Water service charges will also be reduced in the next two financial years to remove a dam charge factored into water prices, under an Independent Pricing and Regulatory Tribunal determination that the state government has adopted.

The government abandoned plans for the controversial $477million Tillegra Dam in November.

The tribunal’s report, which was provided to Water Minister Phil Costa’s office last week and made public yesterday, said water service charges for most households would be reduced by $7.47 for the remainder of the financial year, by $22.54 in 2011-12 and $24.35 in 2012-13.

Tenants may not receive any benefits of the reductions because they applied to water service charges that property owners and landlords usually paid.

But the tribunal considered service charges were the most straightforward way to apply the reduction, and that applying it to the water use charge element of bills would have encouraged increased consumption.

Mr Costa said the rebate would be automatically credited and clearly marked on the bill.

Under the determination, residents who had sold their properties and moved outside Hunter Water’s area would have their claims for a rebate assessed on a ‘‘case by case basis’’.

The tribunal said it had calculated about $7.7million had been collected from water customers for the dam so far, and that Hunter Water had spent more than $100million on the project.

‘‘Pending the sale of land on which Tillegra Dam was to be constructed, it is expected that NSW taxpayers [through lower dividends and tax equivalent payments] will bear the carrying costs of these land purchases,’’ the report said.

Mr Costa’s office did not return Newcastle Herald calls about a new Lower Hunter water plan, which the government announced it would commission.