Sydney Water customers pay $194 million a year to a private firm for a desalination plant that does not work.

The Kurnell plant has been switched off since 2012, and was damaged by a storm in December last year.

A report by the Independent Pricing and Regulatory Tribunal (IPART) says repair work is scheduled to begin next month and last up to a year.

But customers have been paying $194 million a year to Sydney Desalination Plant Pty Ltd to maintain the damaged and inactive facility.

The payments stem from an earlier privatisation deal.

The public asset sale included a fee to be paid by the Government-owned Sydney Water to the plant’s new owners for maintenance in years when the plant was not fully operational.

Opposition water spokesperson Chris Minns says it shows the privatisation was a “dud deal” for taxpayers.

“This plant has been closed since December last year, but we still pay an exorbitant amount to the owners, whether or not it is available,” Mr Minns said.

“The issue was that the privatisation was lauded as a great deal for water users,” he said.

“Now we find out that we have to pay an availability fee to the owners of the plant whether it is available or not.”

Water Minister Niall Blair insists that privatising the plant was a good deal.

“At the moment, they are paying the lowest possible rate for the desalination plant, and now we see a reduction in water prices of over $100 a year every year for the next four years,” Mr Blair said.

“This is the first time it has happened, and it's no thanks to the assets that were left by Labor.

“We now have the lowest water bills in the country.”