The thought of spreading human poo onto crops may not sound appealing, but there's a multi-million-dollar scheme to turn Canberra's waste into a valuable farming product.

Canberra's water provider wants to turn sewage into high-grade agricultural fertiliser, called biochar, as part of an upgrade of the city's wastewater treatment facilities.

Advocates say it'll not only produce a financial return for the waste we flush down the toilet, but it'll also help fight climate change.

Icon Water says it needs to spend $300 million over the next five years to dramatically improve capacity at the Lower Molonglo Water Quality Control Centre — the capital's largest sewage treatment plant — to cope with the waste from a growing Canberra.

The current plant is reaching capacity, and, at times, authorities have had to release partially treated effluent into the Molonglo River during heavy rainfall, which is jeopardising its environmental license agreements.

Icon Water managing director Ray Hezkial said parts of the plant were reaching the end of their life.

"It was built in the 1970s and I think at that time it was quite cutting edge," Mr Hezkial said.

"What we're seeing now is, obviously, there are some capacity issues here at the plant.

"We need to prepare for that population growth, and some of those assets are coming to the end of their life."

Biochar proposal to lock carbon in the soil

As part of the upgrade to the centre, Icon Water plans to build a new bio-solids treatment facility, which would turn Canberra's waste into a high-grade product demanded by agriculture as a replacement for traditional phosphate fertilisers.

Ray Hezkial said reusing human poo — albeit in a heavily refined way — could be a tough sell.

"For some people, it's a foreign concept," Mr Hezkial said.

"The opportunity we have here, with these upgrades, is we can actually start contributing to things like the circular economy.

Senior planning engineer Patty Chier said Icon Water currently created a lower-grade fertiliser called agri-ash, but its biochar product would be the next level.

"We are looking at putting in a technology that will actually break down microplastics and PFAS [chemical contaminants] and all the pharmaceuticals of concern that is coming into our solids," Ms Chier said.

"Biochar is going to look very much like charcoal that you see in your fireplaces.

"It holds a lot of carbon in it, and it holds a lot of the phosphorus that land around this area needs … so we can use it to spread on farmland."

And Ms Chier said while traditional fertilisers could easily leach into river systems, biochar actually "sequestered" carbon in the soil — helping reduce greenhouse gas emissions.

"Whereas what we have now, a lot of it goes into the air as carbon dioxide."

Ms Chier said the massive upgrade works would all be downstream of Canberra — and customers would not notice any difference.

"I mean, a lot of people don't know Lower Molonglo exists at the moment, so hopefully we will keep it that way," she said.

Biological control to rid drugs and pathogens from our water

Icon Water also plans to upgrade components of the Lower Molonglo facility, including its bioreactor which removes nutrients, pathogens, and pharmaceuticals that are flushed down the wastewater system.

That's important, given the latest wastewater analysis by the Australian Criminal Intelligence Commission confirmed the ACT had the highest capital city consumption of the powerful painkiller oxycodone, and Australia's second-highest use of cocaine, fentanyl, cannabis and MDMA.

Ms Chier said the Lower Molonglo plant was built for a population of around 500,000 people, and Canberra was rapidly approaching that size.

"If we did nothing, we run the risk of discharging water that is not compliant with our license, [which] stipulates what water quality we need to achieve in our discharge.

"So if we don't have this upgrade, we are at risk of breaching that. We don't want to do that because we want to be a good environmental neighbour."

Canberra's treated wastewater is released into the Murrumbidgee River system, which then becomes a water source for many towns and cities all the way to Adelaide.

Upgrades come at a cost to ratepayers

But can Canberrans afford to pay for Icon Water's grand plans?

Last month the ACT's independent pricing commission, the ICRC, announced its most recent price determination — or how water and sewerage prices would increase over the coming five years.

It has allowed Icon Water to lift prices by 6.1 per cent next year, or about $72 extra annually for an average household.

That was slightly below the annual inflation rate of 6.2 per cent.

Senior ICRC commissioner Joe Dimasi said Icon had originally asked for a bigger increase.

"We felt that those capital projects could be pushed out a little bit because it was very challenging to deliver that big capital program in such a short period of time," Mr Dimasi said.

"We thought they needed to achieve some more savings."

However, the ICRC agreed the proposed $270 million upgrades were "prudent".

"Otherwise we will see outcomes that are just not going to be great for the community and for the environment."

Mr Dimasi said the cost would be spread across a growing customer base as the city grows, and even with the 6.1 per cent increase, Canberra water and sewerage prices were around the average of "comparable jurisdictions".