The Water Corporation has fired a salvo at WA's economic watchdog, arguing that forced budget cuts every year are undermining its viability and are not sustainable amid falling demand.
As it handed down its annual report, which showed a net $140 million return to the State Government last financial year, the Water Corp hit out at so-called "efficiency targets", which force it to cut costs.
The Economic Regulation Authority imposed the measures from 2004 and they have saved $300 million and eased customers' bills, according to the Water Corp.
However, chairman Eva Skira said continuing to meet the targets was a "significant challenge" that could ultimately erode the corporation's viability.
The warning came on the back of unexpected falling demand, which grew at just 1.6 per cent in the year to June 30 compared with a forecast rise of 2.6 per cent.
Ms Skira noted the corporation was asked to find the savings every year even though it had one of the lowest operating costs per property of any major Australian water utility.
"Under the agreement Water Corporation has with the ERA, we are required to operate more efficiently every year in ways that will not impact our customers," Ms Skira said.
"As changes are made it becomes harder to identify new areas to improve.
"Going forward, the challenge will be to maintain the 2 per cent, to keep searching for new efficiency initiatives in a market where growth may be slower than recent years and the benefits of economies of scale may lessen."
ERA chairman Lyndon Rowe said he was not surprised or worried by the "positioning statement", though he suggested the Water Corp, rather than the ERA, had set the 2 per cent target.
"Up until now they have been able to achieve it," Mr Rowe said.
"I read this as saying yes, they still think they can, but it's not going to be easy and neither should it be . . . that's what being efficient is all about."