because of “uncertain and unforeseen” circumstances.

“Those circumstances were simply this: the drought is grinding on, and Bendigo people are being really careful about their water consumption,” he said.

“Yet Labor, and its water authority Coliban Water, say they did not foresee that Bendigo people would heed the calls to conserve water.’’