Under the Water Act 2007 (Cth) (the Commonwealth Water Act), the Commonwealth Minister for Water may make water charge rules to apply in the Murray Darling Basin (MDB). The types of charges to which the rules can apply include:
- fees or charges payable to an irrigation infrastructure operator for access, changing access, or terminating access to its irrigation network, including for surrendering a water delivery right
- bulk water charges in respect of MDB water resources
- water planning and management charges in the MDB
- certain other charges prescribed by the Water Regulations 2008 (Cth)
What do the rules do?
All water charge rules must contribute to achieving the Basin water charging objectives and principles set out in Schedule 2 of the Water Act 2007 (Cth). Broadly these objectives and principles seek to:
- promote the economically efficient and sustainable use of water resources, water infrastructure assets and government resources devoted to the management of water resources
- ensure sufficient revenue streams to allow efficient delivery of the required services
- facilitate efficient functioning of water markets
- give effect to the principle of user-pays and achieving price transparency in respect of water storage and delivery in irrigation systems and cost recovery for water planning and management
- avoid perverse or unintended pricing outcomes
Types of rules
To date, three sets of water charge rules have been made:
- Water Charge (Infrastructure) Rules 2010 (Cth) relating to charges payable to operators of water storage, delivery or drainage infrastructure for the purpose of providing irrigation or any other water infrastructure services in relation to MDB water resources;
- Water Charge (Termination Fees) Rules 2009 (Cth) relating to charges for terminating access to water delivery infrastructure or surrendering a right to the delivery of water in the MDB; and
- Water Charge (Planning and Management Information) Rules 2010 (Cth) relating to charges in respect of water planning and management activities in the MDB undertaken by or on behalf of Government.
The Water Charge (Infrastructure) Rules 2010 (Cth) apply to Goulburn-Murray Rural Water Corporation (G-MW) and Lower Murray Urban and Rural Water Corporation (LMW) as they meet the criteria for Part 6 operators specified in these Rules.
The Rules require that the infrastructure charges of these businesses be independently regulated. These charges are currently regulated by the Victorian Essential Services Commission (ESC) under accreditation from the Australian Competition and Consumer Commission (ACCC). These arrangements have applied since 1 July 2012. The framework for regulating these charges is specified in Part 6 of these Rules and enable these businesses to recover the costs of providing an efficient service to customers.
The Water Charge (Termination Fees) Rules 2009 (Cth) came into effect on 1 July 2009 and provide irrigators in the MDB, who sell their water shares, with the option of maintaining or terminating their network connection.
Where irrigators elect to terminate their network connection, the Termination Fee Rules require that any termination fees are to be calculated at no more than 10 times the fixed network access fee for the delivery of water. The Victorian water businesses within the MDB that are affected by these Rules are Coliban Region Water Corporation, G-MW, Grampians Wimmera Mallee Water Corporation and LMW.
The Water Charge (Planning and Management Information) Rules 2010 (Cth) commenced on 24 July 2010, with a transitional implementation period until 30 June 2011, after which time they took full effect.
These Rules apply to charges levied for water planning and management activities undertaken in respect of a MDB resource but do not specifically define such activities. However, the ACCC has released a guide to the Rules that refers to the National Water Initiative (NWI) pricing principles for the recovery of the costs of water planning and management activities as the most useful and comprehensive definition of these activities.
The Rules apply to persons determining these charges (i.e. water businesses, Government and any other persons who determine these charges). The Rules require these persons to publish specific information on these charges including details of the charge and the process for determining the charge.
In Victoria, the Minister of Water determines an Environmental Contribution which is levied on all Victorian water businesses. The Governor-in-Council determines the charges associated with a range of activities that are recorded in the Victorian water register (trade in water shares, water allocations and related dealings). These charges are levied to fund various water planning and management activities captured by the rules. Information on these charges as well as the process and basis for setting these charges is provided in accordance with the rules as follows: