Mr Costa has written to the pricing regulator arguing for Hunter Water price rises to be limited to less than what the utility was seeking.

The Independent Pricing and Regulatory Tribunal will make a final decision this month on a controversial plan to increase Hunter Water charges for a typical household by $220 or 31 per cent from 2008-09 to 2012-13.

Under the plan, prices will rise by $69 or 9 per cent in 2009-10.

The utility had asked for prices to rise by 57 per cent by 2012-13, but the tribunal rejected that and proposed a 31 per cent rise.

"A 31 per cent increase comes at a difficult time for many Hunter Region residents who are feeling the impacts of the global economic crisis," Mr Costa said in a submission to the tribunal.

"The Hunter regional economy is particularly vulnerable to the current economic downturn due to its reliance on commodity exports."

Mr Costa said the NSW Government urged the tribunal to ensure that price increases were "limited to those absolutely necessary to ensure the ongoing supply of safe, healthy and reliable water and sewerage services".

Mr Costa's comments were made despite the NSW Government ordering Hunter Water to build Tillegra Dam and meet new environmental standards.

The utility needed to increase prices to "improve water and drought security for the Hunter region through the construction of Tillegra Dam, as directed by the minister", the tribunal said.

Price rises were needed to pay for sewerage system upgrades worth $100 million to meet Department of Environment and Climate Change standards and to maintain the utility's financial sustainability.

Sydney Water supported its Hunter counterpart, saying the tribunal should not set prices below Hunter Water's costs, which had been "efficiently determined".

It said the tribunal's recommendation of a 31 per cent rise by 2012-13 would set prices $18 million below costs.