Releasing the "sensitive" material was "contrary to the public interest", it said.
The secrecy has angered consumer advocates.
"Melbourne Water is saying that spreading the cost of the desalination plant over its asset life of 50 years, rather than the length of the public-private partnership, which is 27 years, will impact its financial viability," Consumer Action Law Centre chief Gerard Brody said.
"This claim needs to be examined publicly, and that can only be done if its financial modelling is examined closely by the regulator and is open to public scrutiny."
Retailers have applied for a huge price rise of 34 per cent for next financial year for most metropolitan households, mainly to recoup desal plant costs.
The Essential Services Commission will make a draft price ruling for 2013 to 2018 soon.
Melbourne Water must pay consortium AquaSure $18 billion over 27 years before any water is even ordered, under the State Government contract.
Giving households longer to repay would ease the initial price rise and force future generations to chip in more for the plant, but could lead to a higher overall cost because of interest charges on borrowings.
In one example supplied to the commission, average bills would be just under $200 less over the first five years, but Melbourne Water borrowings would blow out by an extra $300 million.
Melbourne Water said releasing the "preliminary internal working documents" would be potentially misleading.
Spokesman Geoff Lynch said the modelling represented "hypothetical" situations prepared for the commission, but was not the only material being considered before the regulator made its decision.
If money were collected from households over a longer period "we would have to either cut services or borrow money and pay interest, which adds to the overall cost, and we don't think either of those alternatives are in the long-term interests of the community", he said.
couriermail.com.au 7 apr 2013
The quote "contrary to the public interest" is a statement that implicates the 'water authority'.
There are a myriad of shelf companies created for the project, that get a slice of the tax payers pie.
Since the fraud is on a billion dollar scale, the oppressive force is overwhelming in keeping the information within the select few.
Another fraud that will go unpunished, and probably the full extent will not be reported or investigated by the corporate media.