Winnipeg's major sewage treatment project could now top $2 billion due to excessive inflation and an order to speed up a key component of the project.

A new city report estimates costs for the North Sewage Treatment Plant Project are overflowing again, this time by $360 million. The upgrades are being done in three phases to increase capacity and cut down on pollution destined for Lake Winnipeg.

"I'm going to have questions when that report comes. I mean it's a huge cost increase," said Councillor Brian Mayes.

The total costs had been pegged at $1.8 billion. However the report says the second phase of the project could be increasing from $552 million to $912 million – a $360 million spike.

The city blames this in part on excessive inflation and financing costs and a funding request delay by the province for federal money.

"Years of delay by the former premier didn't help," Winnipeg Mayor Brian Bowman said Thursday.

In a statement, the province said it is analyzing the most recent report from the city.

"There have been no delays in provincial approvals, and we remain committed to working with the city on collaborative options to ensure our waterways are cleaned up as quickly as possible," the statement reads.

The report also says a new requirement by the province for the city to speed up an aspect of the project to remove phosphorus, which causes algae blooms, is also driving up the cost.

"If we're going to get the phosphorus out more quickly, there's a cost to that," said Mayes. "I think that's money well spent."

The Lake Winnipeg Foundation agrees.

"I'm thrilled. I was so excited to read this report," said Alexis Kanu, the executive director of the foundation.

Kanu said by pushing this element of the project up, it could actually save money overall.

"The most expensive element of this treatment plant upgrade is time," Kanu said. "So the longer we wait to put in place those critical environmental protections, the more expensive they become."

The city is awaiting word from Ottawa on the funding request for phase two. Premier Heather Stefanson announced late last year it was being forwarded to Ottawa.

The city's public service is asking the matter be referred to the 2024 budget process. In the meantime, it says it will look at ways to curb the costs including looking for additional funding sources.