The Hazelwood Pondage is temporarily closed to all recreational water activity after energy company ENGIE found structural damage to the dam wall.
The decision has led to the cancellation of a major sailing regatta due to be held next weekend.
However, barramundi fishing is still permitted from the shore and dedicated fishing areas will remain open.
Engineering consultants found the pondage walls had deteriorated with age since they were built in the 1960s and did not comply with regulatory guidelines.
This means the walls could fail if there was an earthquake of a magnitude six or greater.
Engineers also found some wet zones within the dam wall which could eventually lead to in seepage causing internal erosion and result in a dam-break impacting downstream properties.
Hazelwood mine rehabilitation project director Garry Wilkinson said they had to close the pondage immediately to ensure public safety.
“We are not looking at anything catastrophic. There is no immediate danger,” Mr Wilkinson said.
He said they will lower the water levels to take some pressure off the walls and undertake further detailed studies over the next few months.
Mr Wilkinson said ENGIE had spoken with local residents and was engaging with affected stakeholders while the technical study is being carried-out.
ENGIE is also doing daily inspections and has real-time survey monitoring in place to alert of any movement.
“I sympathise with the community for the loss of such a well-known and valued asset so suddenly,” Mr Wilkinson said.
“But our firm stance on managing risk to the community leads us to no other option but to temporarily close the pondage until further notice.”
Latrobe Valley Yacht Club commodore Geoff Conway said it meant the club had to cancel its annual Latrobe Valley Sauna Sail.
He said the 50-year-old event would have attracted between 80 to 160 boats with 500 participants.
“The sauna sail is an important event. It’s disappointing we have to cancel it. Obviously, safety is a first priority, this is where the focus is,” he said.
Mr Conway said it was impossible to postpone the sauna sail due to the packed calendar of events in the yachting fraternity. He said the club also had to cancel its winter series.
“There is no other place we could hold these events. Lake Narracan is smaller and shallower and these are restrictions so we can’t run events on the same scale,” he said.
Latrobe City Council will keep the Hazelwood Pondage Caravan Park open during the temporary closure.
Latrobe Mayor Darrell White said he was disappointed by the closure which would be a significant loss to the community.
“We understand and acknowledge ENGIE’s need to manage its risks and liabilities. Dam safety and the safety of the community must be of paramount importance,” Cr White said.
“Council is still working through what the implications will mean for its operations and will remain in communications with the response team at ENGIE. We will be seeking from ENGIE its long-term plan for this asset and the likely duration of the closure.”
