Environment Minister Josh Frydenberg knew the expansion of the Snowy Hydro scheme could cost nearly double the $2 billion price Australians were told by the prime minister.
A massive expansion of the iconic hydropower scheme will also require a major upgrade to the poles and wires needed to transmit the electricity it creates.
Snowy Hydro is working with NSW electricity grid operator Transgrid to determine how much that would cost.
Chief operating officer Roger Whitby was reluctant to give a ballpark estimate when he appeared before a Senate committee, saying it depended on many factors, but eventually conceded it was "potentially more than $1 billion" but less than $2 billion.
Prime Minister Malcolm Turnbull visited the Snowy Mountains in mid-March to announce a feasibility study into expanding the scheme to provide more storage and backup energy capacity.
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During interviews in the immediate aftermath, he said it would cost $2 billion to build.
But environment department officials revealed to senators they had always known there would be an extra cost for the transmission upgrade.
"The fact that there would be an extra cost of transmission, the transmission augmentation, that's always been part of all briefings provided," deputy secretary Rob Heferen told the Senate committee on Tuesday night.
"The whole issue about pumped hydro, of which the Snowy is one example, they're matters that have been canvassed through cabinet processes."
Officials said Mr Frydenberg would have certainly known, but it would be speculation on their part to say what other ministers or the prime minister may have been told.
Even the $2 billion for the build could grow, Snowy Hydro executives said.
The project is likely to involve building 27km of tunnel and a new 2000mW power station 1km underground, and it could cost more depending on the geology of the mountains.
The $29 million feasibility study to be finished by the end of the year will confirm such details.
In the federal budget a fortnight ago, the Commonwealth announced it was talking to the NSW and Victoria state governments about buying out their shares of the scheme to allow an easier path to funding the expansion.
Officials said they had no estimate yet of how much that will cost.
