This work is copyright. In addition to any use permitted under the Copyright Act 1968, all material contained within this work is provided under a Creative Commons Attribution 3.0 Australia licence, with the exception of:
the Commonwealth Coat of Arms
the ACCC and AER logos
any illustration, diagram, photograph or graphic over which the Australian Competition and Consumer Commission does not hold copyright, but which may be part of or contained within this publication.
The details of the relevant licence conditions are available on the Creative Commons website, as is the full legal code for the CC BY 3.0 AU licence.
Requests and inquiries concerning reproduction and rights should be addressed to the Director, Corporate Communications, ACCC, GPO Box 3131, Canberra ACT 2601, or [email protected].
Important notice
The information in this publication is for general guidance only. It does not constitute legal or other professional advice, and should not be relied on as a statement of the law in any jurisdiction. Because it is intended only as a general guide, it may contain generalisations. You should obtain professional advice if you have any specific concern.
The ACCC has made every reasonable effort to provide current and accurate information, but it does not make any guarantees regarding the accuracy, currency or completeness of that information.
Parties who wish to republish or otherwise use the information in this publication must check this information for currency and accuracy prior to publication. This should be done prior to each publication edition, as ACCC guidance and relevant transitional legislation frequently change. Any queries parties have should be addressed to the Director, Corporate Communications, ACCC, GPO Box 3131, Canberra ACT 2601, or [email protected].
List of abbreviationsABARES Australian Bureau of Agricultural and Resource Economics
ACCC Australian Competition and Consumer Commission
BRC Border Rivers Commission
CEWH Commonwealth Environmental Water Holder
CCA Competition and Consumer Act 2010 (Cth)
CIT Central Irrigation Trust
CPI Consumer Price Index
DPI NSW Department of Primary Industries
DELWP Vic Department of Environment, Land, Water and Planning
DEWNR SA Department of Environment, Water & Natural Resources
DNRM Qld Department of Natural Resources and Mines
EWH Environmental Water Holder
EPD ACT Environment and Planning Directorate
ESC Essential Services Commission (Victoria)
GL Gigalitre (one billion litres)
GMW Goulburn-Murray Water
GWMW Grampians Wimmera Mallee Water
GS General security
HP High pressure
HS High security
ICD irrigation corporation and district
IIO Irrigation infrastructure operator
IPART Independent Pricing and Regulatory Tribunal (NSW)
IR Irrigation right
JWSS Joint Water Supply Scheme
LP Low pressure
LTAAY Long Term Average Annual Yield
LMW Lower Murray Water
MDB Murray-Darling Basin
MDBA Murray-Darling Basin Authority
MI Murrumbidgee Irrigation Limited
MIL Murray Irrigation Limited
MJA Marsden Jacob Associates
ML Megalitre (one million litres)
MP Medium pressure
NVIRP Northern Victoria Irrigation Renewal Project
NWC National Water Commission
NWI National Water Initiative
Off-river IO Off-river infrastructure operator
On-river IO On-river infrastructure operator
QCA Queensland Competition Authority
RFI Request for Information
RIT Renmark Irrigation Trust
SDL Sustainable diversion limit
SRWUIP Sustainable Rural Water Use and Infrastructure Program
TNAC Total Network Access Charge
WA Water allocation
WAE Water access entitlement
WCIR Water Charge (Infrastructure) Rules 2010
WCPMIR Water Charge (Planning and Management Information) Rules 2010
WCTFR Water Charge (Termination Fees) Rules 2009
WDR Water delivery right
WMI Western Murray Irrigation Limited
WMR Water Market Rules 2009
WPM Water Planning and Management
WTR Basin Plan Water Trading Rules
GlossaryBasin Plan a high level framework agreed to by the Australian Government
and Basin States that sets standards for the management of the Murray-Darling Basin‘s water resources in a coordinated and sustainable way in collaboration with the community. Officially known as the Basin Plan 2012
Basin State NSW, Victoria, Queensland, SA, or the ACT
bulk water charge a charge payable for the storage of water for, and the delivery of water to:
(i) infrastructure operators
(ii) other operators of reticulated water systems
(iii) other persons (including private diverters and environmental water holders)
carryover arrangements which allow water entitlement holders to hold or allocated water in storages so that it is available in subsequent years
Infrastructure charge charges infrastructure operators impose for access to their water service infrastructure and services provided in relation to that access
infrastructure operator any person or entity who owns or operates infrastructure for one or more of the following purposes:
(i) the storage of water
(ii) the delivery of water
(iii) the drainage of water
for the purpose of providing a service to another person
irrigation infrastructure operator (IIO)
any person or entity who owns or operates water service infrastructure for the purpose of delivering water to another person for the primary purpose of being used for irrigation
irrigation network a network of carriers (typically open channels, pipes and/or natural waterways) used to convey water from a water source through customer service points to customer properties—an irrigation network may be either a gravity-fed network (typically using channels and/or natural waterways) or a pressurised network (using pipes)
irrigation right a right that a person has against an IIO to receive water which is not a water access right or a water delivery right—an irrigation right can usually be transformed into a water access entitlement
Infrastructure service access, or a service provided in relation to access, to water service infrastructure and includes the storage, delivery, drainage and taking of water
non-volumetric charge a charge that does not that reference a volume of a water right, for example, a charge which is levied per account, per outlet or per meter
Off-river infrastructure operator operators which provide Off-river infrastructure services
Off-river infrastructure service includes the storage, delivery and/or drainage of water diverted from a natural watercourse through a network consisting of channels and/or pipes (which can be gravity-fed or pressurised) to another person
On-river infrastructure operator operators which provide On-river infrastructure services
On-river infrastructure service includes harvesting and storing water through infrastructure, such as dams, lakes, weirs and reservoirs located primarily on a natural watercourse, and delivering water, primarily through natural watercourses
private diverter an irrigator that extracts water directly from a natural watercourse (either a regulated or unregulated river)
reporting IOs an irrigation infrastructure operator (IIO) that:
holds, or whose customers hold, more than 10 GL of water access entitlement, and
imposes regulated water charges
regulated water charge includes a water charge to which any of the three sets of water charge rules applies:
Water Charge (Infrastructure) Rules
Water Charge (Planning and Management Information) Rules
Water Charge (Termination Fees) Rules
See s. 91 of the Act for a full definition
termination when a person terminates or surrenders the whole or part of a right of access to the IIO’s network, typically by terminating water delivery right
termination fee a fee that may be imposed by an IIO when an irrigator terminates
the Act the Water Act 2007 (Cth)
total network access charge (TNAC)
the amount on which the termination fee multiple is applied in order to calculate a maximum termination fee. The total network access charge is the sum of all amounts that would have been
payable for access to an operator’s irrigation network by an irrigator in respect of a full financial year if termination or surrender had not occurred, excluding:
any amount calculated by reference to the amount of water actually delivered to the terminating irrigator (that is, variable irrigation network charges)
any amount in respect of a service for the storage of water
connection/disconnection fees
any amount that exceeds the cost of providing irrigators with access to an operator’s irrigation network
fees under ACCC approved contracts
tradeable water right (a) water access rights
(b) water delivery rights
(c) irrigation rights
transformation the process by which an irrigator permanently transforms their entitlement to water under an irrigation right against an IIO into a water access entitlement held by the irrigator (or anybody else other than the IIO), thereby reducing the share component of the operator’s water access entitlement
volumetric charge a charge imposed based on the volume of a water right or physical amount of water. A fixed volumetric charge is a charge based on the volume of a water right held, while a variable volumetric charge is a charge based on the volume of the right that is utilised in a particular manner
water access entitlement perpetual or ongoing entitlement, by or under a law of a state, to exclusive access to a share of the water resources of a water resource plan area
water access entitlement trade the change of ownership and/or location of a water access entitlement (including through the establishment of a tagging arrangement)
water access right any right conferred by or under a law of a state to hold and/or take water from a water resource, and includes:
stock and domestic rights
riparian rights
a water access entitlement
a water allocation
water allocation the specific volume of water allocated to water access entitlements in a given water accounting period
water allocation trade the change of ownership and/or location of a particular volume of
water allocation
watercourse means a river, creek or other natural watercourse (whether modified or not) in which water is contained or flows (whether permanently or intermittently) and includes:
(i) a dam or reservoir that collects water flowing in a watercourse
(ii) a lake or wetland through which water flows
(iii) a channel into which the water of a watercourse has been diverted
(iv) part of a watercourse
(v) an estuary through which water flows
Water Charge (Infrastructure) Rules 2010 (WCIR)
water charge rules for fees and charges payable to an infrastructure operator for:
bulk water charges
access to the irrigation infrastructure operator’s network or services provided in relation to that access
matters specified in regulations made for the purposes of s. 91(1)(d) of the Water Act 2007
Water Charge (Planning and Management Information) Rules 2010 (WCPMIR)
water charge rules relating to charges for water planning and water management activities in the Murray-Darling Basin and requiring the publication of information on the details of the charge and the process for determining the charge
Water Charge (Termination Fees) Rules 2009 (WCTFR)
water charge rules for fees or charges payable to an IIO in relation to terminating access to an operator’s irrigation network (or services relating to such termination), or surrendering a right to delivery of water through the operator’s irrigation network
water delivery right (WDR) a right to have water delivered by an infrastructure operator—a water delivery right typically represents the holder’s right of access to an irrigation network (there may also be a right to drainage), and can be terminated
Water Market Rules 2009 (WMR) rules dealing with actions or omissions of an IIO that prevent or unreasonably delay transformation arrangements or trade
water service infrastructure infrastructure for one or more of the following purposes:
(i) the storage of water
(ii) the delivery of water
(iii) the drainage of water
for the purpose of providing a service to another person
Water trading rules (WTR) the rules set out in Part 12 of the Basin Plan 2012.
The rules relate to the trade or transfer of tradeable water rights. The rules commenced on 1 July 2014 and are enforced by the Murray-Darling Basin Authority.
Key findingsThe Water Act and associated rules have resulted in improvements in the transparency of information about water charging arrangements in the Murray-Darling Basin (MDB). Water right holders’ ability to deal flexibly with their rights has also increased due to Basin State reforms and the development of Commonwealth rules to reduce or remove restrictions on dealing with rights to water and infrastructure access.
However, there remains a lack of clarity about tradeable water rights, particularly for customers of Off-river infrastructure operators. Many operators do not make clear which charges relate to which rights, or that tradeable water rights may be dealt with separately from each other. This lack of clarity may hamper customers’ ability to make efficient decisions about trade of water access rights, transformation of irrigation rights into statutory water access entitlements, and the termination of access to infrastructure.
Further, some operators’ charging arrangements result in preferential treatment for certain customer groups. Current examples include:
charging structures that favour larger customers and may not reflect underlying costs of supply
charges applying to the trade of water allocation out an area that appear to be beyond the reasonable administration cost of trade processing, and
charging groups based on purpose of water use, where differences in charges across groups are not clearly linked to underlying differences in costs.
Such arrangements are likely to influence irrigators’ decisions on using, carrying over and trading their water and may impact the efficiency of water use across the MDB.
Charging arrangements continue to vary widely across the MDB for both On-river and Off-river IOs and also for water planning and management (WPM) activities. Charging outcomes for the 2014−15 year are:
Despite all Basin States committing to the principle of full cost recovery for water planning and management (WPM) activities under the National Water Initiative, only one Basin State department and one water authority appeared to fully recover the user share of the reported cost of their WPM activities. There continue to be difficulties in attributing the cost of WPM activities and revenues.
For On-river infrastructure operators (‘On-river IOs’), hypothetical bills increased in real terms for most systems (26 out of 36 hypothetical bills). Bill changes since 2013−14 ranged from an 11 per cent decrease in real terms (GMW–Murray private diverters) to a 30 per cent increase (WaterNSW–Murray–High security). Since 2009−10, On-river IO bills have been lowest for larger systems, where there are higher volumes of usage/water access entitlement on issue.
For Off-river infrastructure operators (‘Off-river IOs’), hypothetical bills increased in real terms for a majority of networks, with more variability among gravity-fed networks. Three Off-river IOs applied tiered charging arrangements to one or more of their charges. Off-river IOs use a range of approaches for passing through WPM and on river infrastructure charges onto their customers. However, many approaches are not transparent and some could adversely affect customers’ decisions.
In 2014−15 there was an increase in the number and volume of transformations. To date roughly 16 per cent of the total volume of irrigation right on issue at 1 July 2009 has been transformed into statutory water access entitlements. This increase occurred despite a decline in water recovered for the environment via Commonwealth water purchases and infrastructure upgrades which in the past have been strong drivers for transformation.
The volume of water delivery right (WDR) terminated in 2014−15 is the lowest since the ACCC began monitoring in 2009–10. Across all operators, 7 per cent of the volume of WDR on issue at 1 July 2009 has been terminated to date, although termination activity has been much greater in some operators than others. In 2014−15, the majority of terminating irrigators chose to terminate only a portion of their WDR.
Concerns raised by irrigators in 2014−15 mostly related to operators’ fees and charges or policies for trade, termination or transformation. In some instances, customer concerns reflected a lack of information about charging arrangements. Other concerns related to charging arrangements or policies which resulted in perceived different or ‘unfair’ treatment of particular customer groups. Issues relating to transparency of operators’ charging arrangements will be an important part of the compliance agenda going forward. The ACCC has also taken into account current examples of charging arrangements and policies which restrict trade or favour certain customer groups at the expense of others, in forming its advice on the review of the Water Charge Rules.
SummaryThis is the sixth annual water monitoring report by the Australian Competition and Consumer Commission (ACCC) to the Commonwealth minister responsible for water. This report provides an opportunity to inform the minister, Basin States, operators and water users more broadly about the ACCC’s monitoring of regulated charges, transformation arrangements and the degree of compliance with the water rules administered by the ACCC.
This report illustrates the significant progress that has been made to date to improve water markets in the MDB through the Water Act and associated rules.
Water markets are facilitated through the water planning and management activities of governments and the operation of infrastructure used to store and deliver water to users. However, the natural monopoly characteristics of infrastructure operators mean that direct competition is unlikely to develop between operators. In the absence of competition, infrastructure operators hold market power, which can result in prices, quality, service levels or innovation diverging from competitive levels. As customers are not able to change service providers without incurring substantial costs, these infrastructure operators may have the ability to engage in discriminatory behaviour against customers, certain customer types or potential customers, undermining the efficient use of water resources and water infrastructure.
In addition to having an incentive to depart from competitive charging arrangements, operators have an incentive to prevent water being traded from their area of operations since trade ‘out’ of an area reduces an operator’s ability to levy infrastructure charges. Examples of such barriers include trade restrictions, charges on water being traded ‘out’ of an area, high termination fees or restrictions on customers’ ability to transform their contractual right to water into a more widely tradeable statutory right. These restrictions can affect water market liquidity and hamper the efficient use of water resources.
The ACCC assists in addressing these issues by monitoring the rural water sector and enforcing the water market rules and water charge rules made by the Minister under the Act. In undertaking these roles, the ACCC contributes to achieving the objectives of the Act by regulating the charging practices of natural monopoly infrastructure operators on certain matters, reducing barriers to trade, improving access to markets for irrigators and other water users and ensuring greater pricing transparency in the MDB.
Regulating water chargesRegulated charges are imposed by Basin State departments, water authorities, On-river and Off-river infrastructure operators (IOs) to recover the costs of their respective activities.
All water market participants in the MDB are impacted by regulated water charges. There is growing recognition of the impact these charges have on irrigators’ decisions to use, carry over or trade their water.
To regulate the charges imposed on water market participants there are three sets of water charge rules enforced by the ACCC:
The Water Charge (Planning and Management Information) Rules 2010 (WCPMIR) seek to improve the consistency, availability and transparency of information about water planning and management (WPM) charges and costs of associated WPM activities.
The Water Charge (Infrastructure) Rules 2010 (WCIR) apply to charges imposed by infrastructure operators for providing their customers with On-river and/or Off-river infrastructure services. Rule requirements depend on the operator’s size and ownership structure. The rules require all infrastructure operators to provide a certain level of information to their customers about their infrastructure charges and prohibit certain types of price discrimination. They also require a regulator to approve the charges of the largest infrastructure operators.
The Water Charge (Termination Fee) Rules 2009 (WCTFR) regulate the termination fees an Off-river infrastructure operator can impose on an irrigator terminating their right of access to the operator’s network and limit the circumstances where the operator can impose such a fee.
In December 2014, the Minister requested the ACCC to review the Water Charge Rules. The ACCC’s review has considered opportunities to reduce costs to industry and government. Particular areas of focus have included:
options to improve pricing transparency
facilitating more efficient water markets
differential charging between customers
the appropriateness of the tiered regulatory approach in the WCIR
the form of price regulation for medium and large infrastructure operators
the calculation and application of termination fees, and
other opportunities to improve the clarity and operation of the rules.
Basin State departments and water authoritiesBasin State departments and water authorities impose charges that recover a proportion of the costs associated with their WPM activities. These activities support the sustainable management of water resources, ensure the integrity of water access entitlement frameworks and administer the trade of tradeable water rights.
WPM charges typically increase each year by a consistent amount such as the Consumer Price Index or according to a price path approved by a Basin State regulator. In 2014−15, estimated revenue from WPM charges increased in all Basin States and water authorities except for the NSW’s Department of Primary Industries and Victoria’s Department of Environment, Land, Water and Planning (DELWP).
The WCPMIR require Basin State departments and water authorities to publish cost information. The ACCC continues to work with Basin State department and water authorities to ensure the publication of data that reflects, as accurately as possible, the WPM activities and associated costs despite practical limitations.
For 2014−15, there was significant variation in the reported cost of WPM activities across Basin States and water authorities. There was also significant variation in the breakdown of total WPM costs by activity. Total costs associated with WPM activities across Basin States increased by 15 per cent (13 per cent in real terms) compared to the previous year.
The Victorian department, DELWP, continues to over-recover for WPM activities, but by a decreasing amount since 2012−13. Although SA’s Department of Environment, Water and Natural Resources again under-recovered in 2014−15, it has been steadily moving towards full cost recovery since 2011−12.
Infrastructure operatorsInfrastructure operators provide infrastructure services to their customers and operate either On-river or Off-river (or, in a minority of cases, both). On-river infrastructure operators (On-river IOs) impose On-river infrastructure charges to recover costs associated with harvesting, storing and delivering water through natural watercourses. Off-river infrastructure operators (Off-river IOs) impose Off-river infrastructure charges to recover costs associated with maintaining and operating their Off-river network.
Both On-river and Off-river IOs tend to be natural monopolies in their areas of operation. In the absence of competition, prices, quality, service levels and innovation can diverge from competitive levels which can result in less efficient market outcomes. The WCIR aim to promote efficient market outcomes, introduce a more consistent approach to pricing with greater transparency across the Basin States and prohibit certain discriminatory pricing practices.
The WCIR transparency requirements have improved information availability across the MDB—chiefly through a requirement to publish a schedule of charges. However, due to the considerable differences in terminology and approach across infrastructure operators, comparing charges across operators over time is difficult. To enable a meaningful comparison, the ACCC produces a number of hypothetical bills.
While IOs enjoy a monopoly in the provision of infrastructure services in particular areas, the development of water markets has meant that demand for these infrastructure services can change over time as water is traded from place to place. IOs have an incentive to restrict the trade of water from their area as such trade will reduce demand for their infrastructure services. The WCTFR and WMR aim to ensure these restrictions are not unreasonable.
On-river infrastructure operatorsThis report covers five On-river IOs in the MDB: Lower Murray Water (LMW), Goulburn Murray Water (GMW), WaterNSW, SunWater and the Queensland Department of Natural Resources and Mines (DNRM). Of these, LMW, GMW and WaterNSW are required under the WCIR to have their regulated charges approved or determined by either the ACCC or an accredited Basin State regulator.
LMW and GMW are currently regulated by the Victorian Essential Services Commission (ESC), while WaterNSW is regulated by the ACCC. From 1 June 2016, the NSW Independent Pricing and Regulatory Tribunal (IPART) has been accredited to approve or determine regulated charges for WaterNSW.
The Queensland Competition Authority (QCA) oversees regulated charges of SunWater under state legislation. The Murray-Darling Basin Authority (MDBA) and Border Rivers Commission (BRC) also provide On-river infrastructure services but do not currently impose any infrastructure charges. Rather, the costs associated with the MDBA and BRC met via Basin State contributions, a proportion of which is then recovered from water users using a range of approaches, some more transparent than others.
There are no On-river infrastructure operators in South Australia. Instead, the MDBA performs relevant water storage and delivery actions. The SA Government levies WPM charges on SA irrigators to contribute to the MDBA’s funding.
On-river IOs’ charging arrangements continue to vary primarily according to the proportion of fixed and variable charges imposed. LMW and GMW impose 100 per cent fixed On-river charges on customers, whereas WaterNSW, SunWater and the Department of Natural Resources and Mines in Queensland impose a mix of fixed and variable charges.
The level of On-river infrastructure charges varies significantly across systems and charge categories. Larger systems in the Murray and Murrumbidgee rivers tend to have lower hypothetical bills than smaller systems. This is in part due to the significant level of On-river infrastructure services provided by the MDBA in these systems, and also to the fact that there are greater volumes of water access entitlement and usage in these systems over which costs can be spread.
In 2014−15, hypothetical bills for the majority of On-river IO customers increased (26 out of 36 hypothetical bills increased in real terms). Hypothetical bills increased the most for high security in WaterNSW’s Murray system, by 32 per cent (30 per cent in real terms) compared to 2013−14. However, some systems saw a reduction of up to 11 per cent in real terms.
Chart S.1: On-river IOs—southern MDB—percentage changes in total hypothetical bills—1000 ML of water access entitlement, 50 per cent and 100 per cent water delivered, 2013−14 to 2014−15 (nominal)
Source: ACCC from data provided and published by Off-river infrastructure operators.
Chart S.2: On-river IOs—northern MDB—percentage changes in total hypothetical bills—1000 ML of water access entitlement, 50 per cent and 100 per cent water delivered, 2013−14 to 2014−15 (nominal)
Source: ACCC from data provided and published by Off-river infrastructure operators.
Off-river infrastructure operatorsFor most reporting Off-river IOs, the WCIR imposes baseline requirements in relation to the transparency of charges and non-discrimination between irrigation right holders and other customers.
Charging regimes continue to vary considerably across the MDB for Off-river IOs. This variation reflects differences in infrastructure (whether networks are gravity-fed channels or pressurised pipes),
technology, scale, level of service, infrastructure age and type, business model and applicable regulatory approaches.
On balance, hypothetical bills in pressurised networks tend to be larger than bills in gravity-fed networks. In 2014−15, total hypothetical bill for irrigators with 250 ML of water delivered range from $11 799 to $52 352 in pressurised networks and from $5126 to $34 176 in gravity-fed networks.
On-river infrastructure charges and WPM charges paid by Off-river irrigators are also included in Off-river hypothetical bills. These charges are passed through to customers in a wide variety of ways. The proportion of hypothetical bills associated with WPM and On-river infrastructure charges tends to be higher for smaller Off-river IOs and lower for larger Off-river IOs.
Hypothetical bills have increased in both nominal and real terms in 2014−15 for a majority of networks. Changes in these bills have been more varied in gravity-fed networks compared to pressurised networks.
The charts below show the nominal change in hypothetical bills for Off-river customers between 2013−14 to 2014−15 in pressurised (chart S.3) and gravity-fed (chart S.4) networks. The bills are broken down to show the effect of changes in Off-river infrastructure charges, On-river infrastructure charges and WPM charges.
Chart S.3: Off-river IOs—changes in WPM, On-river and Off-river charge components of hypothetical bills for irrigators in pressurised networks, 250 ML of water access entitlement, 100 per cent water delivered, 2013−14 to 2014−15 (nominal)
Source: ACCC from data provided and published by Off-river infrastructure operators.
Chart S.4: Off-river IOs—dollar changes in WPM, On-river and Off-river charges for irrigators in gravity-fed networks—250 ML of water access entitlement, 100 per cent water delivered, 2013−14 to 2014−15 (nominal)
Source: ACCC from data provided and published by Off-river infrastructure operators.
Longer term trends in regulated water chargesSince 2009−10, hypothetical bills for On-river IOs have increased in most networks across the MDB. In the southern MDB for general security customers, hypothetical bills increased by between 10 and 44 per cent in real terms over the six years since 2009−10, while bills for southern MDB high security customers increased by between 14 and 92 per cent. Hypothetical bill changes in the northern MDB were more varied. For general security (NSW)/medium priority (Qld) customers, bill changes in real terms ranged from a 20 per cent decrease (Chinchilla Weir) to a 127 per cent increase (Maranoa River). Real bill changes for northern MDB high security customers ranged from a 94 per cent decrease (NSW Border Rivers) to a 78 per cent increase (Peel). Across the MDB as a whole, bill changes varied most in NSW and were more pronounced for valleys with a smaller volume of water access entitlement on issue than in valleys with larger entitlement volumes.
Since 2009−10, hypothetical bills for Off-river IOs in all pressurised networks except one and all gravity-fed networks have increased in real terms. For pressurised networks, real bill changes over the past six years for 250 ML of water delivered ranged from a 16 per cent decrease (MI-IHS-HS)1 to a 22 per cent increase (GMW-Nyah) (assuming 100 per cent delivered). Hypothetical bills in gravity-fed networks varied more significantly over this period, with real bill changes for the period ranging from a 6 per cent decrease (LMW-Merbein) to a 54 per cent increase in Hay. Generally among gravity-fed networks, larger increases have been found in smaller networks.
1 Bill change for MI-IHS-HS is for the period 2012−13 to 2014−15, since earlier data is not available.
Regulated charges—customer impactsCharging arrangements differ considerably across the MDB. While specific arrangements can reflect differences in underlying costs and physical infrastructure, some aspects of charging arrangements can have the effect of discriminating between customers or groups.
One approach to imposing charges is for the amount payable to vary across customers in line with their right of access to and use of infrastructure. Larger customers who hold larger volumes of water delivery rights, and consequently have a larger right to access the infrastructure, will pay more than smaller customers. However, other approaches such as tiered tariff structures may adversely affect smaller irrigators as the total cost to users (on a per ML basis) declines as more water is either held or delivered.
Another commonly used approach is to impose non-volumetric charges that are not linked to the volume of water delivery right, irrigation right or water access right the customer holds or to the volume of water delivered. These charges are levied on other bases, such as per account, per landholding or per outlet, and generally relate to a particular service that is provided by an infrastructure operator and/or to dedicated infrastructure used solely by the customer (e.g. a meter or outlet). Chart S.5 sets out the proportion of Off-river IO hypothetical bills associated with non-volumetric charges between 2012−13 and 2014−15. Where non-volumetric charges constitute a high proportion of customers’ bills, smaller customers will pay more per ML than larger customers. In some cases use of non-volumetric charges may reflect underlying cost structures, but otherwise these charging structures may be to the detriment smaller customers.
Chart S.5: Off-river IOs—proportions of hypothetical bills associated with non-volumetric charges, 250 ML water delivery right, 50 per cent water delivered, 2012−13 to 2014–15
Source: ACCC from data provided and published by reporting operators.
Improving water marketsA significant proportion of water access entitlement on issue in the MDB continues to be held within Off-river IOs. As such, to ensure that water markets operate efficiently and water can flow to its highest value, it is important that any unnecessary barriers to trade are removed or limited. Potential barriers to trade can include particular trade-related charges, processing times for transformations of irrigation right, and very high termination fees (in per ML terms) for some water delivery right holders.
Regulated charges and water markets
Trade application charges typically recover costs associated with Basin States or infrastructure operators assessing proposed water trades however for some types of trade (particularly interstate trade) these costs can be significant.
Some operators in the MDB currently impose infrastructure charges when water is traded out of there area, or between different customer types. This can have the effect of distorting individuals’ decisions to enter water markets and the extent to which they engage in them.
Transformation of irrigation right
IIOs have an incentive to restrict water trade out of their areas as they derive their revenue from infrastructure charges for access to, and use of, their irrigation networks to deliver water. This incentive exists even where such trades are in the interests of their customers and would result in water moving to a higher valued use. Until 2009, IIOs could prohibit or greatly restrict their customers’ ability to trade their right to water outside their irrigation network.
By transforming their irrigation right into a statutory water access entitlement, irrigators can more easily trade their water to areas beyond their own irrigation network, free of restrictions imposed by their IIO. In 2009, the Water Market Rules (WMR) were introduced, which prevent an IIO from unreasonably delaying the transformation of irrigation rights and imposing excessive processing fees.
Over the period 2009−10 to 2014−15, 521 GL of irrigation right has been transformed, in 1896 transactions. This volume represents around 16 per cent of the total volume of irrigation right on issue at 1 July 2009 for those operators who are able to give effect to transformation.
Since 2009−10 there has been a general downward trend in the annual number of applications for transformation and the total volume of water transformed. For 2014−15, the number of applications and aggregate volume transformed was somewhat higher than in 2013−14, but still significantly below previous years.
In past years, the total volume of transformations has largely followed trends in Commonwealth water access entitlement acquisitions (via direct buyback and investment in water infrastructure programs). However, as shown in chart S.6, in 2014−15 the volume of transformations increased, while the amount of Commonwealth acquisitions declined substantially compared to previous years. This data suggests that irrigators may increasingly be transforming for reasons other than participation in government water recovery programs, such as flexibility of managing water rights and incentives in water markets.
Chart S.6: Total volume of transformations and Commonwealth water acquisitions, 2009–10 to 2014−15
Sources: ACCC from data provided by reporting operators, MDBA, National Water Commission.
Termination of water delivery right
The WCTFR regulate the maximum amount that an IIO can impose on an irrigator who terminates their right of access to the IIO’s network and the circumstances in which this charge (known as a ‘termination fee’) can be imposed. Prior to the introduction of the WCTFR, irrigators throughout the MDB faced very high fees to terminate water delivery rights and/or were forced to terminate their right of access if they traded water externally.
Irrigators took advantage of the lower termination fees brought about by the introduction of the WCTFR, and higher water prices, to trade water and adjust their access to IIO networks to better align their access to water with their business needs.
As with transformation, there was a relatively large volume of water delivery right terminated upon the commencement of the WCTFR (compared to prior levels), most of which was accompanied by a transformation. Once this initial backlog was met, there has been a fairly flat trend in the overall number of terminations since 2010−11, although the number of irrigators terminating their water delivery right without transforming any irrigation right has generally been increasing (see chart S.7). Infrastructure upgrades and network rationalisations in several larger IIOs are likely to be a reason for this. Overall, during the period 2009−10 to 2014−15, only 7 per cent of the total volume of water delivery rights on issue on 1 July 2009 has been terminated. However, some operators have had a relatively greater proportion of terminations than others.
Chart S.7: All IIOs that can give effect to transformation—number of customers, transformation and/or termination decisions, 2009−10 to 2014−15
Source: ACCC from data provided and published by Off-river infrastructure operators.
Termination fees
The ACCC constructs hypothetical termination fees in order to provide a meaningful comparison of potential termination fees across IIOs. Hypothetical termination fees represent what a customer would pay to terminate their access to an IIO’s network, assuming no discounts or fee waivers occur. In 2014−15, there was considerable variability in the level of hypothetical termination fees between IIOs. For pressurised networks, hypothetical termination fees in 2014−15 ranged from $276 per ML in CIT to nearly $1200 per ML in LMW-Robinvale. For gravity-fed networks, smaller IIOs generally charged smaller termination fees (between $50–$250/ML) while termination fees for larger IIOs were more varied (between $50/ML and $750/ML).
However, on most occasions in 2014−15, IIOs did not actually impose a termination fee on terminating customers (only 51 customers out of 132 reported terminations were charged a non-zero termination fee). This was largely due to the funding provided from government-funded infrastructure programs, particularly the GMW Connections Project.
Non-volumetric charges can impact the termination fee payable as well as the incentives faced by irrigators considering termination. Chart S.8 shows, for selected operators, the impact of non-volumetric charges on termination fees expressed per ML of water delivery right terminated. If an irrigator retains their connection to their operator’s network when terminating part of their right of access, non-volumetric charges do not form part of the basis for calculation of termination fees; these charges are only included when a customer ‘fully’ terminates, that is, terminates their connection to the network as well as the whole volume of their WDR.
Chart S.8: Effect of non-volumetric charges—$ per ML termination fee for 100 per cent volume terminated (retain connection), and marginal additional per ML termination fee for 100% volume terminated (disconnection)
Source: ACCC from data provided and published by Off-river infrastructure operators.
The inclusion of non-volumetric charges in termination fees significantly disadvantages irrigators when they choose to disconnect from the network altogether. This provides an incentive for customers who would otherwise wish to fully terminate (i.e. no longer irrigate or have access to the Off-river IOs network) to instead retain a small portion of their right of access. This can affect irrigators’ ability to flexibly manage their tradeable water rights, and also has implications for Off-river IOs, particularly in relation to the network configuration and ensuring the network is operating as efficiently as possible.
Transformation, termination and trade
Transformation, termination and trade decisions are often closely interlinked, as they are the key means by which irrigators adjust their water right holdings. Most reporting entities had some water allocation trade during 2014−15. However, the nature of the trade varied significantly across infrastructure operators.
Because of the different factors affecting the relative benefits of termination, transformation and trade, the degree to which these activities are correlated is an empirical question. Chart S.9 shows the correlations between the volume of irrigation right transformed and the annual allocation trade into and out of large operators’ networks.
Chart S.9: Operators who can give effect to transformation—correlation between proportion of irrigation right transformed since 1 July 2009 and water allocation traded into and out of network as a proportion of total water delivered in 2014−15
Source: ACCC from data provided and published by reporting operators.
* Narromine reported zero volume delivered and traded for 2014−15.
Charts S.10 and S.11 report on the volumes of water delivery right terminated and surrendered, new WDR issued and WDR traded within the operator’s network for selected operators for 2012−13 to 2014−15.
As is clear from these charts, the degree to which WDR are traded and terminated varies substantially across operators. These charts show that Coleambally, MI and LMW have issued a significant volume of new WDR in some years. In several instances, terminations or surrenders of WDR have also occurred in the same years that new WDR has been issued. These instances indicate possible opportunities for WDR trade between customers. Beyond this, wherever there is new WDR issued there may be opportunities for trade with customers who, while wishing to decrease their WDR holdings, do not apply to terminate because the level of termination fees are prohibitive.
Chart S.10: Large operators—total volume of water delivery right terminated, surrendered, issued and traded, 2012−13 to 2014−152
Source: ACCC from data provided and published by reporting operators.
Note: WDR traded includes where trade of WDR occurs together with trade of WAE/IR.
2 Not all IIOs provided water delivery right trade data to the ACCC.
Chart S.11: LMW and CIT—total volume of water delivery right terminated, surrendered, issued and traded, 2012−13 to 2014−15
Source: ACCC from data provided and published by reporting operators.
Note: WDR traded includes where trade of WDR occurs together with trade of WAE/IR.
Maintaining a culture of compliance
The ACCC’s approach to compliance and enforcement aims to foster a culture of compliance among regulated entities. This approach seeks to reduce the risk that IIOs’ policies or conduct may cause harm to water users through contraventions of the Rules or the Competition and Consumer Act 2010 (CCA).
In 2014−15, the ACCC conducted eight investigations into suspected breaches of the Rules, arising out of compliance concerns identified through complaints or ACCC initiated compliance reviews. Two of these investigations resulted in the ACCC identifying policies or practices of infrastructure operators that were likely to contravene the Rules. In both of these cases the ACCC resolved its compliance concerns without taking formal legal action. The ACCC considered this to be the appropriate response given the circumstances of the breaches and that the entities voluntarily addressed these concerns.
The number of enquiries received by the ACCC relating to the water charge rules and water market rules declined slightly in 2014−15, to 36 enquiries/complaints in total. The overall downward trend in the number of enquiries received in recent years indicates that the water industry is becoming more familiar with the processes of transformation and termination. However, irrigators raised concerns about trading restrictions imposed by infrastructure operators on ‘temporary trade’ of water out an operator’s network (other than through transformation).
Most irrigator enquiries related to infrastructure operators’ fees and charges. As such, issues relating to pricing transparency will be an important part of the compliance agenda going forward. This includes:
accuracy of the schedule of charges (ensuring the inclusion of all infrastructure charges on bills)
timeliness of the schedule of charges, and
how operators pass through On-river infrastructure charges/WPM charges and represent this on their schedule of charges.
IntroductionThis chapter provides an overview of the regulatory framework in the Murray-Darling Basin, the ACCC’s roles and its approach to monitoring.
Key points Under the Water Act 2007, the ACCC has a monitoring role, a price setting role, an
enforcement role and an advisory role. These roles help to create an environment where water markets work to ensure scarce water resources are allocated most efficiently between competing water users and uses.
There are a number of other Commonwealth and Basin State regulatory measures that apply within the MDB to contribute to the Act’s objective to manage MDB water resources in the national interest.
The ACCC supports the timely review of existing legislation and processes to ensure they are fit-for-purpose and successfully implemented.
1.1 Regulatory framework in the Murray-Darling BasinThe Murray-Darling Basin (MDB), Australia’s most important agricultural region, extends across four states and one territory and encompasses a diverse mix of natural landscapes and climatic conditions. Reflecting this diversity, water management and regulation in the MDB is complex and has evolved over many decades.
Administration of water planning and management activities is primarily undertaken by Basin State governments under state water management law. In particular, Basin States administer water allocation frameworks, which underpin users’ access to and use of water via the system of tradeable water rights (see also section 2.2).
In 2007, the Commonwealth Water Act 2007 (the Act) was made. The Act has an objective of enabling the Commonwealth, in conjunction with the Basin States, to manage MDB water resources in the national interest. This includes promoting the use and management of Basin water resources in a way that optimises economic, social and environmental outcomes. A number of instruments have been made under the Act. These are:
The Murray-Darling Basin Plan (Basin Plan), which includes:
– Basin Plan water trading rules (BPWTR)
– Environmental watering plans
The Water Charge Rules:
– Water Charge (Infrastructure) Rules
– Water Charge (Planning and Management Information) Rules
– Water Charge (Termination Fees) Rules
The Water Market Rules
In turn, the water charge rules contribute to the achievement of the Basin water charging objectives and principles (set out in Schedule 2 of the Act), while the water market rules and BPWTR contribute to the Basin water market and trading objectives and principles (set out in Schedule 3 of the Act).
Most aspects of the rural water sector are governed by requirements at both the Commonwealth and Basin State level, and may also be affected by inter-governmental agreements in place relating to water sharing between Basin States, water trading or other matters.
For example, trade of water access rights (such as water access entitlements and water allocations) is governed by trading rules set by the relevant Basin State(s) and is also subject to the BPWTR. For
interstate trades in the southern MDB, the administrative processes required to account for the trade are set out in the Murray-Darling Basin Agreement, its schedules and protocols. Furthermore, commercial aspects of water trading are subject to the Competition and Consumer Act 2010 which includes the Australian Consumer Law.3
Box 1.1 Key water reviews at the Commonwealth level Throughout 2014, the Act was reviewed by an Independent Expert Panel (the Panel). The
Panel provided its Report on the Review of the Act in November 2014. 4 The Government provided its response to the Panel’s report and presented the Water Amendment (Review
Implementation and Other Measures) Bill 2015 to Parliament in December 2015. 5,6
In December 2014, as part of the Government’s interim response to the Act review recommendations the Minister requested:
the ACCC to review the Water Charge Rules in December 20147 (see box 1.2).
an Interagency Working Group, led by the Bureau of Metrology, to assess the reporting requirements under the Act and options to reduce associated regulatory burden. The working group provided its final report to the Minister in January 2016 and publically released the final report in March 2016. 8
The ACCC has also committed to commencing a full review of its own Pricing Principles after it has submitted its final advice to the Minister on the water charge rules review.
1.2 The ACCC’s roleThe ACCC has a number of roles in the MDB. These roles impact on the development of water markets, both directly and indirectly. The Act gives the ACCC four main functions in the MDB9:
A monitoring role—for regulated water charges, transformation arrangements10 and compliance with the water market rules and water charge rules.
A price setting role—for certain regulated water charges under the water charge rules. This price setting role can also be performed by an accredited Basin State regulator.
An enforcement role—enforcing the water market rules and the water charge rules.11
An advisory role—providing advice to the Minister on the water market rules and the water charge rules as well as advice to the Murray-Darling Basin Authority (MDBA) on water trading rules forming part of the Basin Plan.
The ACCC’s involvement in these four areas help to create an environment where water markets work to ensure scarce water resources are allocated efficiently between competing water users and uses. The ACCC’s roles also ensure there are adequate protections available to customers of monopoly infrastructure operators.
3 For further information, see https://www.accc.gov.au/regulated-infrastructure/water/water-trading-brokers-exchanges.4 See https://www.environment.gov.au/water/publications/report-of-the-independent-review-water-act-2007.5 See https://www.environment.gov.au/water/publications/water-act-review-govt-response.6 See http://www.aph.gov.au/Parliamentary_Business/Bills_LEGislation/Bills_Search_Results/Result?bId=r5595.7 See https://www.accc.gov.au/regulated-infrastructure/water/water-projects/review-of-the-water-charge-rules-advice-
development.8 See http://www.bom.gov.au/water/regulations/interagencyWorkingGroup.shtml.9 The ACCC also has a role in enforcing the fair trading and competition provisions in the Competition and Consumer Act
2010, which applies to all businesses including those in the water industry.10 Transformation is the process by which an irrigator permanently transforms their right to water under an irrigation right
(typically a contractual right) against an IIO, into a water access entitlement (statutory right) held by the irrigator (or anybody else other than the IIO). See also section 2.2.2.
11 The ACCC’s guidance materials on these rules can be accessed through the ACCC’s website at www.accc.gov.au/regulated-infrastructure/water/water-guides.
The ACCC’s functions primarily relate to the four sets of rules made under Part 4 of the Act, set out below. The broader ACCC roles relevant to the rural sector are also set out below.
1.2.1 Water Charge (Infrastructure) Rules 2010
The Water Charge (Infrastructure) Rules 2010 (WCIR) set requirements relating to the fees and charges payable to infrastructure operators for both On-river infrastructure services (such as management of storages and river operations) and Off-river infrastructure services (such as access to man-made water distribution networks and related delivery and drainage services). These rules came into full effect on 12 April 2011.
The purpose of the WCIR is ‘to address the various issues that arise from operators having market power as natural monopoly service providers, and to introduce a more consistent approach to pricing across Basin jurisdictions.’12 The nature of water infrastructure means that competition is unlikely to develop between infrastructure operators. In the absence of competition, prices, quality, service levels and innovation can diverge from competitive levels which can result in less efficient market outcomes. The WCIR aim to promote efficient market outcomes, introduce a more consistent approach to pricing with greater transparency across the Basin States and prohibit certain discriminatory pricing practices.
1.2.2 Water Charge (Termination Fees) Rules 2009
Irrigators within an irrigation infrastructure operator’s (IIO) network are required to pay charges to maintain their right of access to the network (often represented as a ‘water delivery right’). If an irrigator no longer wants to maintain some or all of their access they are generally required to pay a ‘termination fee’ (see section 2.2.3).
The Water Charge (Termination Fees) Rules 2009 (WCTFR) regulate the maximum amount of the termination fee payable to an IIO upon the termination or surrender of access to an IIO’s network. The WCTFR cap the termination fee at 10 times the IIO’s total fixed network charges actually paid by the irrigator in that year.
The WCTFR also limit the circumstances where an IIO can impose a termination fee. For example, an irrigator can no longer be made to pay a termination fee simply because they have traded their water access right or their water delivery right. The WCTFR came into full effect on 1 September 2009.
The purpose of the WCTFR is to address potential barriers to trade and contribute to the efficient functioning of water markets. The objective is to strike a reasonable balance between providing incentives for efficient investment in irrigation and on-farm infrastructure, rationalisation and water trade.
1.2.3 Water Charge (Planning and Management Information) Rules 2010
As part of the National Water Initiative (NWI), Basin States agreed to pursue cost recovery for their water planning and management (WPM) activities. The Water Charge (Planning and Management Information) Rules 2010 (WCPMIR) aim to advance the Basin water charging objectives and principles relating to cost recovery of WPM activities.
The WCPMIR require persons determining charges for WPM activities to publish information about these charges and the costs of activities associated with these charges. The WCPMIR seeks to make information on WPM charges more widely and consistently available across Basin States. The WCPMIR came into full effect on 1 July 2011.
Box 1.2 ACCC review of the water charge rules
The three sets of water charge rules (the WCIR, the WCTFR and the WCPMIR) were introduced
12 Water Charge (Infrastructure) Rules 2010—Explanatory Statement. Available at https://www.legislation.gov.au/Details/F2011L00058/Explanatory%20Statement/Text.
at a time of significant reform within the MDB. Since the introduction of the water charge rules five to six years ago, charging practices and water markets in the MDB have continued to evolve and develop.
During 2014, the Independent Expert Panel (the Panel) reviewed the Act and made a number of recommendations and conclusions. Recommendation 11 was that the ACCC, in consultation with industry and Basin State governments, review the three sets of water charge rules. 13
In its interim response to the review of the Act, the Government accepted this recommendation. On 17 December 2014, the Minister requested that the ACCC undertake a review of the water charge rules and, where appropriate, provide advice on possible amendments.
The ACCC’s review has considered opportunities to reduce costs to industry and government. 14 Particular areas of focus have included:
options to improve pricing transparency
facilitating more efficient water markets
differential charging between customers
the appropriateness of the tiered regulatory approach in the WCIR
the form of price regulation for medium and large infrastructure operators
the calculation and application of termination fees, and
other opportunities to improve the clarity and operation of the rules.
1.2.4 Water Market Rules 2009
In NSW and SA many irrigators’ rights to water take the form of an ‘irrigation right’ held against their IIO.15 The IIO itself holds the statutory water access entitlement and the IIO’s consent is required for this water to be traded. IIOs have an incentive to maximise the amount of water delivered through their networks and, as such, may seek to restrict water trade out of their networks.
Transformation is a process whereby an irrigator’s irrigation right, which is generally a contractual right, may be converted or ‘transformed’ into a statutory water access entitlement that is independent from the IIO’s own entitlement (see section 2.2.2). Transformation can give the right holder a greater degree of control over their right, particularly in relation to trade.
The Water Market Rules 2009 (WMR) prohibit the actions or omissions of an IIO that prevent or unreasonably delay an irrigator from transforming an irrigation right into a water access entitlement. The WMR came into full effect on 1 January 2010. The WMR seek to ensure that the IIOs administrative requirements do not represent a barrier to trade. The WMR contribute to Basin water market and trading objectives by facilitating the operation of efficient water markets and opportunities for trade.
1.2.5 Other ACCC roles relevant to the rural sector
The ACCC also has a role in enforcing the fair trading and competition provisions under the Competition and Consumer Act 2010, which contains the Australian Consumer Law and applies to businesses generally, including those in the water industry. In particular, the ACCC has published
13 Report of the Independent Review of the Water Act 2007, recommendation 11.14 The ACCC’s analysis and findings from reviewing the water charge rules to date are set out in its Draft Advice. The
proposed water charge rules show what the rules would look like if all of the ACCC’s draft rule advice is accepted. For more information on the Water Charge Rules review, see http://www.accc.gov.au/regulated-infrastructure/water/water-projects /review-of-the-water-charge-rules-advice-development .
15 ‘Irrigation right’ is defined in s. 4 of the Act as ‘a right that (a) a person has against an irrigation infrastructure operator to receive water, and (b) is not a water access right or a water delivery right.’ See section 2.2.2.
guides on fair trading obligations for water brokers and exchanges and on users’ rights when participating in water markets, such as avoiding misrepresentations in relation to prices.16
Further, in 2015 the ACCC established an Agriculture Enforcement and Engagement Unit that contains additional staff to conduct investigations and engagement in rural and regional areas with funding provided through the Agricultural Competitiveness White Paper. In February 2016, the Government appointed Mr Mick Keogh as an ACCC Commissioner. Mr Keogh will play a key role in the work of the ACCC’s Agriculture Enforcement and Engagement Unit, which has been working to identify competition and fair trading issues in agriculture markets and engaging with a range of key industry groups.
These new arrangements will enhance the ACCC’s ability to examine issues in the agricultural sector, including irrigated agriculture.
1.3 The ACCC’s approach to water monitoringThe ACCC’s water monitoring role involves providing an annual water monitoring report to the Minister on the outcomes of its monitoring activities. Under the Act, the ACCC monitors:
regulated water charges17
transformation arrangements18 and
compliance with the water market rules and water charge rules.19
To improve information availability within the MDB, the report is publicly released.
To fulfil this role, the ACCC gathers information through both formal and informal processes. Informal information gathering activities include:
examination of information provided by infrastructure operators on their websites, such as schedules of charges and transformation policies
data collection and compilation from direct liaison with irrigators, infrastructure operators and industry specialists, such as water brokers and lawyers
examination of information published or provided to the ACCC by other government agencies, such as the Bureau of Meteorology.
Formal information gathering involves annual data collection in the form of requests for information (RFIs) from infrastructure operators, Basin State departments and water authorities listed in table 1.1. For the current report, information requests were sent to these reporting entities in September 2015 and responses were received up until January 2016.
16 See https://www.accc.gov.au/regulated-infrastructure/water/water-trading-brokers-exchanges .17 Water Act, s. 94(1)(a).18 Water Act, s. 99(1)(a).19 Water Act, s. 94(1)(b) and s. 99(1)(b).
20 For definitions of ‘On-river infrastructure operator’ and ‘Off-river infrastructure operator’, see section 2.1.21 Formerly the Victorian Department of Environment and Primary Industries (DEPI); name changed on 1 January 2015.22 Formerly the NSW Office of Water (NOW); name changed on 3 July 2015.23 Formerly the Environment & Sustainable Development Directorate (ACT) (ACT ESDD).
Narromine Irrigation Board of Management (NSW): Narromine
West Corurgan Private Irrigation District (NSW): West Corurgan
Western Murray Irrigation Limited (NSW): WMI
The ACCC recognises that responding to specific information requests imposes costs on infrastructure operators and other reporting entities (which are ultimately passed on to their customers). Following the Review of the Act, the Panel concluded that ‘Australian Government agencies should ensure that data collected under the Act is collected in the right form at the right time for the right purpose and used to create information that is of value, while minimising regulatory burdens and any duplication of requests imposed on data providers’.25
The ACCC agrees with this conclusion and has a continuous commitment to reducing the level of ‘red tape’ associated with its water monitoring activities, while also continuing to fulfil its obligations under the Act and provide valuable information about water charges, transformations and terminations to the water market. The ACCC takes regular steps to refine, reduce and improve its annual requests for information, while bearing in mind the transitional costs imposed on operators when information requests are altered.
The ACCC also participated in the Interagency Working Group on Commonwealth Water Information Provision chaired by the Bureau of Meteorology. The Working Group was formed based on recommendation 18 of the Panel’s report.26 The Working Group Report was provided to the Minister for Agriculture and Water Resources and publicly released on 3 March 2016. The report identified a number of measures to reduce the regulatory burden and costs of providing water information to Commonwealth agencies. The Government accepted all Working Group recommendations. Action 6 of the Working Group provides for a commitment by the Bureau of Metrology to bring together rural water utilities and Commonwealth Government agencies to discuss advantages and disadvantages of further streamlining water information provided by rural water entities.
Further, the ACCC notes that if the water charge rules are amended following its review and advice to the Minister, there may be opportunities to further improve the ACCC’s information gathering processes and reduce the burden on reporting entities.
The ACCC’s information gathering process also provides information for its compliance functions and as such there is a need to ensure that any changes to the RFIs are considered in the context of the ACCC’s overall compliance approach. However, changes to the specific information requested by the
24 Formerly State Water; WaterNSW is the entity formed from the merging of State Water with after the Sydney Catchment Authority on 1 January 2015.
25 Report of the Independent Review of the Water Act 2007, conclusion 7.2.26 Report of the Independent Review of the Water Act 2007, recommendation 18. See also Interagency Working Group on
Review of Water Information Reporting Burdens’, available at https://www.environment.gov.au/system/files/pages/117d6268−6372−42dc-9ed5-e3f5be5dfa15/files/review-water-information-reporting-18-tor.pdf, accessed November 2015.
ACCC will ultimately depend on what changes, if any, are made to the water charge rules by the Minister.
2.Understanding rural water rights, markets and chargesWater reforms have increased water user opportunities but also added complexity to the Murray-Darling Basin (MDB) rural water sector. The level and quality of information available to water market participants varies across the MDB. To assist stakeholders in understanding water rights, markets and charges, this chapter provides an overview of the key aspects of the MDB rural water sector including: Rural water supply participants Tradeable water rights Regulated water charges.
Key points Government entities, infrastructure operators and water users are key supply chain
participants in the MDB but they vary in their activities and services.
There remains a lack of clarity about tradeable water rights, options available to manage them and the charges payable for each right. Water access rights, water delivery rights and irrigation rights are collectively referred to as tradeable water rights. There are both benefits and costs associated with tradeable water rights.
MDB water markets have different levels of maturity. Water allocation trade is well established with high trade volumes while other markets, such as water delivery right trade, are newer and have much lower volumes of trade.
Typically water charges in the MDB are either WPM charges that recover the costs of WPM activities or infrastructure charges that recover the costs associated with both On-river and Off-river infrastructure services.
Information about water charges are primarily provided by infrastructure operators and Basin States via ‘schedules of charges’. However, the level of information included varies significantly across the MDB. Irrigators consider many different types of information important and should be included on a schedule of charges, with the most important being the type of right that a charge relates to and administrative charges for trade.
2.1 Key supply chain participantsThe rural water supply chain consists of government entities, infrastructure operators (both On-river and off-river) and irrigators who extract water directly from natural watercourses (private diverters) or from an infrastructure operator’s network.
2.1.1 Government entities
Government departments and water authorities undertake water planning and management (WPM) activities to plan for and manage water resources. These activities include:
developing water resource plans which include environmental flow requirements and limits on diversions
managing water access entitlements
managing trade registers
making water allocation decisions
water monitoring
environmental works to minimise the negative impacts of consumptive use.
Governments may recover some or all of the costs of WPM activities through WPM charges or from consolidated revenue. WPM charges may be levied on infrastructure operators or on water users directly.
WPM activities and their associated costs and WPM charges and estimated revenue are discussed in more detail in chapter 3.
2.1.2 Infrastructure operators
Infrastructure operators own or operate infrastructure to provide a service (e.g. storage, delivery or drainage of water) to another person. These services are known as infrastructure services. Water service infrastructure can include dams, weirs, channels, pipes and associated equipment. Figure 2.1 shows the location of the key infrastructure operators in the MDB.
Figure 2.1: Infrastrucutre operators in the MDB
Note: WaterNSW is not shown in figure 2.1, but operates throughout NSW.
Infrastructure operators can have a range of different customers. These include irrigators, environmental water holders, commercial operators and other infrastructure operators like urban water supply networks. Infrastructure operators can also be water users themselves. For example, an operator may hold its own separate water right which it uses to cover distribution losses.
In this report, we generally distinguish between two main types of infrastructure operators according to the types of infrastructure services they provide:
On-river infrastructure operators (On-river IOs): these operators provide On-river infrastructure services which include harvesting and storing water through infrastructure, such as dams, lakes, weirs and reservoirs, and delivering water, primarily through natural watercourses, to an extraction point on a natural watercourse. On-river IOs and their infrastructure services are further discussed in chapter 4.
Off-river infrastructure operators (Off-river IOs): these operators provide Off-river infrastructure services which include the delivery of water from the natural watercourse through a network consisting of channels and/or pipes (which can be gravity-fed or pressurised) to a customer’s extraction point. Off-river IOs and their infrastructure services are further discussed in chapter 5.
– Irrigation infrastructure operator (IIO): an IIO is a particular type of Off-river IO who operates its infrastructure for the primary purpose of irrigation.27 This means that an Off-river IO may change over time from being an IIO to not being an IIO (or vice versa), depending on the primary purpose for which the network is used. Transformation, termination and trading activity of IIO customers is further discussed in chapter 6.
Three of the infrastructure operators featured in this monitoring report provide both On-river and Off-river infrastructure services (LMW, GMW and SunWater). This means they act as a vertically integrated operator and are not solely an On-river IO or an Off-river IO. When reporting on these entities the ACCC distinguishes between their operation as an On-river IO and their operation as an Off-river IO. This allows for comparison with other entities that provide comparable services but are not vertically integrated.
Box 2.1: Why have the terms changed from previous water monitoring reports?
The ACCC’s previous water monitoring reports referred to On-river infrastructure services as ‘bulk water services’, operators providing these services as ‘bulk water suppliers’ and the charges they levy as ‘bulk water charges’. Previous reports also assumed all Off-river IOs were IIOs.
The terms ‘bulk water service’, ‘bulk water supplier’ and ‘IIO’ are defined in the Act and Water Regulations. However, they are defined in a way that may not apply to some customers or some infrastructure services provided by infrastructure operators in the MDB (for example, provision of On-river infrastructure services to environmental water holders, or the provision of Off-river infrastructure services by an operator that may not meet the definition of IIO).
For this reason, this year’s report and future reports will avoid using the terms ‘bulk water service’, ‘bulk water supplier’ and ‘bulk water charge’, replacing these terms with ‘On-river infrastructure service’, ‘On-river IO’ and ‘On-river infrastructure charge’. Also, unless reporting on matters specifically relating to IIOs only (for example some of the water charge rules and water market rules administered by the ACCC only relate to IIOs), this report will use the more general term ‘Off-river IO’. These changes ensure that we are able to report on charging, termination and transformation arrangements accurately and comprehensively.
27 Section 7(4) of the Act: ‘If the infrastructure operator operates the water service infrastructure for the purposes of delivering water for the primary purpose of being used for irrigation: (a) the operator is an irrigation infrastructure operator, and (b) the infrastructure is the operator’s irrigation network.’
2.1.3 Water users
Irrigators make up the overwhelming majority of water users in the MDB.28 Irrigators can be located either On-river or off-river. On-river irrigators are called ‘private diverters’ and take their water directly from the natural watercourse. Off-river irrigators are Off-river IO customers (typically customers of an IIO) and rely on their operator’s channels and/or pipes to have water delivered to their property.
Figure 2.2 provides a pictorial representation of the rural water supply chain for three irrigators with different infrastructure service needs.
Other water users include:
rural stock and/or domestic users
environmental water holders (see box 2.2)
commercial plantations (e.g. forestry)
manufacturing and processing operations
mining operations
urban water suppliers.29
Just like irrigators, these other water users require infrastructure services for the storage and delivery of water relating to the water access rights that they hold. Typically, they will incur the same types of charges as irrigators where they use the same infrastructure services.
28 Australian Bureau of Statistics, water use on Australian Farms, http://www.abs.gov.au/AUSSTATS/[email protected]/allprimarymainfeatures/A5A4DA2DF9F997A0CA2571AD007DDFD4?opendocument, accessed October 2015.
29 Charges in respect of urban water supply activities beyond the point at which water has been removed from a Basin water resource are not covered by the water charge rules. However, regulated water charges incurred by an urban water supplier (and imposed by another infrastructure operator) may nevertheless be subject to the water charge rules.
Figure 2.2: Rural water users
Box 2.2: infrastructure charges for environmental water
Environmental water holders (EWHs) such as the Commonwealth Environmental Water Holder (CEWH) have significantly increased their water holdings in recent years, particularly with water recovery programs to ‘bridge the gap’ to the new, lower, sustainable diversion limits set out in the Basin Plan. Generally, EWHs hold the same types of water access entitlements as other water users such as irrigators, largely due to the fact that EHWs have acquired a substantial portion of the water they hold directly from irrigators via water markets.
Despite holding the same types of water access entitlements as other water users, EWHs may require unique infrastructure services. For example, whereas an irrigator may require the services of delivery of water through an Off-river IO’s network to a specific off-take point (e.g. the outlet at the irrigator’s farm), an EWH may require delivery of water through an IO’s network, for example to bypass On-river constraints or to water environmental sites that can be reached via the network. As another example, whereas an irrigator may require water at a very specific time (because of specific crop needs), an EWH may require water over a longer period or have more flexibility in precisely when water is delivered.
Providing infrastructure services to EWHs gives rise to several challenges for operators, particularly in relation to how to develop appropriate infrastructure charges for these services. Key questions that require consideration are:
Is the service required by an EWH different to the service provided to irrigators?
What, if any, WDR should an EWH hold, or should EWHs simply be viewed as a ‘casual user’ of infrastructure services and charged accordingly?
How can operators provide services to EWHs without negatively impacting other customers?
The ACCC notes that any new infrastructure charges developed for EWHs will be required under the WCIR to be included on the operator’s schedule of charges (unless an exemption from the publishing requirements is sought by the operator and granted by the ACCC30). This pricing transparency is particularly important in that it enables the operator’s other customers to understand how charges for services provided to EWHs may differ from charges for services used by irrigators.
The ACCC considers that, where EWHs receive the same services as other customers, they should pay the same charges, and that where new services are created, operators should be careful not to give preferential treatment to any particular group—that is, operators should neither discriminate for nor against EWHs via charging arrangements. This approach will help ensure a level playing field for all customers.
2.2 Tradeable water rightsIn Basin States, ownership of water is vested in the states/territories. However, water users can own various different types of water property rights, which enable them to access a share of available water resources and/or water service infrastructure.
To allocate water among competing uses (e.g. environmental, agricultural, domestic, industrial, etc.) and individual users, Basin States have developed ‘water sharing plans’ for each catchment in the MDB. These water sharing plans, together with supporting state water management law, provide for a system of property rights for taking and using water, taking into account current and future forecast water availability and aspects of specific rights such as priority.
30 Rule 9 of the WCIR currently provides an exemption process whereby an infrastructure charge may be excluded from the operator’s schedule of charges because publication would have a material and adverse effect for the operator and the customer, or for the customer only.
However, not all the available water in the MDB is allocated to water users under the property rights system. Water resource plans set aside water for environmental purposes31 or for ‘critical human water needs’ and other special purposes. Water set aside for environmental purposes is generally referred to as ‘planned environmental water’, and in contrast to other water rights is not a true ‘property right’ that is individually owned or tradeable.
Beyond a simple property right to take or use a specific amount of water, the notion of ‘water rights’ captures a range of different types of rights or entitlements. For example, water rights could enable the right holder to do one or more of the following:
own water
receive a particular share of available water (e.g. a percentage of inflows into a storage or a share of the total ‘pool’ of a water resource)
take or use a particular volume of water (including through specified works)
use water for a specific purpose
use water on land (e.g. for irrigation)
have water stored (e.g. carryover)
have a specific volume of water delivered through a natural watercourse (e.g. a river)
have a specific volume of water delivered through man-made infrastructure (e.g. an irrigation network)
water drainage services
harvest rainfall (e.g. in an on-farm dam)
divert or otherwise modify a natural watercourse
discharge water into an aquifer for later extraction
Historically, most water users in the rural MDB held a single water right that covered several aspects of the above list—in particular, the rights to receive a particular share of available water, to take or use a specific volume of water each year, to have that water delivered and to use water on specific land (e.g. a farm) were all ‘bundled’ together into a single water right.32
Also, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied to land, which made it difficult for water users to adjust their water needs, for example by trading water with other users or changing the location of where water could be extracted and used.
Under the National Water Initiative (NWI), Basin States committed to ‘unbundling’ historical water rights to allow them to be traded separately from land. In addition, further unbundling of water rights into the following individual rights, recognised under the Act, has occurred:
Water access right—a right to take/hold water from a water resource
Water delivery right—a right to have water delivered by an infrastructure operator.
Irrigation right—a right that a person holds against an IIO to receive water (which is not a water access right or a water delivery right).
Note that full unbundling, which would entail each individual right being separately specified, has not yet occurred, and is not necessarily desirable. For example, rights to carryover and rights to On-river delivery of water generally remain part of water access entitlements, although in certain systems, storage rights have been separated from a right to a share of available water, in what are known as ‘capacity sharing’ schemes.
31 Note that ‘planned environmental water’ is generally used to meet basic environemental standards such as minimum flow requirements, and may not be used for other purposes. Beyond this, most types of water access rights may be used for environmental purposes. Where water access rights, water delivery rights or irrigation rights are held for the purposes of achieving environmental outcomes, this is known under the Act as ‘held environmental water’. Environmental Water Holders (such as the Commonwealth Environmental Water Holder) generally achieve environmental outcomes using water available via the tradeable water rights system.
32 Note this is a general example – specific rights embodied in historical water rights have varied across states and over time.
Decisions about the appropriate level of further unbundling are complex, as specific circumstances will make the costs and benefits of further unbundling differ across regions and across time.
Water markets in the MDB enable water access rights, water delivery rights and irrigation rights—collectively referred to as tradeable water rights (TWRs)—to be traded between different water users and different locations. However, water markets across the MDB have differing levels of maturity. Some markets are well-established and have high trade volumes (for example, water allocation) and other markets are relatively new (for example, water delivery right).
For many stakeholders there remains a lack of clarity about:
the nature of tradeable water rights
options available to manage them (for example trade, termination and transformation), and
the type of charges payable for each right.33
The ACCC considers that improving stakeholders’ understanding in these areas is a fundamental part of encouraging efficient use of water resources and water infrastructure.
The following sections provide an explanation of the different types of tradeable water rights, options for managing them, and a discussion of water charging arrangements in the MDB.
2.2.1 Water access rights
There are two main types of water access rights:
water access entitlement (WAE)—a perpetual or ongoing entitlement to exclusive access to a share of a water resource
water allocation—a specific volume of water allocated to a WAE in a given water accounting period.
Other kinds of water access rights include stock and domestic rights and riparian rights.
Trading water access rights
Trading a WAE is sometimes referred to as a ‘permanent trade’. But it is also possible to lease a WAE. Trading water allocation is sometimes referred to as a ‘temporary trade’. WAE and water allocation are generally tradeable, which means that both the ownership and/or the location (of extraction) can be changed. Trade of other water access rights such as stock and domestic rights may be restricted.
When water access rights are traded, the Basin Plan water trading rules (BPWTR) and other relevant Basin State water trading rules apply. Among other requirements, the BPWTR require the seller to notify the approval authority or registration authority in writing of the price agreed for the trade. These trade prices are not regulated water charges but instead represent the value of the water access right that is being traded.
Charges levied on water access rights are discussed in section 2.3.
2.2.2 Irrigation rights
An irrigation right is a right a person holds against an IIO to receive water, which is not a water access right (such as a WAE) or a water delivery right. Irrigation rights are generally contractual rights. In these cases, the IIO holds the statutory water access entitlement rather than the irrigator. Because the IIO holds the statutory WAE, in most cases the IIO’s approval is required to change aspects of an irrigation right (e.g. to trade or otherwise change the volume of water a person may receive under their irrigation right).
Trading irrigation rights
33 This was a common theme during the ACCC’s public forums held as part of the review of the water charge rules, as well as in direct stakeholder contact with the ACCC.
Irrigation rights are only tradeable within an IIO’s network. Generally, IIOs allow irrigation rights to be traded internally both permanently and temporarily, both to other customers of the IIO and/or for use at other locations within the IIO’s network. An IIO’s approval is usually required for irrigation right trades. The BPWTR require IIOs to make their rules for trading irrigation rights (as well as other TWRs) available to irrigators and other customers.
In order to permanently trade an entitlement to water under an irrigation right for use outside the IIO’s network, the irrigation right must first be ‘transformed’ into a water access entitlement (see box 2.3).
Temporarily trading an allocation of water to an irrigation right for use outside the IIO’s network (that is, for an irrigation right holder to ‘sell’ water allocation to a buyer outside the network) is somewhat more complex and requires a two-part process.
1. First, the irrigation right holder would need to apply for their IIO to undertake the external trade on the irrigation right holder’s behalf.
2. Second, water allocation would be traded from the IIO’s account to the buyer’s account and the amount of water the ‘seller’ had a right to receive would be adjusted (by debiting the seller’s account within the operator) to reflect the trade.
Trade approval fees for the water allocation trade between the IIO and the buyer are payable to Basin State trade approval authorities. Also, the IIO may also charge its own trade administration fee, payable by the seller. Figure 2.3 depicts this process.
Figure 2.3: Trade of irrigation right to an external buyer
* Trade application fees payable to the state approval authority may also be paid directly by the seller (IR holder), but in general this payment is more likely to go through the IIO.
Temporary trade to an irrigation right holder from outside the IIO’s network follows the reverse two-part process, where the seller (who holds water allocation and is located outside of the IIO’s network) undertakes a water allocation trade to the IIO, who in turn increases the amount of water available to be taken under the buyer’s irrigation right.
Transforming irrigation rights into water access entitlements
As shown above, temporary trade involving irrigation rights is more complex than trade of water allocations and requires the involvement and approval of the IIO. Permanent trade of irrigation rights can only occur inside an IIO’s irrigation network.
As an alternative, irrigators who hold irrigation rights can undertake a one-off ‘transformation’ to convert their irrigation right a WAE held in their own name. This allows the irrigator to sell or lease some or all of their WAE or water allocation to water users outside the IIO’s network, without seeking the IIO’s approval. The irrigator can also use the WAE as a form of security in obtaining finance and gaining greater control over carryover decisions. An irrigator can also transform their irrigation right directly into a WAE held in the name of another person (with whom they have agreed to trade).
Transformation is regulated by the Water Market Rules 2009 (WMR). Box 2.3 sets out a simplified example of the process of transformation.
Box 2.3: Transformation
An IIO holds 3000 ML of WAE and its customers hold an entitlement to this water in the form of irrigation rights against the IIO. Irrigators A and B each hold 100 ML of irrigation right, while other customers hold a combined total of 2800 ML of irrigation right.
Irrigator A wishes to transform all of their irrigation right volume without selling their water. Figure 2.4 shows that irrigator A transforms all of their irrigation right and is issued with a 100 ML WAE.
Irrigator B wishes to transform all of their irrigation right and immediately sell it to another person. Figure 2.4 shows that irrigator B transforms all of their irrigation right and the purchaser is issued with 100 ML of WAE. The WAE held by the IIO has been reduced by 100 ML from each respective transformation, leaving the IIO with 2800 ML of WAE. The volume of irrigation right held against the IIO has also been reduced from 3000 ML to 2800 ML.
Figure 2.4: Transformation process
Transformation can have both costs and benefits for an irrigation right holder. As identified above, transformation can give an irrigator more control and flexibility over their water rights, especially in relation to external trade.
The WCIR require operators not to charge a different charge for an infrastructure service for a customer who holds irrigation right compared to a customer who does not (e.g. because they have transformed their irrigation right into a WAE), unless the difference in charges reflects the underlying differences in costs of providing the service.34 This rule helps ensure that customers who have transformed are not treated unfairly and that the IIO charging arrangements do not deter transformation. However, this does not necessarily mean that WAE and IR holders will always face the same conditions.
There may be transaction costs for the holder of a WAE resulting from transformation, such as time taken to manage their own WAE rather than have the operator manage the entitlement on their behalf. Also, most operators who have customers who hold both irrigation right and WAE require
34 WCIR, Rule 10.
WAE holders to trade water allocation onto the operator’s account or licence in order for that volume of water to be delivered inside the operator’s network. Such trade will incur trade approval fees.
Further, if water allocation is traded onto the operator’s account or licence for delivery within the network, it may also need to be traded back to the WAE holder’s own account in order to be carried over. Since the volume of the operator’s own WAE is reduced during the transformation process, the operator may not be able to provide carryover for customers who hold their own WAEs without creating third party impacts for irrigation right holders. These costs and benefits need to be weighed by each individual when considering transformation.
2.2.3 Water delivery rights
A water delivery right (WDR) is defined in the Act as a right to have water delivered by an infrastructure operator.35 WDR can be specified in relation to the delivery of water On-river (i.e. delivery through rivers and other natural watercourses) or Off-river (i.e. delivery through an Off-river IO’s network of pipes and channels). In practice, only the latter type of delivery has been specified. The right to On-river water delivery generally remains implied into or ‘bundled’ with WAE. Unbundling enabled the separation of the right to have water delivered into a separate WDR that can be held and traded separately to irrigation rights and WAR.
More specifically, a WDR can be viewed as entitling the holder to a specified share of a network’s delivery capacity (or a specific part of a network). This is normally denominated as a right to have a particular volume of water delivered in a season or year. However, some operators specify shorter periods.
As such, infrastructure operators generally use WDR as a way of determining who has the responsibility to pay for the upkeep of the network. For example, all Off-river IOs that the ACCC monitors levy fixed charges per ML (or other unit) of WDR held by each customer. This type of charging means that, all else being equal, a person with a greater volume of WDR contributes more to ongoing network maintenance compared to a person with a lower volume of WDR.
Box 2.4: ‘water delivery right’ versus ‘right of access’
WDR provide a right of access to an operator’s water service infrastructure (or the services provided in relation to that right) as it relates to the delivery of water. However, a person’s right of access may in fact entail more than just the delivery of water. For example, a person may also be entitled to drainage or storage services. The WCTFR refer to the more general ‘right of access’ to acknowledge these additional aspects of customers’ rights and to ensure that the water charge rules also cover where customers terminate an aspect of their right of access other than a right to have water delivered, such as a right to drainage.
Generally in this report, we refer to WDR rather than to ‘right of access’, to avoid confusion.
Termination of water delivery rights
A customer may wish to modify their WDR. For example, an irrigator that sells a WAE and switches to dryland farming may no longer require the right to have water delivered to their property. As such, they may no longer require access to the operator’s infrastructure and wish to cease paying ongoing infrastructure charges to the operator. In such circumstances, the customer generally has two options:
terminate their WDR (where this represents their right of access) and pay a termination fee to the operator if applicable or
sell their WDR to another customer located in the area serviced by their infrastructure operator.
Terminating (or surrendering) WDR and ending the ongoing obligation to pay associated infrastructure charges would create a negative impact for remaining customers. The fixed costs of maintaining the network would be spread over fewer customers. In view of this, operators are able to charge a ‘termination fee’ when a customer decreases or altogether extinguishes or ‘terminates’ their ‘right of 35 Section 4 of the Act.
access’ (see box 2.3) to the operator’s network. The WCTFR regulate how and when an operator36 may impose termination fees.
Trade of water delivery rights
The ability for an irrigator to trade WDR to another irrigator within the operator’s network (or to a new entrant) provides a much less costly alternative to termination for irrigators wishing to reduce their WDR holdings. Operators such as MIL and CICL are leading the development of such markets in the southern MDB. However markets for WDR are in general not yet well-developed.
The obligation to pay a termination fee for terminating a WDR means that a person seeking to acquire WDR faces both costs and benefits. On the one hand, acquisition of a WDR provides the ‘buyer’ with access to the operator’s network and places an obligation on the operator to provide certain services to the right holder. On the other hand, the acquisition of the WDR means in most instances that the ‘buyer’ is taking on the obligation to pay ongoing fixed charges as well as the obligation to pay a termination fee at some future time if they wish to terminate their WDR.
When the value of holding the right of is greater than the costs, a positive price should be associated with a WDR trade. This is expected to occur in circumstances where the network (or the relevant part of the network) is being operated at or near full capacity.
In contrast, where the costs of holding WDR exceed the benefits, a ‘negative price’ may emerge in WDR markets. This means that in effect the ‘seller’ (current holder of the right) pays the ‘buyer’ to take on the right and the ongoing obligation to pay infrastructure charges, in order to avoid paying the termination fee. In this circumstance, ‘sellers’ in WDR markets should be willing to pay up to the value of the termination fee for another person to take on their WDR. In this case, a person wishing to acquire WDR should be willing to acquire this via trade from another irrigator where the benefits (in terms of acquiring the right of access and the payment made by the ‘seller’) exceeds the costs (the obligation to pay ongoing fixed charges and possibly a termination fee in the future). The final price associated with the trade will be decided by negotiation between the ‘buyer’ and ‘seller’.
The existence of willing buyers and sellers is not necessarily sufficient to ensure that robust WDR markets emerge. In particular, an operator has an incentive to prevent such trades in order to benefit from termination fee payments by the terminating customer and/or issue ‘new’ WDR to those wishing to acquire these rights.
Actions by operators to unreasonably restrict, or disallow altogether, trade of WDR are likely to cause detriment to the operator’s customers. Since 1 July 2014, the BPWTR have prohibited IIOs37 placing unreasonable restrictions on the trade of WDR. The Murray-Darling Basin Authority (MDBA) enforces the BPWTR.
Operators should be encouraged to facilitate trade of WDR and give information to customers (and prospective customers) about trading opportunities, as this provides an alternative to termination fees and can facilitate more efficient use of water service infrastructure generally. Robust WDR markets facilitate flexible management of water service infrastructure, enhance the ability of irrigators to deal flexibly with their tradeable water rights, and are strongly endorsed by the ACCC.
2.2.4 Characteristics of tradeable water rights
Where unbundling has occurred, the costs and benefits of different elements of a water right have also been separated. Table 2.1 provides an overview of the characteristics, benefits and costs associated with each main type of tradeable water right.
36 The WCTFR are limited to those water delivery rights held against infrastructure operators that meet the definition of ‘irrigation infrastructure operator’.
37 The Basin Plan water trading rules are limited to those water delivery rights held against infrastructure operators that meet the definition of ‘irrigation infrastructure operator’.
Table 2.1: Tradeable water rights—characteristics and Basin State terminology
Water access entitlement(WAE)
Water allocation(WA)
Irrigation right(IR)
Water delivery right(WDR)
Benefits of holding the right
Holder is entitled to take/hold a share of the water resources to which the WAE relates
Access to carryover (may differ according to type of WAE held)
Access to On-river infrastructure services (e.g. storage of water in dams or on-river, delivery of water on-river)38
Holder is entitled to use39, hold or trade a specific volume of allocated water
Holder is entitled to receive water from an IIO under the terms specified in the IR
Holder can generally trade IR within an IIO’s irrigation network
Holder is entitled to access the operator’s network and receive infrastructure services under the terms specified in the WDR
Can have water delivered up to the volume of the WDR40
‘Costs’ of holding the right—regulated water charges applying to the right (see section 2.3 for more detail)
WPM charges levied on the basis of WAE
Fixed On-river infrastructure charges
WPM charges levied on the basis of WA
Variable On-river infrastructure charges
Variable Off-river infrastructure charges (if water used inside an operator’s network)
Variable Off-river (IIO) infrastructure charges relating to water use
Fixed and variable WPM/On-river infrastructure charges (passed through by an IIO)
Fixed infrastructure charges for the ongoing maintenance of the irrigation network
Liability to pay termination fees
Where can this right be traded?
Within and between trading zones41,42
Within and between regulated trading zones
Within an IIO’s irrigation network43
Within an IO’s network44
Who is required to approve a trade?
Basin State approval authority
Basin State approval authority
IIO IO
Statutory right? 45
38 Since generally water delivery rights are not specified in relation to On-river infrastructure services, On-river delivery rights are considered to be ‘implied into’ water access entitlements. Also note that in some jurisdictions (notably in some Queensland systems) storage rights have been unbundled from water access entitlements and are called ‘capacity shares’.
39 A person may also be required to hold a particular location-related right such as a water use licence or works approval in order to use a water allocation on land or to extract water under a water allocation via particular works.
40 Delivery of a volume greater than the volume of WDR is often possible, subject to network capacity and the payment of (typically higher) casual user charges.
41 Certain types of water access entitlement, such as stock and domestic rights or WAE granted for other special purposes, may not be tradeable under state water management law.
Water access entitlement(WAE)
Water allocation(WA)
Irrigation right(IR)
Water delivery right(WDR)
Can be transformed?
Can be terminated?
NSW terminology Water access licence
Water allocation Varies by operator. Often ‘water entitlement’
Varies by operator. Often ‘delivery entitlement’
VIC terminology Water share Water allocation n/a46 Water delivery share
SA terminology Water access entitlement
Water allocation Varies by operator. Often ‘water entitlement’
Varies by operator: often ‘delivery entitlement’
Qld terminology Water allocation Seasonal water assignment
n/a46 Water supply contract
In many areas where Off-river networks are not constrained, water delivery rights do not have a positive value due to the associated obligation to pay fixed infrastructure charges and the potential termination fee liability. Even though the same ‘cost’ existed prior to unbundling it was disguised by the much larger net benefit of the right to water with which it was bundled.
2.3 Water charging arrangementsThe water charge rules administered by the ACCC apply to several different categories of charges:
Water planning and management charges (WPM charges)
On-river infrastructure charges
Off-river infrastructure charges
Termination fees.
Information on each of these charge categories is provided in the following sections.
Within the broad categories outlined above, there are different types of charges. Charge types can be characterised as either volumetric (fixed or variable) or non-volumetric, based on how they are levied.
42 In relation to trading a WAE or WA into an Off-river operator’s network, the operator’s consent is generally required in order to nominate their works as the extraction point for a WAE or WA.
43 If a person wishes to trade an entitlement to water under an IR for use outside an IIO’s network, the IR must first be transformed into a WAE. A ‘temporary’ trade of water allocation under an IR can be made outside of an IIO’s irrigation network with the IIO’s consent.
44 Some IIOs currently do not allow trade of WDR altogether, but the water trading rules require no unreasonable restriction on the trade of WDR where trade is provided for.
45 WDRs in Victoria are ‘statutorily recognised’.46 Although IRs can exist in Vic/Qld, irrigators typically hold a statutory water access entitlement directly, rather than an IR.
A volumetric charge is imposed according to the volume of a water right or physical amount of water. It can in turn be a:
fixed volumetric charge: a charge based on the volume of a water right held.
variable volumetric charge: a charge based on the volume of the right that is utilised in a particular manner.
For example, an infrastructure operator may levy a fixed volumetric charge based on the customer’s WAE, irrigation right or WDR holdings and a variable volumetric charge based on the volume of water delivered to the customer under their water allocation or irrigation right.
A non-volumetric charge is one that does not reference a volume of a water right.
For example, a customer may incur a non-volumetric charge which is levied:
per account (regardless of the volume of water right they hold)
per outlet or meter
based on the size of their landholdings
transaction based charges (for example, a trade application fee which is unrelated to the amount of water being traded)
as a flat charge on all customers with a particular characteristic.
Non-volumetric charges cannot, by definition, be levied with reference to the volume of a right utilised in a particular manner. These charges are generally viewed as fixed from the irrigator’s perspective. As such, non-volumetric charges are often classified together with fixed volumetric charges (for example, in the hypothetical bills set out in chapter 5, and in previous ACCC water monitoring reports).
The effect on irrigators and other customers of these different charging arrangements is discussed in more detail in chapters 4 and 5.
2.3.1 Water planning and management charges
WPM charges are determined by Basin State ministers, water departments and water authorities to recover the costs of WPM activities.
Volumetric WPM charges are usually levied on the basis of WAE held or water allocation used.
Non-volumetric WPM charges can be a mix of:
broad based levies which apply directly or indirectly on water users to fund a specific set of WPM activities, and
transaction charges, including include fees for applications for the trade, transfer or variation of water access rights or lodgement of a transaction with a water registry.
These charges are paid by infrastructure operators and other water users. Where WPM charges are imposed on an IO, the charges (or the costs incurred by the IO associated with these charges) are typically passed on to their own customers.
WPM charges are regulated by the Water Charge (Planning and Management Information) Rules 2010 (WCPMIR). Analysis of WPM charges levied in 2014−15 is provided in chapter 3.
2.3.2 Infrastructure charges
Infrastructure charges are the charges infrastructure operators impose for access to their water service infrastructure and services provided in relation to that access (collectively referred to as ‘infrastructure services’). Infrastructure charges are regulated by the Water Charge (Infrastructure) Rules 2010 (WCIR).
Infrastructure charges for On-river infrastructure services
Infrastructure operators that provide On-river infrastructure services impose ‘On-river infrastructure charges’ to recover the costs associated with:
water harvesting and storage
water transportation and delivery.
Although these costs relate to water service infrastructure, infrastructure charges for On-river infrastructure services generally take the form of:
fixed volumetric infrastructure charges levied on the volume of WAE held by the customer
variable volumetric infrastructure charges levied according to the amount of water allocation delivered to a customer’s extraction point
non-volumetric charges levied per account or per meter/outlet.
Infrastructure operators rely overwhelmingly on volumetric charges to obtain their required revenue. However, the amount of revenues recovered via fixed volumetric charges relative to revenues from variable volumetric charges differs considerably across operators. In some cases, infrastructure operators may also collect infrastructure charges or WPM charges on behalf of other entities.
On-river infrastructure charges levied in 2014−15 are discussed in chapter 4.
Infrastructure charges for Off-river infrastructure services
IOs that provide Off-river infrastructure services impose ‘Off-river infrastructure charges’ to recover their costs associated with the delivery of water from a natural watercourse through channels/pipes to a customer. These costs are associated with:
the day-to-day operation of their infrastructure
maintaining and renewing their infrastructure and
meeting overheads.
Off-river infrastructure charges generally take the form of:
fixed volumetric charges levied on the volume of WDR held by the customer
variable volumetric charges levied on the volume of water delivered to the customer (under a water access right or irrigation right) up to the volume of WDR held (with higher charges typically applying to volumes delivered over this amount), or
non-volumetric charges levied per account, per meter/outlet or with reference to landholdings.
Operators providing Off-river infrastructure services generally rely on volumetric charges to obtain their required revenue, although the contribution to revenues from non-volumetric charges such as account or service fees has changed over time for some operators (see section 6.2.5). Relative reliance on fixed and variable volumetric charges may differ considerably across operators and through time.
Infrastructure operators that only provide Off-river infrastructure services may levy other charges on their customers to pass through or recover the cost of On-river infrastructure charges or WPM charges that they have incurred on behalf of their customers.
Off-river infrastructure charges levied in 2014−15 are discussed in chapter 5.
Infrastructure charges versus the price of water
Infrastructure operators often use a customer’s volume of a WDR held or water used as a proxy for the consumption of infrastructure services and therefore their liability for infrastructure charges.47 However, infrastructure charges imposed by infrastructure operators are not charges for the physical water or water access rights. Unlike urban water tariffs, which can relate to both costs of providing the
47 WPM charges may also be applied on a similar basis.
urban water system and the value of the water itself, infrastructure charges are charges for infrastructure services only (except in some limited cases, see box 2.4).
One key reason why charges in the rural MDB generally do not include a ‘resource rent’ or ‘scarcity value’ for the water itself is that water scarcity is managed at a high level via aggregate volumetric restrictions on consumptive water use such as the Sustainable Diversion Limits in the Basin Plan. The ability for allocated48 water to move to its highest-valued or most productive use via water markets gives water users an incentive to use water efficiently. If the net benefit from using water for a specific use (including non-consumptive uses) is less than the market price, a person would be better off selling the water rather than using it. Thus, well-functioning water markets promote the efficient use of water resources. Use of markets in this way has the benefit that the market itself establishes the price or ‘value’ of water. However, there are also challenges such as deciding where and when water access rights may be traded, and ensuring transactions costs of participating in the market are as low as possible.
Box 2.5: Water charges for ‘bundled’ water rights
In some limited cases, a customer may not hold their own water access right or irrigation right, but may instead have a contract with an operator to supply to them both the water itself and the infrastructure services necessary for the storage, delivery and/or drainage of the water. This primarily occurs in relation to stock and/or domestic customers and urban customers. Often in these cases the charges levied on these customers do not distinguish between charges for the water itself and the charges for the infrastructure operator’s services. In effect, the operator has ‘bundled’ the provision of water with the infrastructure services.
Although these bundled charging arrangements may be simpler, there is a lack of transparency about what proportion of these charges represents the cost of infrastructure services versus the cost of the water supplied. The ACCC is concerned that this charging arrangement makes it difficult for the customers involved to evaluate whether this arrangement is preferable to alternatives, such as users acquiring their own water access right or irrigation right, and separately paying the operator for infrastructure services only.
2.3.3 The availability of information on water charges
Information about water charges is primarily provided by infrastructure operators and Basin State via ‘schedules of charges’. All infrastructure operators are required to provide their schedule of charges to their customers. For infrastructure operators monitored by the ACCC, copies of their Schedules of Charges are provided in the 2014−15 Water Monitoring Report—monitoring approach and assumptions document, available on the ACCC’s website.49
The level of information provided on the schedules of charges varies considerably across operators. For example, GMW, the second largest operator in the MBD, has a very complex schedule of charges with many different types of charges across many different charging districts/areas.50 GMW also provide its customers with a single schedule of charges for both its On-river IO customers and its Off-river IO customers. In contrast, Tenandra, a relatively small infrastructure operator, only list a single variable charge (‘Water-pumping’ charge) and a single fixed charge (‘operation and maintenance fee’).51
Differences in the complexity of the services provided is a key reason why the level of information provision differs. However, in some cases operators’ schedules of charges lack transparency about elements of charges that may be important to customers, for example:
48 The term ‘allocated water’ as used here can be considered both as the volume of WAE on issue, or the particular volume of water allocated during a given water year.
49 See 2014−15 Water Monitoring Report—monitoring approach and assumptions, available at https://www.accc.gov.au/regulated-infrastructure/water/water-monitoring-reporting.
50 See 2014−15 Water Monitoring Report—monitoring approach and assumptions, section 3.2.4.51 See 2014−15 Water Monitoring Report—monitoring approach and assumptions, section 3.2.19.
The extent to which the schedule of charges distinguishes between the operator’s own charges to recover costs of managing and operating its infrastructure versus charges levied to ‘pass through’ costs of On-river infrastructure charges or WPM charges that operators incur on behalf of customers.
The relationship between charges and particular TWR. For example, some schedules of charges clearly specify that a certain fixed charge is levied ‘per ML of WDR’, whereas others only specify ‘per ML’. In the latter case, a customer may not have certainty about how the charge is levied or which TWR the charge relates to.52
Where an operator provides multiple services with different associated charges, the nature of the services (including who is eligible for the services) may not be clear.
Transaction-based charges such as charges for trade of tradeable water rights, transformation, and termination are often not listed on the operator’s schedule of charges. In some cases, information on these types of charges are provided in a separate document, but this may not be clear to customers. In other cases, information about the amount of a particular charge may not be available unless and until a customer takes a particular action. This is particularly the case in relation to termination fees.
The dates for which the charges apply may also not be provided.
See chapter 7 for more information on the ACCC’s approach to compliance with the rules.
2.4 Interaction between user types, tradeable water rights and chargesAs described in the previous sections there are a range of different TWR and water charges relevant to water users. The types of charges payable by any individual water user depend in a large part on what type of water user they are. In particular:
whether the user is located within an Off-river IO’s network, or is a ‘private diverter’ who extracts water directly from a river
what type of WPM activities are undertaken in the Basin State in which the user is located and how the Basin State recovers WPM activity costs
what types of TWR the water user holds (e.g. WAE, IR, WDR)
whether the user is located within a regulated system or an unregulated system.
Rivers can be regulated (flows are controlled via operation of dams and weirs) or unregulated (flow is not controlled directly by the river operator via man made structures). It is possible for a river to be regulated in some parts but not others. WAE are specified with respect to a particular regulated or unregulated river system (e.g. a Goulburn Water Share (a Victorian WAE) is an entitlement to a share of the water resources of the Goulburn regulated system).
Figure 2.5 sets out some examples of different types of water users that commonly exist in the MDB.
In figure 2.5, there are two river valleys (dark blue and light blue). Both river valleys are regulated river systems in some parts, but not others (regulated stretches depicted with thick lines; unregulated with thin lines). The light blue river valley is regulated for a stretch of the river below the dam (storage A), but reverts to an unregulated system before meeting with the dark blue system. This is because water levels cannot reliably be controlled beyond this point due to transmission losses/hydrological reasons.
52 If a customer holds the same volume of WDR as their IR then the lack of clarity in the schedule of charges may have little impact. However, to the extent that a customer’s holdings of WDR / IR differ (or the customer is contemplating undertaking a trade, termination or transformation that would result in such a difference), the lack of clarity in the schedule of charges can provide an incomplete and potentially misleading impression.
Figure 2.5: Schematic with examples of customer types
One type of customer not shown in figure 2.5 is an environmental water holder (EWH). As noted in box 2.2, an EWH would generally hold the same type of rights and be subject to the same charges as other water users. However, EWHs are less likely to have water delivered through an Off-river irrigation network and are therefore more similar to private diverters.
Table 2.2 brings together a summary of the types of tradeable water right held by these customers, and the infrastructure charges that they typically incur. Charges that are passed on by Off-river infrastructure operators are shown in italics (for customers 4 and 5).
WPM charges will also be incurred (directly and/or indirectly) by nearly all water users—these are not shown in table 2.2 but are considered further in chapter 3. On-river charges are considered in chapter 4 and Off-river infrastructure charges in chapter 5. The impact of these charges are considered through chapters 4 and 5.
Table 2.2: Customer types and applicable water charges
Customer type
Types of rights held Infrastructure charges typically payable
Right to water Right to delivery of water
On-river charges paid by customer
Off-river charges paid by customer
1Private diverter
WAE—for the regulated system in the light blue valley
Implied in WAE
(not held separately, not acknowledged explicitly in legislation)
Fixed (per ML of WAE held)
Variable (per ML of water allocation utilised)
Non-volumetric charges (e.g. per account, meter)
n/a
2 WAE—for the n/a (as it is an n/a (as no n/a
Private diverter
unregulated tributary in the light blue valley
unregulated system) infrastructure services are received)
3Private diverter
WAE—for regulated system in the dark blue valley
Implied in WAE
(not held separately, not acknowledged explicitly in legislation)
Fixed (per ML of WAE held)
Variable (per ML of water allocation utilised)
Non-volumetric charges (e.g. per account, meter)
n/a
4Irrigation network customer, untransformed
The operator of the orange irrigation network holds a WAE for the regulated system in the dark blue valley.
The customer holds an IR against the operator.
For delivery on river to the off-take point— implied in WAE held by the operator
For delivery from the off-take point through the network to the customer—WDR against the orange network operator*
Fixed (paid by orange network operator, passed on to customer based on volume of IR held)
Variable (paid by orange network operator; passed on to customer based on volume of water utilised)
Fixed (based on volume of WDR held)
Variable (based on volume of water delivered through the orange irrigation network)
WAE for the regulated system in the light blue valley
Implied in WAE
(not held separately, not acknowledged explicitly in legislation)
Fixed (per ML of WAE held)
Variable (per ML of water allocation utilised)
Non-volumetric charges (e.g. per account, meter)
n/a
(urban water supplier will, however, levy charges on its own customers—these charges are not regulated by the Act)
* Customers 4 and 5 may also have a separate right to drainage, however drainage services are usually bundled with delivery. These customers are also liable to pay a termination fee if they terminate their right of access (represented by their WDR) to their respective irrigation networks. See chapter 7.
3.Water planning and managementThis chapter presents information provided by Basin State departments and water authorities on the: types of water planning and management (WPM) activities types of WPM charges imposed costs of WPM activities estimated revenue raised from WPM charges.The chapter also considers the degree of cost recovery in relation to WPM activity costs.
Findings The type of WPM activities undertaken continues to vary across Basin State departments and
water authorities. Similarly, the approach to WPM charging arrangements also varies, with water access right charges, broad based levies and transaction charges imposed by Basin State departments and water authorities.
In 2014−15, three of the six Basin State departments reported a decline in total costs for WPM activities (of between three and 37 per cent) while the remaining three reported increases (of between five and 56 per cent).
WPM charges nearly all increased by CPI or according to a price path approved by an economic regulator. Changes in WPM charges varied more in Victorian water authorities compared to WPM charges levied by Basin State departments.
Estimated WPM revenue for all water authorities increased in 2014−15. Estimated WPM revenue increased in three of the five Basin States departments. There was a significant decline in estimated WPM revenue of 25 per cent in Department of Environment, Land, Water and Planning. Estimated WPM revenue across the MDB decreased by 16 per cent.
In 2014−15, one Basin State department and one water authority appeared to fully recover the reported cost of their WPM activities.
There continue to be difficulties in attributing the cost of WPM activities and revenue from MDB charges between the MDB and non-MDB areas.
3.1 Water planning and management categories
3.1.1 WPM activities
Water planning and management (WPM) activities are those activities undertaken by, or on behalf of, governments to plan for and manage water resources to ensure their sustainability.
WPM activities are important as they:
promote the long term sustainability of the resource and maintain the health of natural ecosystems by minimising impacts associated with water extraction
are necessary to manage the impacts of past, current and future patterns of water extraction
are concerned directly with the hydrology of surface and groundwater systems
protect the integrity of the entitlement system and the security of users’ authorised access to water.53
53 National Water Initiative Pricing Principles: Principles for cost recovery of water planning and management activities, April 2010, p. 12.
The emphasis applied to each WPM activity varies across each Basin State given the individual and varying factors that affect each Basin State.
For the purposes of reporting, the ACCC uses WPM activity categories developed by the National Water Initiative Pricing Principles Steering Group for Water Charges (the NWI Pricing Principles). These categories are54:
water reform, strategy and policy
water planning
water management
water monitoring and evaluation
information management and reporting
water administration and regulation
water industry regulation.
3.1.2 Water planning and management charges
WPM charges are levied on water users to recover the costs of WPM activities. WPM charges levied in Basin States within the MDB are regulated under the Water Act. Regulated WPM charges:
are primarily related to the management of water resources
do not relate to urban water supply activities (although urban users may also pay certain WPM charges)
are determined by a minister, water department or water authority
are levied across a broad range of users, including irrigators and water authorities and
comprise a relatively small proportion of irrigator bills compared to charges payable to infrastructure operators (see chapters 4 and 5).
The ACCC has classified WPM charges into three categories:
water access right charges—fees and charges for holding or using water access rights
broad based levies—charges applied directly or indirectly on water users (other than water access right charges) to fund a specific set of WPM activities and
transaction charges—include fees for applications to obtain, vary or trade water access rights or lodgement of a transaction with a water registry.
Water access right charges
Water access right charges are imposed on water users based on the water access entitlement they hold and the water allocation used in particular years. These charges are generally volumetric imposed either on the volume of water access rights held (that is, a ‘fixed charge’) or the volume of water delivered (that is, a ‘variable charge’). However, water access right WPM charges may also be levied per water access right held or per account—such charges are ‘fixed non-volumetric charges’. Use of water access right WPM charges varies across Basin States. Table 3.1 sets out the types of water access right WPM charges each Basin State department and water authority impose.
54 National Water Initiative Steering Group on Water Charges, Cost recovery for water planning and management in Australia, February 2007, appendix B.
Table 3.1 : Basin State and water authorities—types of water access right WPM charges
Basin State department/water authority Fixed volumetric
Variable volumetric
Fixed non-volumetric
Qld Department of Natural Resources and Mines (DNRM)
NSW Department of Primary Industries (DPI)
ACT Environment Protection Directorate (EPD)
Vic Department of Environment, Land, Water and Planning (DELWP)
Goulburn Murray Water (GMW)
Grampians Wimmera Mallee Water (GWMW)
Lower Murray Water (LMW)
SA Department of Environment, Water and Natural Resources (DEWNR)
Source: ACCC from data provided and published by Basin State departments and water authorities.
The NSW Government imposes a set of water access right charges, called ‘water management charges’, on irrigators and other non-urban water users. These charges pay for a specific set of WPM activities engaged in by DPI. Water management charges apply to both regulated and unregulated rivers within the MDB as well as other areas in the state. These charges are further differentiated according to whether they relate to surface water or groundwater.
A water user in NSW who pays DPI charges is subject to both a fixed volumetric charge determined by the user’s water access right and a variable volumetric charge based on the volume of water actually used.55 DPI’s water management charges are not distinguished by the type of water access right held by the water user. That is, the same charges apply to high security and general security water access entitlement holders.
DPI WPM charges are therefore imposed on all customers holding a NSW water access licence, including private diverters and Off-river IOs. Off-river IOs then pass these WPM charges, together with WaterNSW’s On-river infrastructure charges, on to their own customers who hold irrigation right (see also section 5.3.5).
In SA, DEWNR only impose fixed volumetric water access right charges that are imposed per ML of water access entitlement held by the water user. DEWNR impose these fixed volumetric water access right charges in the form of NRM Water Levies.56 The amount of the charge varies by water resource and, in the River Murray, the class of water access entitlement held.
55 The charges are determined by the NSW Minister based on advice from the Independent Pricing and Regulatory Tribunal (IPART) of the maximum charge that can be applied in each valley for their efficient costs. IPART conducts reviews every three to four years and sets the maximum charge that can be imposed in every year over the determination period.
Queensland’s DNRM imposes a variable volumetric water access right charge in particular water management areas.
In the ACT, the majority of the EPD’s revenue is associated with its variable water access right charge for water abstraction. In Victoria, DELWP and water authorities levy both fixed and variable volumetric charges as well as fixed non-volumetric charges (such as a set amount per water share regardless of size).
Broad based levies
Broad based levies are general levies that are not linked to the holding and/or use of a water access right and, as such, may not be transparent as an identifiable separate charge. Broad based levies are currently only imposed by DELWP in Victoria and DEWNR in SA.
Victoria imposes a broad based levy—the Environmental Contribution—on all water authorities (both urban and rural). The Victorian Environmental Contribution is a fixed percentage of the revenue raised from specific water services delivered by water authorities.57
The water authority’s revenue cap and charges (including for infrastructure services) incorporates an amount equivalent to a percentage of revenue into the total cost of the water authorities and consequently other charges paid by water users.58
In SA, DEWNR imposed a broad based levy—the Save the River Murray Levy—on all water users that receive water from the River Murray. Unlike DELWP’s broad based levy calculated as a percentage of revenue, DEWNR’s broad based levy was imposed as a dollar amount per water user. The dollar amount imposed on water users varied depending on whether they are classed as non-residential, commercial, farming properties or special. In June 2015, the Save the River Murray Levy was abolished by the South Australian Government, effective from 1 July 2015.
Transaction charges
Transaction charges are charges imposed when a water user undertakes a particular activity. These charges are often associated with a water user’s application to be permitted to undertake that activity. For example, fees associated with the trade of water access entitlements or water allocations are transaction charges as they are only imposed when a water user engages in that activity. Trade application charges are discussed further in chapter 6.
Other transaction charges are imposed by Basin State departments and water authorities. These transaction charges are attached to various activities across Basin States, including:
water meter testing, use and operation
searching registries and lodging documents
licences-related activities
varying water access entitlements and/or water allocations
assessments and inspections.
56 NRM water levies are in addition to the regional NRM levies, which are set with reference to the area of rateable land and collected by local councils.
57 According to the Environmental Contribution Order 2012−16 the contribution of an individual water authority is determined as a multiple of the revenue allowed. For 2012−13 the revenues considered are the 2006−07 amounts for the following services: retail fixed and variable water and sewerage services, trade waste, irrigation services, stock and domestic services and diversion services. It excludes bulk water, bulk sewage, drainage, waterways services, developer contributions and gifted assets. For 2013−14 and onwards to 2016 it assumes the revenue amounts for the above services at their 2010−11 amounts.
58 The ESC includes, in each water authority’s determination, a contribution amount. Water authorities are also required to specify this contribution in their annual reports. The Environmental Contribution Order runs for four years and will expire in June 2016.
3.2 Water planning and management costs and estimated revenue
3.2.1 Water Planning and Management costs
One of the commitments Basin States made under the National Water Initiative (NWI) is to implement water pricing and institutional arrangements which achieve cost recovery for WPM activities.59 The NWI Pricing Principles provide that WPM costs should be allocated between water users and government using an ‘impactor pays’ approach. Further, and where practical, WPM costs are to be identified and differentiated by catchment and by water source.
The Water Charge (Planning and Management Information) Rules 2009 (WCPMIR) require Basin States to disclose the cost of WPM activities where a charge is imposed and the proportion of these costs that are to be recovered from water access entitlement holders. This disclosure allows water users to understand the relationship between WPM charges and WPM costs in Basin States. This comparison is particularly important to assess the degree of cost recovery.
Cost recovery of WPM activities varies across Basin States. It is often not possible to separate the cost of WPM activities, particularly within the MDB, from other government costs. Basin State departments and water authorities have informed the ACCC that they have practical challenges when reporting WPM activities and the costs incurred. These challenges include:
it may be difficult to separate out WPM costs from other non-WPM costs
the level of some WPM charges does not have a clear relationship to the costs incurred for WPM activities
many WPM activities are delivered for the whole of a Basin State and it can be impractical to allocate a portion of these costs to MDB areas.
An example of these challenges is the recovery of contributions to the Murray-Darling Basin Authority (MDBA). The MDBA and Basin States jointly manage water infrastructure across the MDB and jointly deliver a number of WPM activities. Both of these functions are funded via inter-government transfers to the MDBA.60 The general approach to the joint funding of these functions is set out in the Murray-Darling Basin Agreement.61
While the WPM information published by the NSW and Victorian Basin States identified the proportion of their total contribution to the MDBA relating to WPM activities, this information did not identify which specific WPM activities the costs related to (see box 3.1 for more detail).
In addition, the WCPMIR do not apply to WPM charges in relation to urban water supply activities or non-Basin water resources. They also do not require the publication of WPM activity costs where no WPM charge is imposed.
Given these practical constraints, the current approach set out in the WCPMIR may not be the most beneficial way to ensure sufficient transparency for water users and other Basin State residents who either contribute to the cost of WPM activities (either directly or indirectly) or benefit from those WPM activities.
Box 3.1 Recovery of MDBA contributions
In 2014−15, Basin State governments provided $52.7 million to fund these MDBA activities, a reduction of more than $10 million from 2013−14 contributions. In addition, the Australian Government also provided $11.3 million.
59 Intergovernmental Agreement on a National Water Initiative, s. 64(iv). This can be viewed at http://www.nwc.gov.au/__data/assets/pdf_file/0008/24749/Intergovernmental-Agreement-on-a-national-water-initiative.pdf.
60 The MDBA carries out a number of WPM activities including: environmental works relating to joint assets, salinity management, water quality monitoring, interstate water trade reconciliation, water monitoring and evaluation and environmental works (for example construction of fishways and pest fish management).
61 Murray-Darling Basin Agreement, Parts VII and VIII set out the joint activities. Clause 72 provides a formula for determining the contribution provided by the Commonwealth and Basin States. The MDBA annual report, notes to Financial Accounts, discloses the total amount contributed to the MDBA for joint activities as well as the contributions of Basin States.
The MDB Agreement does not set out any requirements on how MDBA joint activities funding is reported by states and there is no consistent approach to reporting on joint activities undertaken. As a result there is also limited information about the level of cost recovery from water users for these contributions. Governments fund their contributions in a number of ways which affect the charges paid by water users.
The Commonwealth covers its contribution for joint activities and the agency costs of the MDBA through consolidated revenue.
NSW contributed $18.9 million in 2014−15. Some of the contribution costs were recovered through infrastructure charges imposed by the NOW (in the form of WPM charges) collected by WaterNSW.
Victoria contributed $18 million in 2014−15. Some of the contribution costs were recovered from water users. GMW included MDBA costs in its expenditure forecasts for the ESC price determination. Victorian water users also fund some MDBA costs through the Environmental Contribution.
Queensland contributed the least of all Basin States, contributing $100 000. This reflects the limited application of joint activities in Queensland.
There is little available information about recovery of MDBA contributions in SA. In 2013−14, the SA Government noted $9.8 million was provided to the MDBA through the Save the River Murray Levy and Fund collected from SA Water customers (both inside and outside the MDB).
Table 3.2 shows the total cost of WPM activities reported by Basin State departments and water authorities from 2011−12 to 2014−15. Where a WPM activity occurs both inside and outside the MDB, the WPM cost refers to costs within the Basin State as a whole. This is consistent with the approach to revenue from WPM charges reported in section 3.2.3.
Table 3.2: Basin State and water authorities—total cost of WPM activities ($2014−15), 2011−12 to 2014−15
State Department/authority Total WPM cost ($ million) Per cent change (real),
2013–14 to 2014−15
2011−12 2012−13 2013−14 2014−15
NSW DPI62 71.3 77.4 62.8 64.9 3%
Vic Department
DELWP63 44.8 35.8 72.2 96.8 34%
Water authority
GMW 3.2 3.1 2.8 1.7 –38%
62 The NSW Department of Primary Industries was formed on 3 July 2015 and replaced the NSW Office of Water.63 Following the November 2014 Victorian State Election, Department of environment and primary industry is now part of
Department of Environment, Land, Water and Planning (DELWP).
GWMW 1.2 0.8 0.7 1.1 53%
LMW 1.8 1.7 1.2 1 –18%
Vic total 51.0 41.5 76.9 100.6 31%
SA DEWNR 42.4 37.2 38.3 36.5 –5%
Total 164.7 156.1 178.1 202 13%
Source: ACCC from data provided and published by Basin State departments and water authorities.
In 2014−15 the total cost for all WPM activities in Victoria increased by 31 per cent in real terms. This overall increase was due to a 34 per cent increase in departmental WPM costs, slightly offset by a reduction in WPM costs for the two Victorian water authorities, LMW and GMW. As in 2013−14, Victoria had the highest WPM costs across the Basin States, totalling just over $100 million in 2014−15. DEWNR reported a decrease of 5 per cent on WPM costs from 2013−14, to $36.5 million in 2014−15.
DNRM and EPD did not provide WPM cost information for 2014−15. DNRM acknowledged to the ACCC that WPM charges levied under the Water Regulation 2002 (Qld) do not reflect the actual cost of WPM activities and only recover a small portion of the total WPM cost. DNRM also noted that consolidated revenue almost exclusively funds WPM costs.64
EPD similarly informed the ACCC that it is difficult to accurately provide WPM costs. However, EPD did note that over $475 000 was provided by the ACT Government for the Waterwatch program to enhance water monitoring in the ACT region. EPD further provided that in 2014−15 roughly $28.5 million was collected from the water abstraction charge. This revenue covers the administration of water entitlement and registry systems, regulatory functions, and the scarcity value of water in the ACT.65
Table 3.3: Basin State and water authorities—breakdown of total WPM costs by activity, 2014–15
Department/authority
Basin State department Water authority Total
DPI DELWP DEWNR GMW GWMW LMW
Water reform strategy and policy
$ million 10.1 10.1
(% of total) (10) (5.4)
Water planning $ million 17.6 29.2 8 54.8
(% of total)
(27) (30) (22) (29.4)
Water management $ million 3.2 28.2 21.9 0.1 53.4
64 The ACT Environment and Sustainable Development Directorate was renamed to the ACT Environment and Planning Directorate in 2015.
65 Information provided by DNRM in the 2014−15 WPM RFI.
(% of total)
(5) (29) (60) (9) (28.7)
Water monitoring and evaluation
$ million 19.5 10.1 0.6 0.7 30.9
(% of total)
(30) (10) (2) (41) (16.6)
Information management and reporting
$ million 2.8 0.5 1 0.1 0.4 4.8
(% of total)
(4) (1) (3) (4) (41) (0.1)
Water administration and regulation
$ million 21.8 4.1 2.8 0.9 1.1 0.5 31.2
(% of total)
(34) (4) (8) (50) (100) (51) (16.8)
Water industry regulation $ million 0.8 0.1 0.9
(% of total)
(1) (3) (0.5)
Total $ million 64.9 83 34.3 1.8 1.1 1 186.1
Source: ACCC from data provided and published by Basin State departments and water authorities.
Note: not all WPM activity costs are allocated to a WPM activity category, so the total amounts reported in this table are less than the overall costs reported in table 3.2.
For all Basin State departments and water authorities, the highest cost was for water planning activities, closely followed by water management activities. Water industry regulation activities had the lowest cost, at less than $1 million in 2014−15.
Although table 3.3 provides a guide to the breakdown of costs for NWI Pricing Principle WPM activity categories, it can be difficult for Basin State departments and water authorities to accurately breakdown total costs for these categories. It is possible that particular WPM products will fall under multiple categories. An example of this is DELWP’s reported activity of Basin Plan modelling. DELWP reported this as ‘water monitoring and evaluation’, but it could also include elements that fall under ‘water management’ and ‘water administration and regulation’. However, Basin State departments and water authorities are required to identify a category that best fits that particular WPM activity rather than identifying multiple categories.
Under the WCPMIR, Basin State departments and water authorities must also publish information that breaks down their WPM costs between66:
capital costs—costs incurred in purchasing land and buildings
corporate service costs—corporate costs that may be common to the delivery of a number of activities not easily allocated to a specific project, and
operating costs—costs involved with maintaining property or assets.
66 WCPMIR, rule 5(2)(j)(ii).
As set out in the WCPMIR, Basin States and water authorities can choose to provide the breakdown between operating, corporate and capital costs for each WPM activity undertaken or for all WPM activities as a whole. In most cases, given the difficulty in identifying the proportion of operating, corporate and capital costs for each WPM activity, Basin State departments and water authorities provide a breakdown for all WPM activities as a whole rather than by activity. Further some Basin State departments and water authorities are unable to provide a breakdown for some WPM activities.
Chart 3.1 sets out the breakdown of WPM costs for Basin State departments and water authorities for 2013−14 and 2014−15. Costs are separated between capital, corporate and operating costs based on the overall breakdown provided in their RFI responses. As such, this chart does not match the costs reported in table 3.2. Further, this chart includes costs that are incurred by Basin State departments and water authorities within and outside the MDB.
Chart 3.1: Basin State departments and water authorities—cost by WPM categories, 2013−14 and 2014−15 (nominal)
Source: ACCC from data provided and published by Basin State departments and water authorities.
Consistent with previous years, operating costs make up the majority of WPM costs for Basin State departments and water authorities. Capital costs were significantly higher in 2014−15 for DELWP and two of the Victorian water authorities. DELWP’s reported capital costs increased from $3.7 million to $9.2 million in 2014−15. The change in capital costs is related to an increase in WPM activity capital costs connected to the salinity offset charges and the Environmental Contribution. DELWP’s corporate costs decreased from almost $1 million in 2013−14 to just over $0.3 million in 2014−15, associated with a decrease in corporate activity costs connected to the Environmental Contribution.
3.2.2 Levels of water planning and management charges
Basin States typically allow WPM charges to increase each year according to:
some consistent amount as set out in legislation such as the rate of the Consumer Price Index, or
a price path approved by an economic regulator (such as the maximum charges approved by IPART in NSW or the ESC in Victoria for a given year in each year of a determination).
IPART is the independent economic regulator for DPI’s WPM charges. The scheduled price determination for 1 July 2014 to 1 July 2016 was deferred. As such, the DPI WPM charges imposed on water users in NSW remained at 2013−14 levels in 2014−15.
DNRM and DEWNR submitted to the ACCC that all WPM charges that changed in 2014−15 increased by CPI. In contrast, increases in ACT EPD WPM charges were due to the movement in the
Wage Price Index rather than the CPI. DELWP WPM charges are indexed for inflation in accordance with the Victorian Monetary Units Act 2004.
Year on year changes in WPM charges levied by Victorian water authorities were more varied than those of Basin State departments, which were relatively straightforward. GWMW’s charges either did not change between 2013−14 and 2014−15 or increased by CPI of 2.75 per cent plus real growth between 0.14 per cent and 10.48 per cent. One GWMW WPM charge—the groundwater volumetric charge in the Murrayville Area—declined in real terms by nearly 10 per cent, from $8.26 to $7.67.67
LMW submitted that since the introduction of the 2013−18 Water Plan, its ‘operation fee’ is incrementally increasing to cover the full cost of service. For other LMW WPM transaction charges, LMW sets the charge at a level that is comparable with similar charges imposed for Victorian Water Register transactions which are indexed on 1 July each year in accordance with the Monetary Units Act 2004. Other charges are annually indexed by CPI as part of the Victorian Essential Services Commission miscellaneous charge approval process.68
WPM charges imposed by GMW either increased in line with CPI or decreased due to streamlining the relevant application process. GMW reduced four charges due to streamlining application processes.69
3.2.3 Estimated revenue from WPM charges in 2014−15
The ACCC estimates revenue from WPM charges by multiplying each charge amount by the number of times the charge was imposed, and summing across all charges. The number of times each charge is imposed is provided to the ACCC from Basin State departments and water authorities as part of the annual request for information process.
WPM charges can be levied across the entire Basin State—not just within the MDB part of the Basin State. Where a WPM charge is levied state-wide, it is not always possible for the Basin State department to identify the number of times the WPM charge was levied on water users within the MDB and water users outside the MDB. As such, estimated revenue reported relates to the Basin State as a whole. This is consistent with the approach taken to reporting the cost of WPM activities in section 3.2.1.
Table 3.4 shows the estimated total revenue received by each Basin State department and water authority from WPM charges between 2010−11 and 2014−15. It also shows the percentage change in real terms between 2013−14 and 2014−15.
Table 3.4: Basin State and water authorities—total estimated real revenue received from WPM charges, 2010−11 to 2014−15
State Department/authority Estimated total revenue ($2014−15 million) Per cent change
(real), 2013−14 to
2014–152010−11 2011−12 2012−13 2013−14 2014−15
Qld DNRM 3.1 – 1.7 1.1 1.1 1%
NSW DPI 37.1 39.5 42.7 45.3 40.1 –11%
ACT EPD 23.9 23.1 26.2 25.7 26.2 2%
67 Information provided by GWMW in the 2014−15 WPM RFI.68 Information provided by LMW in the 2014−15 WPM RFI.69 These charges decreased by between 34 and 60 per cent between 2013−14 and 204−15 and were imposed on:
registration of construction or alternation of a Domestic Stock or Aesthetic dam groundwater works licence fees-application to construct, alter or replace a bore for domestic and stock use renewal/transfer of a works licence to construct registration and transfer of a domestic and stock bore.
Vic Department
DELWP 77.3 76.2 87.5 158.9 116.8 –26%
Water authority
GMW 2.6 2.5 2.8 1.0 1.1 1%
GWMW – 0.6 0.5 0.5 0.6 7%
LMW 0.9 1.0 1.1 1.2 1.3 7%
Vic Total 80.8 80.3 91.9 161.7 119.7 –26%
SA DEWNR 35.6 34.0 31.0 34.0 34.8 2%
Total 180.4 176.8 193.5 267.8 221.9 –17%
Source: ACCC from data provided and published by Basin State departments and water authorities.
As outlined above, there are broadly three types of WPM charges imposed on water users:
water access right charges
– fixed volumetric
– variable volumetric
– non-volumetric
transaction charges
broad based levies.
Non-volumetric and fixed water access right charges, as well as broad based levies, provide revenue certainty to Basin State departments and water authorities. This certainty is due to the limited variability in the number of water users and the total volume of water access entitlement on issue over time. In contrast, there is less certainty from variable water access right charges as water use can vary significantly across years. Transaction charges depend on water users engaging in particular activities for which a transaction charge is levied (for example, trade of water access rights), and therefore also fluctuate each year.
Chart 3.2 sets out the proportion of estimated revenue that is received from each type of WPM charge.
Chart 3.2: Basin State and water authorities—WPM charge categories—proportion of revenue raised, 2014−15
Source: ACCC from data provided and published by Basin State departments and water authorities.
As shown in chart 3.2, entities generally choose one particular charge type to gather WPM revenues. DELWP (which accounts for the majority of WPM revenue in Victoria) and DEWNR receive almost all of their revenues from broad based levies. DNRM and GMW receive 100 per cent of their WPM revenue from transaction charges.
Of those who rely on water access right charges-DPI, GWMW and LMW-DPI and LMW both receive a higher proportion of their estimated revenue from fixed charges. Conversely, GWMW receives a higher proportion of its estimated revenue from variable charges. A very small proportion of estimated revenue is from non-volumetric water access right charges.
Basin State departments and water authorities that rely on transaction charges for their revenue (compared to other types of WPM charges) are likely to face a more volatile revenue stream. This is because water users have the ability to manage their WPM charges through managing the activities they undertake within that year. This is similar to GWMW who also relies on variable water access right charges for its revenue. GWMW’s estimated revenue from WPM charges is almost entirely dependent on the volume of water delivered to water users.
3.3 Comparison of costs and revenuesAs described above, each Basin State department or water authority takes a different approach to determining what WPM charges will be imposed on water users to recover the users’ share of the costs associated with WPM activities. These methodologies differ with regard to the:
WPM activities for which Basin States seek to recover costs
water users that will be subject to a WPM charge and
proportion of associated WPM costs recovered from WPM charges.
Comparing total WPM costs (set out in tables 3.2 and 3.3) against estimated WPM revenue (set out in table 3.4) provides a measure of the degree to which the costs of the WPM activities are recovered by revenues from WPM charges.
The level of WPM cost recovery achieved by a Basin State through WPM charges imposed on water users has important policy implications. Where revenues from WPM charges do not recover the costs of its WPM activities, a Basin State must divert funds from other sources to cover the shortfall. The converse is true in cases where WPM revenues exceed costs. Disclosure of the level of cost recovery for WPM charges allows users and governments to assess whether the mix of WPM activities is
appropriate given the associated costs and the degree to which these costs are recovered through the WPM charge(s) imposed.
Chart 3.3 sets out the estimated revenue as a percentage of WPM cost.
Chart 3.3: Basin State and water authorities—estimated WPM revenue as a percentage of total WPM cost, 2011−12 to 2014−15
Source: ACCC from data provided and published by Basin State departments and water authorities.
As shown in chart 3.3, according to data provided to the ACCC, DPI and DEWNR consistently under recover WPM costs from WPM charges. However, DEWNR has been steadily moving towards full cost recovery since 2011−12, with estimated revenue covering just over 95 per cent of WPM activity costs in 2014−15.
Victoria is the only Basin State that has over recovered WPM costs from WPM charges, chiefly through the Environmental Contribution—a broad based levy imposed to recover WPM activity costs. The proportion of over-recovery of WPM costs has been declining for the last three years as WPM activity costs have risen faster than revenue from WPM charges.
LMW is the only water authority to over-recover WPM costs through WPM charges. However, this is only the case in 2014−15; in the preceding three years, LMW also under recovered WPM costs.
The level of cost recovery has remained relatively stable for DPI and DEWNR across the four years between 2011−12 and 2014−15. This is represented by the estimated revenue as a percentage of total WPM costs remaining constant. There has been more variation in the cost recovery across years for the Victorian department and water authorities.
4.On-river infrastructure operatorsThis section relates to the operations of On-river infrastructure operators (On-river IOs) with a focus on charging arrangements. In particular, this chapter discusses: the characteristics of On-river IOs and their customers tariff structures and charge types the overall size of On-river IO bills and the components of these bills changes in On-river IO hypothetical bills over time.
Findings There are considerable differences across On-river infrastructure operators in the MDB.
Differences include size, water volumes, customer type, the level of customer bills as well as the degree of cost recovery and hydrologically connection. There is also considerable variation in tariff structures and the mix of variable, fixed and non-volumetric charges imposed.
The Murray-Darling Basin Authority (MDBA) and, to a lesser extent, Border Rivers Commission (BRC) provide On-river infrastructure services, but do not directly recover costs through charges. Funding arrangements, and the degree of cost recovery from users, are opaque.
Hypothetical bills prepared for 2014−15 vary significantly across the MDB and between geographic areas serviced by the same On-river IO. Bills tend to be higher in the northern MDB as charges can be levied on higher volumes of WAE and usage in the southern MDB.
Hypothetical bills range from $5510 for general security customers in Murrumbidgee to $295 710 in GMW’s Bullarook system.
In 2014−15, changes in hypothetical bills varied across On-river IOs. Hypothetical bills increased in 2014−15 in three quarters of the 36 systems monitored. Hypothetical bills increased in all systems in Queensland and almost all systems in Victoria. However, bills increased for only half the systems in NSW. Further, in all but one case the increase in hypothetical bills exceeded the CPI increase.
WPM charges passed through by On-river infrastructure operators generally contribute a relatively small proportion (between seven and 30 per cent) to total hypothetical bills. However, general security hypothetical bills for WaterNSW’s Murrumbidgee system are almost 60 per cent WPM charges and are 100 per cent fixed WPM charges for private diverters in SA Murray (as there are no On-river infrastructure charges).
Since 2009−10, hypothetical bills have been lowest for larger systems (where there are higher volumes of usage/water access entitlement on issue) while hypothetical bills are more volatile across years for smaller systems. Hypothetical bills since 2009−10 generally increased by less in Queensland (except for Maranoa River) compared to other systems, particularly those operated by GMW.
4.1 On-river infrastructure operatorsAs briefly outlined in chapter 2, an On-river IO manages On-river water service infrastructure for the storage and delivery of water (sometimes referred to as ‘bulk’ water services). These operators are responsible for:
water harvesting—the collection or accumulation of surface water primarily sourced from rainfall and run-off over the natural landscape
water storage—this includes operation of storage facilities such as dams, lakes, weirs and reservoirs. These storage facilities allow water to be regulated and held for release when demanded
carryover—in line with water allocation frameworks determined by Basin States, operators manage storages to facilitate carryover arrangements, which allow water entitlement holders to hold or ‘carryover’ allocated water in storages so that it is available in subsequent years
water delivery—the delivery of water primarily occurs through naturally occurring watercourses such as rivers and creeks.
4.1.1 Characteristics
Although all On-river IOs generally undertake the same types of activities, their size and who they deliver water to varies. In addition, some On-river IOs also operate Off-river water service infrastructure, in particular Goulburn-Murray Water (GMW), Lower Murray Water (LMW) and SunWater. This chapter focuses on the On-river services and charges of these operators. These operators’ Off-river services and charges are considered further in chapter 5. Table 4.1 sets out the characteristics of On-river IOs in the MDB.
Source: ACCC from data provided and published by On-river IOs.
As seen in table 4.1, WaterNSW, Goulburn-Murray Water (GMW) and Lower Murray Water (LMW) are the largest On-river IOs in terms of the volume of water access entitlement serviced and the volume of water delivered to their customers. The majority of water delivered by WaterNSW is to separate Off-river IOs. The majority of water delivered by GMW was also to Off-river customers of GMW. LMW’s deliveries were mostly to private diverters rather than their own Off-river customers. On-river IOs generally deliver a relatively small volume of water to urban water suppliers, although such customers make up a higher proportion of deliveries for smaller On-river IOs such as GWMW and DNRM.
Water users in SA do not have an On-river IO which operates specifically in SA, but instead benefit from On-river infrastructure services provided upstream by the Murray-Darling Basin Authority (MDBA). However, the MDBA does not impose charges for these infrastructure services but is instead funded by Basin State and Commonwealth governments—funding arrangements for the MDBA, including cost recovery from water users, are discussed in section 4.4.2.
4.1.2 Customers
On-river IOs have a range of different customers, who extract water directly from a natural watercourse. Customers include:
Private diverters—customers who extract water directly from the natural watercourse to their property for their own use. Typically this water is used for irrigation but may be used for other reasons such as mining or other commercial activities.
Environmental Water Holders (EWHs)—customers who use infrastructure services provided by On-river IOs to deliver water to assist with the protection and restoration of rivers, floodplains and wetlands.
Off-river IOs—customers who extract water from the natural watercourse for delivery through to their own customers through either pressurised or gravity-fed Off-river networks. Irrigation infrastructure operators (IIOs) are a sub-set of Off-river IOs who deliver water for the primary purpose of being used for irrigation.
Urban water suppliers—customers who extract water from natural watercourses for delivery through their own urban water supply network (a type of reticulated water system). Urban water suppliers are also a sub-set of Off-river IOs. However, charges imposed by urban water suppliers are outside the scope of the WCIR.
The nature of customers’ demand for water can vary within these four broad categories. For example, the demand for water could vary among private diverters depending on the crop grown and the season, while for EWHs demand could vary depending on whether they require water to be diverted either to or away from certain areas depending on the unique environmental characteristics of the relevant area.
4.2 On-river infrastructure operators and chargesOn-river IOs generally impose infrastructure charges to recover the costs they incur in order to store and deliver water to customers. In some cases, On-river IOs also pass on water planning and management (WPM) charges imposed on them by, or collect WPM charges on behalf of, Basin State departments and water authorities (see chapter 3). In turn, the On-river IOs’ charges are themselves passed on to the customers of Off-river IOs (see chapter 5).
4.2.1 On-river infrastructure charges
Infrastructure charges of large, non-member owned On-river IOs are directly approved or determined by the ACCC or another accredited regulator in accordance with the WCIR. The Essential Services Commission (ESC) in Victoria was accredited to approve or determine GMW and LMW infrastructure charges in February 2012. Accreditation arrangements for the Independent Pricing and Regulatory Tribunal (IPART) in NSW commence on 1 June 2016 and IPART will determine infrastructure charges for WaterNSW from 1 July 2017.The WCIR requires the regulator to approve or determine such infrastructure charges that allow the On-river infrastructure operator to recover its prudent and efficient costs of providing infrastructure services.
On-river IO infrastructure charges contribute to recovering costs associated with:
water harvesting and storage (including flood mitigation and asset management of dams, lakes, weirs and other storage structures), and
water transportation and delivery (including taking customers’ orders, determining and implementing storage releases, monitoring water usage and administering customers’ water accounts).
On-river IOs generally recover these costs through a mix of variable volumetric charge, fixed volumetric charge, and non-volumetric charges.
Variable On-river infrastructure charges are generally levied according to the volume of water delivered to a customer’s extraction point. Fixed On-river infrastructure charges are generally levied on the volume of a particular type of water access entitlement held by the customer.
Non-volumetric infrastructure charges may also be applied for particular services or dedicated infrastructure (e.g. account or meter fees) and generally represent a very small proportion of total charges that customers face (totalling between $40 and $180 for the On-river IOs reported here).
An example of the charging arrangements of an On-river IO is provided in box 4.1.
GMW manages water storage and delivery in northern Victoria, and provides both On-river and Off-river infrastructure services. For its On-river services, GMW’s customer base is segmented into the following groups:
Victorian ‘bulk entitlement’ holders which include other water authorities, both urban and rural (these GMW customers are referred to as ‘Bulk’ in hypothetical bills)
‘water users’—generally, Irrigators who are located Off-river and to whom GMW also provides Off-river infrastructure services, whose water access entitlement is associated with a specific water use licence70
‘non-water users’ who hold a water access entitlement but do not have a corresponding right to the delivery of water. For example, on some occasions, environmental water holders may fit this description
private diverters, who can be either ‘water users’ or ‘non-water users’ depending on whether their water access entitlement is associated, and
water district users-users located in specific water district areas who primarily use water for stock and domestic purposes.
Further, for each customer category outlined above, different charges can apply depending on the reliability of the water access entitlement held by the customer, and according to the geographic area the customer is located in. Over time GMW has changed the geographic basis of its charging arrangements. At a high level, charges are transitioning from being applied at a ‘system’ level—either the Goulburn or Murray systems—to being applied at the geographically smaller ‘basin’ level—the Broken, Goulburn, Campaspe, Loddon, Bullarook, Murray and Ovens. Charges vary considerably between basins and are mostly higher than the relevant system charge. For 2014−15, basin level charges applied to non-water users and bulk entitlement holders, while system level charges applied to water users.
4.2.2 Water planning and management charges for On-river infrastructure operator customers
An On-river IO and/or its customers may be subject to WPM charges as described in chapter 3.
These WPM charges can be determined by the On-river IO (where they do so on behalf of government). This is the case with Victorian On-river IOs.
In other cases, WPM charges may be collected by the On-river IO on behalf of a Basin State department. For example, through an agreement, WaterNSW collects WPM charges on behalf of DPI in addition to collecting its own On-river infrastructure charges.
70 A water use licence is a location-related right that allows the holder to use water on land, subject to the terms of the licence.
Finally, an On-river IO may itself incur WPM charges which it must pass through to its customers. For example, in Victoria, On-river IOs are required to pay a certain percentage of the revenue from their own infrastructure charges as part of the Environmental Contribution order. This means that infrastructure charges must include a margin to cover the cost of this WPM charge, as explained in box 4.2.
Box 4.2: Victorian Environmental Contributions
Although GMW does not impose any ongoing WPM charges on its On-river IO customers, the ESC’s 2013 price determination for rural water businesses made adjustments for Environmental Contribution (EC) amounts for GMW and LMW to recover. These contributions, as set out in the determination, are at table 4.2.
Table 4.2: Environmental Contribution amounts set out in the ESC 2013 determination, 2013–14 to 2017−18
Water Authority
Environmental Contribution ($ million)
2013−14 2014−15 2015−16 2016−17 2017−18
GMW 2.36 2.30 2.24 2.18 2.12
LMW 1.18 1.15 1.12 1.09 1.06
Source: Relevant ESC determinations.
These amounts represent WPM charges imposed on GMW and LMW, which these operators pay using a proportion of revenues collected via their own charges. As such, EC Contributions are ‘passed through’ to customers in the form of GMW’s and LMW’s infrastructure charges being higher than they otherwise would be. It is difficult to determine the proportion or amount of a hypothetical bill that is associated with the recovery of WPM costs from water users as the ESC determination does not set out how the EC amounts are to be recovered through infrastructure charges GMW and LMW impose on their customers. Nevertheless, a small proportion of LMW71 and GMW’s On-river infrastructure charges is associated with the recovery of the Environmental Contribution WPM charge.
Even where WPM charges incurred by the On-river IO are more straightforward, the manner in which these charges are passed through to end users can be less than transparent, especially where WPM charges are further passed through by Off-river IOs (see section 5.3).
4.3 On-river infrastructure operator hypothetical bills for 2014−15
4.3.1 Approach to hypothetical bills
Similar to previous water monitoring reports, the ACCC has constructed hypothetical bills to represent the level of charges an On-river IO imposes on its customers. A hypothetical bill is a simple representation of how regulated charges translate into an individual customer bill, based on assumptions about the amount of water held and used, and the type of charges likely to be incurred. Hypothetical bills provide a common framework for analysing and comparing charges across operators, geographic areas, and time.
71 GMW and LMW also impose their own WPM charges directly on their customers, as described in chapter 3.
The 2014−15 Water Monitoring Report—monitoring approach and assumptions document, available on the ACCC’s website72, sets out in detail the assumptions of hypothetical bill calculations. This report also includes individual operators’ 2014−15 schedules of charges, on which hypothetical bills are based.
Most On-river IOs charge their customers a fixed volumetric charge to recover at least some of the fixed costs of providing infrastructure services, and a variable volumetric charge to recover variable costs. Where the ratio of fixed to variable charges is not broadly in alignment with the ratio of fixed to variable costs, an IO may rely on variable charges to contribute to funding of fixed costs or, less commonly, the reverse.
Typically, fixed volumetric charges are based on the volume of water access entitlement a customer holds, whereas variable volumetric charges are based on the actual volume of water delivered to the customer. Additionally, some On-river IOs also impose non-volumetric charges. In this chapter, non-volumetric charges are included in the ‘fixed charge’ category (that is, hypothetical bill results for ‘fixed charges’ includes volumetric fixed charges and non-volumetric charges). See section 5.3.4 for further discussion on use of non-volumetric charges.
WPM charges levied in relation to water access rights (see section 3.1.2) are also included in hypothetical bills to provide a clearer and more realistic picture of the total dollar amount a typical customer located in a regulated system would face for annual infrastructure services. These WPM charges may have fixed, variable or non-volumetric components. Transaction-based WPM charges, such as licence or application fees, are not included in hypothetical bills.
Customers in SA do not currently pay any specific On-river infrastructure charges. However, they do generally pay WPM charges and as such a hypothetical bill has been included for SA private diverters.73
Hypothetical bills only include ongoing infrastructure charges that customers face each year. Transactional charges that are based on a customer undertaking a particular activity such as trade fees are not included in hypothetical bills but are discussed in chapter 6.
The capacity of storages and the volume of water access entitlement on issue tend to be larger in the southern MDB compared to the northern MDB. Because of these different characteristics, the hypothetical bills for On-river infrastructure operator systems are presented in charts depending on whether the system is located in the northern or southern MDB.74
In 2014−15, hypothetical bills were produced for customers in systems across five On-river IOs and for SA private diverters.
4.3.2 On-river infrastructure operator hypothetical bills for 2014−15
Total hypothetical bills for On-river IO customers are presented in table 4.3, assuming holdings of 1000 ML of water access entitlement. To demonstrate the effect of variable charges on the amount payable, different bills are prepared assuming 50 per cent or 100 per cent of this volume is delivered.
72 See https://www.accc.gov.au/regulated-infrastructure/water/water-monitoring-reporting.73 The WPM charges in SA are based on the water access right for the Natural Resources Management levy and per
property for the Save the River Murray Levy. These charges are imposed by the SA Department of Environment, Water and Natural Resources (DEWNR).
74 The northern and southern MDB have different characteristics. The northern MDB is drier, flatter and has a more variable landscape than the southern MDB. The southern MDB also receives most of its rainfall during the winter months whereas the northern MDB receives most of its rainfall during the summer months. For these reasons, hypothetical bills in the northern and southern MDB are presented separately.
Table 4.3: On-river IOs—hypothetical bills—1000 ML of water access entitlement, 50 per cent and 100 per cent water delivered—total bill 2014−15, percentage change 2013−14 to 2014−15 (nominal)
On-river IO
System Charge category
50 per cent delivered
($)
Per cent change
(nominal), 2013−14
to 2014−15
100 per cent
delivered ($)
Per cent change
(nominal), 2013−14 to
2014−15
Southern MDB
GMW
Goulburn Bulk-Loddon 36 750 13.2% 36 750 13.2%
Bulk-Bullarook 295 710 13.2% 295 710 13.2%
Bulk-Campaspe 22 300 13.2% 22 300 13.2%
Bulk-Goulburn 7 940 3.9% 7 940 3.9%
Bulk-Broken 34 480 13.2% 34 480 13.2%
Bulk-Ovens 43 470 13.2% 43 470 13.2%
Private Diverters—all basins
15 814 –0.3% 15 814 –0.3%
Murray Bulk-Murray 11 480 3.9% 11 480 3.9%
Private Diverters—all basins
18 214 –9.1% 18 214 –9.1%
LMW Murray 15 277 4.3% 15 277 4.3%
SA Murray Private Diverter 5 510 –1.9% 5 510 –1.9%
WaterNSW
Murray HS 10 075 32.4% 14 000 32.3%
GS 8 065 18.6% 11 990 22.7%
Murrumbidgee HS 7 350 13.2% 9 900 12.8%
GS 5 330 4.4% 7 880 6.6%
Lachlan HS 24 980 2.8% 35 260 2.5%
GS 15 330 –6.4% 25 610 –3.2%
On-river IO
System Charge category
50 per cent delivered
($)
Per cent change
(nominal), 2013−14
to 2014−15
100 per cent
delivered ($)
Per cent change
(nominal), 2013−14 to
2014−15
Northern MDB
WaterNSW
Macquarie HS 22 680 6% 30 830 5.3%
GS 13 530 –4% 21 680 –1.9%
Namoi HS 30 165 0.9% 41 070 0.6%
GS 21 335 –6.3% 32 240 –4.3%
Peel HS 56 025 11.6% 81 330 11.7%
GS 30 755 10.8% 56 060 11.2%
Gwydir HS 21 645 –6.0% 28 350 –6.0%
GS 11 415 –9.0% 18 120 –7.8%
Border HS 17 890 –7.7% 23 600 –5.6%
GS 11 370 2.1% 17 080 2.0%
DNRM Border Rivers 16 250 3.2% 22 450 3.2%
SunWater
Macintyre Brook 39 605 8.3% 41 610 8.0%
Cunnamulla 29 650 2.5% 31 230 2.5%
Chinchilla Weir 28 190 2.5% 29 720 2.5%
St George 19 980 2.5% 20 590 2.5%
Upper Condamine
North branch 48 815 2.5% 55 530 2.5%
North branch risk A 18 595 4.2% 25 310 3.8%
Sandy Creek/ Condamine River
32 540 2.5% 35 000 2.5%
Maranoa River 75 720 3.9% 104 450 4.6%
Source: ACCC from data provided and published by On-river IOs.
Note: HS = high security, GS = general security.
On-river IO bills increased in most systems in 2014−15 (27 out of 36 On-river IO hypothetical bills in nominal terms; 26 in real terms). As shown above, hypothetical bills for On-river IO customers vary significantly across the MDB and between different geographic areas serviced by the same On-river IO.75 For example, a hypothetical bill for a SunWater customer holding 1000 ML of WAE and having 50 per cent water delivered is $18 595 in the North branch of the Upper Condamine system compared with $75 720 in the Maranoa River system.
In 2014−15, hypothetical bills increased by the largest percentage for WaterNSW Murray high security customers, where bills increased by 32 per cent (30 per cent in real terms). Increases were also relatively high in the Murrumbidgee and Peel WaterNSW systems, for both general security and high security customers. Bills rose by 13 per cent (11 per cent real) for most customer groups in GMW’s Goulburn system.
The largest declines occurred for private diverters in GMW’s Murray system (nine per cent nominal) and customers in WaterNSW’s Gwydir system with general security WAE (9 per cent nominal decline for 50 per cent water delivered and 8 per cent nominal decline for 100 per cent water delivered).
Hypothetical bills for customers who have their water delivered on the River Murray across the three Basin States provide a clear example of how bills vary across On-river IOs and Basin States. Holding constant the WAE reliability (high), the WAE volume (1000 ML) and the proportion delivered (100 per cent), the hypothetical bills range from $5510 for a private diverter in SA Murray to $18 214 for a private diverter in GMW’s Murray system.
Hypothetical bills also tend to be higher in the northern MDB compared to the southern MDB. The volume of WAE on issue and average water usage tend to be higher in the southern MDB, meaning that costs of operating On-river infrastructure can be spread over a greater number of users (or, viewed differently, that costs are spread over greater delivered volumes). Another explanation for the lower On-river IO charges in the southern MDB is the contribution towards providing On-river infrastructure services by the MDBA in the southern MDB. Much of the costs of operating and maintaining water service infrastructure in the River Murray System is funded through Basin State government and Commonwealth government contributions pursuant to the MDB agreement. As such, costs of funding the MDBA’s activities are not fully reflected in hypothetical bills.
While there is scope for the MDBA to impose charges to recover its costs associated with the River Murray System, the MDBA does not currently impose such charges.76 As such, the MDBA relies on contributions from Basin State and Commonwealth governments. Since 2011−12, contributions from all Basin State governments (except the ACT) have decreased substantially, declining by a total of 45 per cent over the period 2011−12 to 2014−15. Box 4.3 provides information on MDBA contribution arrangements.
75 Geographic units for charging differ between Basin States: WaterNSW uses ‘valley’, Victorian On-river IOs use ‘systems’ and ‘basins’, SunWater uses ‘water supply scheme’. In this Chapter we generally use the term ‘system’.
76 Water Act s. 212.
Box 4.3: Recovery of MDBA contributions
The MDB Agreement does not set out any requirements on how MDBA joint activities funding is reported by states. These joint activities include infrastructure operation and well as WPM activities. Governments fund their contributions in a number of ways which affect the charges paid by the customers of On-river infrastructure operators.
The Commonwealth covers its contributions for joint activities and the agency costs of the MDBA through consolidated revenue.
NSW recovers some of the contribution costs through a revenue requirement on WaterNSW which is built into the infrastructure charges recovered from its customers. Further NSW contributions are funded through WPM charges levied on water users by DPI Water but collected by WaterNSW.
Victoria recovers some costs for MDBA contributions from water users. GMW included MDBA costs in its expenditure forecasts for the 2013 ESC price determination. 77 Victorian water users also fund some MDBA costs through the Environmental Contribution (see chapter 3).78
Around a third of SA’s contribution to the MDBA was funded by the Save the River Murray Levy (a WPM charge levied on SA Water Customers—there is little available information about how the remainder of the SA Government’s contribution is funded.
Table 4.4 sets out the contributions of Basin State and Commonwealth governments from 2010−11 to 2014−15 for joint activities associated with the MDBA under the MDB agreement.
Table 4.4: Basin State and Commonwealth governments—MDBA contribution from contracting governments—2011−12 to 2014−15
Government Contributions to MDBA ($ millions)
2011−12 2012−13 2013−14 2014−15
Commonwealth 18.74 19.32 18.77 11.30
NSW 35.05 16.23 13.71 18.90
Victoria 33.22 34.15 27.45 18.00
SA 28.35 29.15 23.98 15.50
Queensland 1.01 1.04 0.10 0.10
ACT 0.29 0.30 0.29 0.30
Total 116.66 100.19 83.40 64.10
77 ESC Victoria (prepared by Cardno Consultants), 2012 Review of Prices—Assessment of Expenditure Forecasts for Goulburn-Murray Water, 2012, p.22. The report shows GMW incorporating MDBA costs into its expenditure forecasts for the period of Water Plan 3 (with significant increases for 2013−14 to 2015−16).
78 2013−14 DEPI RFI response noted a $4.2 million payment made from the Environmental Contribution to MDBA joint activities.
Source: MDBA Annual Reports 2012−13, 2013−14 and 2014−15.
For all On-river IOs except GMW and LMW, per ML hypothetical bills are constant regardless of the volume of water access entitlement held. However, for GMW and LMW’s private diverter customers, bills in per ML terms decline as the volume of entitlement increases. This is due to the effect of fixed non-volumetric fees imposed by GMW and LMW. These fees are only imposed once per licence (rather than per ML held or delivered), and as such as the volumes of WAE held increases, the amount of the non-volumetric fees is spread over a larger volume. Table 4.5 shows the per ML hypothetical bill for three volumes of WAE held by private diverters in GMW and LMW.
Table 4.5: On-river IOs—$ per ML hypothetical bills for GMW and LMW private diverter customers—50 ML, 250 ML and 1000 ML of water access entitlement, 2014−1579
OperatorSystem Charge Category 50 ML $/ML 250 ML $/ML 1000 $/ML
GMW Goulburn Private diverter—all basins
21.84 18.78 18.21
Murray Private diverter—all basins
19.42 16.38 15.81
LMW Murray 17.18 15.58 15.28
Source: ACCC from data provided and published by On-river IOs.
Hypothetical bills in the Border River systems of both WaterNSW and the DNRM tend to be lower than in other northern MDB systems. Key water service infrastructure in these systems including the Glenlyon Dam and Boggabilla Weir is overseen by the Border Rivers Commission (BRC) in accordance with the Border Rivers Agreement.
The last publicly released BRC annual report in 2011−12 provided expenditures of $3.96 million and revenues of $2.43 million (of which the NSW and Queensland Governments provided $1.1 million each). These contributions are recovered from water users in different ways and to different extents, as set out in box 4.4.
As with MDBA contributions, the influence of BRC contributions on On-river IO hypothetical bills (and the proportion of these contributions attributed to users) can be difficult to ascertain.
Box 4.4 Recovery of BRC Contributions
In NSW, BRC contributions are indirectly recovered through charges imposed on water users. WaterNSW’s estimated BRC costs and customer contributions were incorporated in charges determined by the ACCC for 2014−17, while DPI Water’s estimated BRC costs were included in its IPART price determination. In 2014−15, NSW provided $1.1 million to the BRC, where WaterNSW funded $0.7 million and DPI Water funded the remaining $0.4 million.
There is no publicly available information for either DNRM or SunWater that identifies how or to what extent contributions to BRC costs are passed through to water users through specific charges.
79 Since all charges are fixed in GMW and LMW, these results do not vary with the percentage delivered.
As discussed above, all On-river IOs levy fixed volumetric charges, while some also levy variable volumetric and/or non-volumetric charges to recover their costs. Generally, On-river IO costs are largely fixed in that they do not vary with the volume of water delivered to customers. However, the ratios of fixed to variable charges in On-river IO hypothetical bills vary considerably.
Charts 4.1 and 4.2 show the fixed (including non-volumetric charges) and variable components of total hypothetical bills for On-river IO systems in the southern MDB (chart 4.1) and northern MDB (Chart 4.2).
Chart 4.1: On-river IOs—southern MDB—total hypothetical bills—1000 ML of water access entitlement, 50 per cent and 100 per cent water delivered—fixed and variable WPM and On-river infrastructure charge components, 2014−15
Source: ACCC from data provided and published by On-river IOs.
Note: fixed charges include fixed volumetric and non-volumetric charges.
Chart 4.2: On-river IOs—northern MDB—total hypothetical bills—1000 ML of water access entitlement, 50 per cent and 100 per cent water delivered—fixed and variable and WPM components, 2014−15
Source: ACCC from data provided and published by On-river IOs.
Note: fixed charges include fixed volumetric and non-volumetric charges.
Charts 4.1 and 4.2 reflect the variety of different charging arrangements between Basin States. One driver of differences is the extent to which charges imposed by On-river IOs are cost-reflective (in terms of fixed charges recovering fixed costs, and variable charges recovering variable costs). For example, GMW and LMW charge their customers 100 per cent fixed fees for On-river infrastructure services and do not impose any variable charges. This reflects that the overwhelming majority of the costs of providing On-river infrastructure services are fixed costs. However, LMW and GMW will still incur some variable costs. There is also an element of LMW and GMW’s infrastructure charges which reflects a pass through of WPM charges, as explained in box 4.2.
In contrast to LMW and GMW, WaterNSW recovers a significant proportion of its costs via variable charges. In NSW and Queensland, On-river IOs impose both fixed and variable charges. In these states, fixed charges are not sufficient to cover fixed costs, and therefore revenues from variable charges are used to cover both fixed and variable costs. Thus, variable charges can form a significant part of hypothetical bills in these states.
In NSW the ratio of fixed to variable charges reflects the ACCC’s Determination for State Water 2014−17, in which the ACCC determined State Water (now WaterNSW) should recover 40 per cent of its costs through fixed charges and 60 per cent through variable charges. This decision reflected past practice in NSW over a number of years.
Due to a high security premium applying to fixed volumetric charges for high security customers in NSW, the proportion of hypothetical bills attributable to fixed charges is larger for high security versus general security WAE holders, even assuming the same proportion of available water is used.
The split between fixed and variable charges reflects trade-offs between equity, efficiency and risk-sharing between On-river IOs and customers.
Variations in fixed and variable charges across valleys and On-river IOs are important in that they are likely to affect irrigators’ planning decisions. Irrigators facing wholly fixed charges will face more predictable expenses for water infrastructure services compared to irrigators facing variable charges or a mix of variable and fixed infrastructure charges.
Differences in the relative amounts recovered through fixed and variable charges may also affect users’ decisions to use or trade water. Because variable charges are currently levied when water allocation is used, a water user may avoid payment of a particular variable charge by choosing not to use water in a particular valley in a given year. Alternatives to using water in a particular valley are listed below, together with the consequences for charges payable:
transferring water for (own) use in another valley—possibly enabling the user to pay a lower variable charge for water use, depending on the differences in charges across valleys
trading to another user—in which case the seller may be able to avoid paying usage charges, although the usage charges payable by the buyer may influence the trade price
forfeiting the water allocation—in which case the user avoids paying any variable charges for any unused allocation (even where variable charges are levied to help meet fixed costs for the On-river IO)
carrying over water—in which case the user will instead incur the variable charge in the year in which water is used, which may be different from the initial year’s charge.
Given that On-river hypothetical bills are 100 per cent fixed in Victoria and South Australia, water users in these states should treat these charges as ‘sunk’ when making decisions about use and trade of water in a given year. As such, these charges mostly affect longer term decisions, such as the amount of WAE water users hold. However, users in these Basin States located Off-river (i.e. within Off-river IO networks) are likely to incur both fixed and variable Off-river infrastructure charges, which will also affect decision-making. These charges are discussed in chapter 5.
4.4 Changes in On-river infrastructure operator hypothetical billsCharts 4.3 and 4.4 show the percentage changes for each On-river IO system in the southern and northern MDB in nominal terms. The rate of change in the consumer price index is also shown for illustrative purposes.80
Chart 4.3: On-river IOs—southern MDB—percentage changes in total hypothetical bills—1000 ML of water access entitlement, 50 per cent and 100 per cent water delivered, 2013−14 to 2014−15 (nominal)
Source: ACCC from data provided and published by On-river IOs.
Note: HS = high security, GS = general security. Since all on-river charges are fixed in GMW, LMW and SA, hypothetical bills are the same for 50 per cent and 100 per cent delivered for these operators.
Chart 4.4: On-river IOs—northern MDB—percentage changes in total hypothetical bills—1000 ML of water access entitlement, 50 per cent and 100 per cent water delivered, 2013−14 to 2014−15 (nominal)
Source: ACCC from data provided and published by On-river IOs.
Note: HS = high security, GS = general security.
80 The percentage change in CPI from 2013−14 to 2014−15 is calculated as the percentage change in the financial year index (average of four quarters) between 2013−14 and 2014−15. The CPI figure is 1.71 per cent. Source: Australian Bureau of Statistics, Consumer Price Index, Australia, Cat. No. 6401.0.
The hypothetical bills for On-river infrastructure services in the southern MDB generally increased from 2013−14 to 2014−15:
the majority of hypothetical bills calculated for Victorian On-river customers (eight out of 10) increased
five of the seven systems operated by GMW in the Goulburn area (GMW) increased by over 10 per cent
hypothetical bills decreased slightly for SA private diverters
hypothetical bills increased for all WaterNSW southern systems, except for Lachlan–GS
hypothetical bills in the Murray (GS and HS) and Murrumbidgee (HS) increased by more than 10 per cent.
Percentage changes in hypothetical bills for 2014−15 are more marked in the northern MDB:
hypothetical bills for Macquarie (HS), Namoi (HS), Peel (HS and GS) and Border (GS) increased in nominal terms; all other WaterNSW hypothetical bills in the northern MDB decreased
hypothetical bill increases in the Peel valley increased by slightly more than 10 per cent in nominal terms, reflecting the ACCC’s 2014 Determination to transition these charges to full cost-recovery levels, consistent with other WaterNSW valleys
hypothetical bills for SunWater increased in all systems, with the highest increases occurring in Macintyre Brook.
4.5 Longer term trends in On-river infrastructure operator hypothetical billsThe ACCC has produced hypothetical bills for On-river IO customers since 2009−10.81 The following section provides an analysis of trends in On-river IO charges as represented through hypothetical bills.
The total change in On-river IO bills from 2009−10 to 2014−15 is set out in chart 4.582 and chart 4.6.
81 Where assumptions for calculating On-river infrastructure bills have changed during these six years, the assumptions adopted for the 2014−15 report have been applied across all previous years to enable accurate comparison.
82 No water charge information is available for DNRM or SA private diverters in relation to 2009−10 charges, therefore charts 4.5 and 4.6 do not include these systems. Hypothetical bills for SA private diverters increased by around 5 per cent in real terms over the period 2010−11 to 2014−15 and for DNRM around 7 per cent.
Chart 4.5: On-river IOs—southern MDB—total hypothetical bills from 2009−10 to 2014−15—1000 ML of water access entitlement, 50 per cent and 100 per cent water delivered (real, $2014−15)
Source: ACCC from data provided and published by On-river IOs.
Notes: HS = high security, GS = general security. In Victoria, there are no variable charges imposed, as such hypothetical bills are the same regardless of the volume of water actually delivered, a single line is used to represent both 50 per cent and 100 per cent water delivery scenarios. To assist the readability of the chart, not all years are shown along the horizontal axis.
Chart 4.6: On-river IOs—northern MDB—total hypothetical bills from 2009−10 to 2014−15—1000 ML of water access entitlement, 50 per cent and 100 per cent water delivered (real, $2014−15)
Source: ACCC from data provided and published by On-river IOs.
Notes: HS = high security, GS = general security. To assist the readability of the chart, not all years are shown along the horizontal axis.
Since 2009−10, hypothetical bills for On-river IOs have increased in most networks across the MDB (27 out of 3683 hypothetical bills).
For hypothetical bills in the southern MDB between 2009−10 and 2014−15:
Charges have been lowest throughout the reporting period in systems where there are larger volume of WAE and/or usage over which to spread costs, namely Goulburn, Vic Murray, NSW Murray, SA Murray and Murrumbidgee.
Hypothetical bills for valleys with a smaller volume of WAE on issue tend to be more volatile from year to year, and tend to have higher bills compared to larger valleys.
The highest On-river IO hypothetical bills in the southern MDB, and in the MDB as a whole, occur in the GMW-Bullarook system in Victoria, a relatively small system. GMWBullarook is not shown in chart 4.5 since bills for this system are far above all other systems. Over the period, hypothetical bills grew by 38 per cent in real terms, to total $295 710 in 2014−15. The level of charges in this system are far above those in any other MDB system.
In GMW’s Goulburn system, the real increase has been around 36 per cent over the period. However, for private diverters, the increase has been only half that amount (14 per cent).
In GMW’s Murray system, bills increased by 25 per cent for private diverters and by 60 per cent for other customers.
The most significant increase over the period occurred in GMW’s Loddon system, where bills have almost doubled in real terms (92 per cent).
Hypothetical bill increases for LMW over the period were nearly half that of most systems in the GMW area (30 per cent).
For WaterNSW systems, increases over the time period in hypothetical bills varied substantially. For example, in the Murrumbidgee system, hypothetical bills increased in real terms for general security customers by 6 per cent (for 50 per cent water delivered) and 10 per cent (for 100 per cent water delivered), whereas bills for general security customers in the Lachlan system increased by 39 per cent (50 per cent delivered) and 44 per cent (100 per cent delivered).
While hypothetical bills in all systems have increased for most years, in some areas (for example, WaterNSW-Murray) bills have risen more sharply in recent years. In other systems (WaterNSW-Lachlan, GMW-Goulburn-Other), the rate of increase has slowed since 2009−10. Bill trends in Victoria reflect pricing determinations undertaken by the Essential Services Commission Victoria (ESC).
For hypothetical bills in the northern basin, there has been more volatility over the reporting period compared with the southern MDB:
hypothetical bills for WaterNSW general security customers in northern systems have increased by 11 to 34 per cent in real terms (for 50 per cent water delivered) and by 15 per cent to 62 per cent (for 100 per cent water delivered)
hypothetical bills for WaterNSW customers holding high security WAE have generally increased at a faster rate than for general security customers
hypothetical bill increases have been substantial in the Peel valley, with a 62 per cent real increase for general security customers (100 per cent delivered) and a 78 per cent real increase for high security customers(100 per cent delivered). These trends reflect the particular circumstances in the Peel valley and are not typical of other WaterNSW systems
hypothetical bills changes for most SunWater customers in Queensland have been more modest, with falls for some customers (e.g. Chinchilla Weir—100 per cent water delivered and Upper Condamine–Sandy Creek/Cond River—100 per cent water delivered).
hypothetical bills for customers in the Maranoa River system have increased markedly in real terms: by 65 per cent (50 per cent water delivered), and 127 per cent for (100 per cent delivered)
the highest On-river IO hypothetical bill in the northern MDB is in the Maranoa River system in Queensland.
83 Charts 4.5 and 4.6 only show 35 hypothetical bills: Long term hypothetical bills for GMW-Bullarook are not show due to the outlier nature of these bills (see text below charts).
In NSW, the rate of increase in hypothetical bills has generally slowed since 2009−10 and in some valleys (e.g. Gwydir–GS and Border–HS) hypothetical bills decreased in 2014−15. Trends in NSW hypothetical bills reflect the regulated charges as determined in pricing decisions undertaken by IPART (for the period 1 July 2010 to 30 June 2014) and the ACCC (for the period 1 July 2014 to 30 June 2017).
In Queensland, the rate of change in hypothetical bills has been more varied, with nearly all systems showing an increase most years but a sharp decline in 2012−13 which has had a substantial effect on the overall level of hypothetical bills over the reported period. The variations in hypothetical bills for SunWater systems are the result of changes to its tariff structure. As seen in chart 4.6, all SunWater systems show a significant change in 2012−13. In that year, the Queensland Competition Authority (QCA) undertook a price review84 for SunWater’s irrigation customers for the period 2012 to 2017. In this review, SunWater’s tariff structure was substantially rebalanced, and the QCA recommended a price path whereby prices would be maintained in real terms (assuming annual inflation at 2.5 per cent until 2017), except for systems that were determined to be below lower bound pricing.
Chart 4.7 tracks the movement in hypothetical bills for On-river customers along the River Murray, across three Basin States.
Chart 4.7: On-river IOs—systems along the River Murray—total hypothetical bills—1000 ML of water access entitlement, 100 per cent water delivered, 2009−2010 to 2014−15 (real, $2014−15)
Source: ACCC from data provided and published by On-river IOs.
Note: HS = high security, GS = general security.
Since 2009−10, along the River Murray system:
hypothetical bills for private diverters form both the highest (GMW) and lowest bills (SA), and also have relatively low real increases over time of between 5 per cent (South Australia) and 25 per cent (GMW)
for NSW, bills have increased substantially in real terms since 2009−10: by 46 per cent for high security entitlement holders and 34 per cent for general security entitlement holders
bills have increased the most for GMW bulk customers (60 per cent real) and the least for LMW bulk customers (15 per cent real).
As shown in chart 4.7, although these six systems operate along the river Murray, there was little consistency in the way On-river infrastructure operator bills moved over time or in the total hypothetical bill amounts for On-river infrastructure operator customers across these systems.
84 Available online: http://www.qca.org.au/getattachment/5fad8dc9−2101−4097-bdc8-d90d25fbfbbb/SunWater-Irrigation-Price-Review-2012−17-Volum-(1).aspx, accessed April 2016.
5.Off-river infrastructure operatorsThis chapter relates to Off-river infrastructure operators (Off-river IOs) with a focus on charges payable for access to and use of their networks. In particular, this chapter discusses: the characteristics of Off-river infrastructure operators and their customers tariff structures and charge types how Off-river IOs pass through WPM and On-river infrastructure charges the overall size of Off-river IO hypothetical bills and the components of these
bills and changes in Off-river IO hypothetical bills over time.
Findings Off-river infrastructure operators (Off-river IOs) vary greatly across the MDB, particularly in
their governance structures, location, size, customer types, network characteristics and upgrades, approach to conveyance, tariff structure and in how they recover network costs.
A substantial proportion of water access entitlements are held within Off-river IOs. As such, charging arrangements and water management policies within these operators affect many water users and can also have broader consequences on the efficient operation of water markets across the MDB.
Many Off-river IOs do not clearly set out on their schedule of charges which tradeable water right a charge is referencing. In some areas, non-volumetric charges (which do not reference the volume of any tradeable water right) make up a significant proportion of hypothetical customer bills.
Three Off-river IOs applied tiered charging arrangements to one or more of their charges. In some cases, this can lead to smaller customers facing higher per ML charges for infrastructure services.
Off-river IOs used a range of approaches for passing through WPM and On-river infrastructure charges onto their customers. Many of these approaches were not transparent and some approaches could have adverse effects on customers’ decisions.
Generally, hypothetical bills are lower for gravity-fed than pressurised networks.
Charges passing through WPM and On-river infrastructure charges contribute a larger proportion of hypothetical bills for smaller operators
The ratio of fixed-to-variable charges in Off-river IO hypothetical bills varies considerably. In NSW, this ratio for larger operators is one-third to one-half. In Victoria, it is generally more than 80 per cent.
Hypothetical bills increased in real terms from 2013−14 to 2014−15 for a majority of networks, with more variability among gravity-fed networks.
Since 2009−10, nearly all hypothetical bills for pressurised networks have increased in real terms. For gravity-fed networks, hypothetical bills have generally increased in real terms for customers in all networks, except LMW and MI.
Most Off-river IOs undertook some form of upgrade or restructure in 2014−15. Generally, the share of Off-river IOs hypothetical bills representing their own charges increased for IOs that undertook such upgrades and decreased for those that did not.
5.1 Off-river infrastructure operator characteristicsMany irrigators in the MDB are located within Off-river networks. To provide water to these irrigators, Off-river infrastructure operators (Off-river IOs) generally extract water from a natural watercourse for delivery to irrigators through their networks. The Off-river IO is responsible for Off-river delivery and maintaining the network but can also provide other services such as managing water access rights on behalf of customers.
Most Off-river IOs in the Murray-Darling Basin (MDB) deliver water for the purpose of being used for the primary purpose of irrigation, and are also therefore considered ‘irrigation infrastructure operators’ (IIOs) under the Act. However, this report refers to Off-river IOs generally, unless a specific reference to ‘IIO’ is necessary.
An Off-river IO’s network can be gravity-fed (consisting of channels and/or pipes) or pressurised (piped networks only). Pressurised networks generally have higher operating costs compared to gravity-fed networks due to the electricity required to operate pumps. This chapter analyses Off-river infrastructure charges separately for pressurised and gravity-fed networks, where relevant.
This chapter presents information on 19 reporting Off-river IOs in the MDB that service more than 10 GL of water access entitlement. These 19 Off-river IOs vary greatly in their governance structure, location, number and type of customer they service, the volume of water held and the volume of water delivered. Table 5.1 sets out characteristics of these entities.
Table 5.1: Off-river IOs—characteristics, 2014−15
SDL resource unit
Off-river IO Type of network Upgrade or restructure 2014−15
WAEa held by operator (ML)/(per cent of WAE on issue) Total volume delivered by
operator in 2014–15 (ML)High securityb General security Conveyance
SA Murray CIT Pressurised No 119 650 (21%)NA NA 109 460
Macquarie Buddah Lakec Gravity-fed No NA 32 525 (5%) NA 4 525
Marthaguyc Gravity-fed No NA 19 965 (3%) NA 1 731
Narromine Gravity-fed Yes NA 35 554 (6%) NA 0
Tenandrav Gravity-fed No NA 14 162 (2%) NA 4 245
Trangie-Nevertirec
Gravity-fed Yes NA 40 624 (6%) NA 3 633
Condamine-Balonne
SunWater Gravity-fed No Data not available 65 968
Source: ACCC from data provided and published by Off-river IOs, MDBA, NSW Water Registers.
Notes: Eagle Creek, Moira, West Corurgan, Buddah Lake, Marthaguy, Narromine, Tenandra, Trangie-Nevertire did not report entitlement class for non-conveyance entitlements. Entitlements for these operators are assumed to be General Security.
Volume of GS and HS for CICL, Jemalong, MI, MIL and WMI derived using total WAE reported in 2014−15 and data on entitlement by class held in 2013.
Narromine reported conveyance entitlements, which have been grouped with ‘General Security’ as ‘Conveyance’ is not a separate entitlement type in the Macquarie system.
a WAE = water access entitlement.
b For SA Murray, ‘high security’ = high reliability entitlements classes 1, 3a, and 3b.
c WAE volumes reported for joint water supply schemes—Buddah Lake, Eagle Creek, Marthaguy, Tenandra and Trangie-Nevertire—are jointly held by all customers, not by the operator on behalf of members.
n/a = not applicable
As seen in table 5.1:
the majority of networks are gravity-fed
most Off-river IOs undertook some form of upgrade or restructure in 2014−15 and
in southern NSW, the majority of water on issue in SDL resource units is held within Off-river IOs; however, in the SA Murray, Victoria85 and in the Northern Basin, the majority of entitlements are held either by irrigators themselves (rather than by operators) or by other water users.
Upgrade and restructure activities vary across Off-river IOs. Regardless of whether these activities were minor or major upgrades, they help to improve the operation and efficiency of each Off-river IO’s network(s). During 2014−15, these activities included:
modernising part of the network by replacing gravity-fed systems with pipes
upgrading metering devices
reconfiguring the network to make it more efficient
replacing outlets and
maintenance and replacement of infrastructure.
The proportion of water access entitlements held by Off-river IOs on behalf of their customers varies throughout the MDB. In the NSW Murray system, more than 60 per cent of the volume of general security water access entitlement on issue is held within MIL. Off-river IOs also hold large proportions of water access entitlement in the Murrumbidgee River, and to a lesser extent in the SA Murray. Although each of the five Off-river IOs along the Macquarie River hold a small proportion of water access entitlements on issue in the SDL unit, in aggregate they hold a substantial share of the water access entitlement on issue. The remainder of the water access entitlement on issue in each valley is held by private diverters, environmental water holders or other water users.
Given that a substantial proportion of water access entitlement are held within Off-river IOs, charging arrangements and water management policies within these Off-river IOs affect many water users and can also have broader consequences across the MDB. In particular, barriers to external trade of water held within a particular Off-river IO, including imposing additional charges on trade ‘out’, can have implications for efficient water markets as they can essentially ‘lock’ water within a particular network. Also, as Off-river IOs are generally natural monopolies, their charging decisions may be affected by the exercise of monopoly power. Given a substantial volume of water is held within Off-river IO networks, the effect of these policies and charging arrangements can adversely affect the efficient operation of water markets in the MDB. Ongoing efforts to remove Off-river IO barriers to water trade are essential for the development of efficient water markets within these water resources, and more generally throughout the MDB.
Box 5.1: Small Off-river infrastructure operators
In addition to collecting information from these reporting Off-river IOs, the ACCC also collects information from a range of smaller Off-river IOs that service less than 10GL of water access entitlement. Information is collected to assess compliance with the water charge rules and water market rules.
These Off-river IOs are typically joint water supply schemes as defined under the NSW Water Management Act 2000. They are also typically located along the NSW Murray River and have a very small customer base.
The charging arrangements of these small Off-river IOs are generally straight-forward. Typically, a fixed and a variable charge are imposed on customers.
85 Although the proportion of WAE on issue held by GMW and LMW in Victorian SDL resource units cannot be calculated, in Victoria the majority of water users hold their own Victorian water share (WAE), rather than GMW or LMW holding the entitlement on customers’ behalf. The majority of WAEs held directly by LMW and GMW are bulk entitlements (to supply water shareholders and other users) or for conveyance losses.
5.2 Customers receiving Off-river infrastructure servicesOff-river IO customers have water delivered to their property via the Off-river IO’s network. The majority of Off-river IO customers are irrigators, however these operators may also deliver water for stock and domestic, manufacturing, mining, environmental and other purposes.
The volume of water required by irrigators for agricultural production depends on a range of factors such as the size and quality of irrigated land, the efficiency of the Off-river IO’s network, the efficiency of on-farm irrigation techniques and the product produced by the irrigator. For example, rice and nuts require larger volumes of water per hectare compared to cereals, vegetables and pasture for livestock.86 The type of on-farm irrigation system the irrigator uses will also affect water demanded. For example, flood irrigation uses more water per unit of irrigated area than more targeted systems such as drip irrigation. However, while irrigators may change irrigation systems to improve on-farm water use efficiency, choice of irrigation system is not independent of crop type. As such, on-farm irrigation systems generally need to be considered on a whole-of-farm basis.
Apart from the quantity of water demanded by irrigators, agricultural water use also encompasses the proportion of network conveyance water that is ‘used’ in order to delivery water to irrigators. The amount of conveyance water used by Off-river IOs will depend on a number of factors, such as the type of network (e.g. whether it is pressurised/piped versus gravity-fed), the variability of network use, channel/pipe characteristics (e.g. channel length, whether a channel is lined, etc.), and climatic factors. Off-river IO charges generally include an amount to recover costs associated with conveyance water. In some cases, charges relating to conveyance may be separate from the operator’s other charges; in other cases conveyance costs are rolled in with other costs.
Box 5.2 Irrigators in the MDB
In 2015, the ACCC commissioned the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) to survey irrigators to examine their experiences of water trading and issues associated with the water charge rules. ABARES conducted this survey as a supplement to its 2014–15 survey of irrigation farms in the MDB and prepared a summary report for the ACCC, which is available from the ACCC’s website. 87
ABARES surveyed 270 farms across the MDB. The responses were grouped and compared for four main regions: Northern Basin (northern NSW and Qld), Goulburn-Broken (Vic), Murrumbidgee (NSW) and Murray (NSW), and then collated for the MDB as a whole.
One area that irrigators were surveyed about was their operator’s schedule of charges. The ABARES key findings include:
Most irrigators recalled receiving a schedule of charges in the last 12 months. 88
Of those irrigators that had received a schedule of charges:
– a significant minority of respondents (18 per cent) did not think the schedule of charges clearly set out the difference between charges payable for access to their operator’s infrastructure and charges incurred by their operator and passed onto the irrigator.
– over a third of respondents did not think the schedule of charges provided sufficient information to calculate the charges payable to terminate some or all of their water delivery right.89
Irrigators indicated that the following information is important to be included on a schedule of charges:
– the circumstances in which the charge is payable (48 per cent of respondents across the MDB as a whole)
86 Australian Bureau of Statistics, Water use on Australian farms, Cat. No. 4618.0 http://www.abs.gov.au/ausstats/[email protected]/mf/4618.0, accessed April 2016.
87 See http://www.accc.gov.au/system/files/ABARES%20irrigator%20survey%20-%20final%20report.pdf.88 However, this response varied significantly in the Northern Basin compared to all other regions, with only 16 per cent of
irrigators in the Northern Basin indicating that they had received a schedule of charges in the last 12 months.89 Only irrigators who were customers of Off-river IOs were asked to respond to this question.
– the type of right that the charge relates to (62 per cent)
– how often the charge is payable (50 per cent)
– whether the charge would be included in the calculation of a termination fee (42 per cent)
– details of any applicable discount or surcharge relating to the charges (44 per cent)
– charges that are incurred by the operator and passed on to customers (44 per cent)
– administrative charges for trades (53 per cent) and
– details of the process for determining the level of charges (48 per cent).
Across the MDB as a whole, respondents indicated that the two most important pieces of information that should be shown on an operator’s schedule of charges are ‘the type of right that the charge relates to’ and ‘administrative charges for trades’. Responses in the Goulburn-Broken, Murrumbidgee and Murray regions were generally consistent with approximately 50 per cent of irrigators indicating that most of these items are important to be included in a schedule of charges. This is in contrast to the northern MDB, where the response to whether these items were important to be included on the schedule of charges varied between six and 23 per cent.
About half of irrigators surveyed indicated they are happy with the level of engagement (i.e. consultation and the ability to provide input and feedback if desired) from their infrastructure operator about changes to future fees and charges. However, 16 per cent are dissatisfied, with the remaining irrigators responding that they are neither satisfied nor dissatisfied. 90
5.3 Charging arrangements for Off-river infrastructure operatorsAs discussed in section 2.3.2, charges can broadly be categorised as follows:
A volumetric charge is imposed according to the volume of a water right or physical amount of water. It can in turn be a:
– fixed volumetric charge: a charge based on the volume of a water right held (either as a water access right or irrigation right)
– variable volumetric charge: a charge based on the volume of the right that is utilised in a particular manner (normally, the volume of water delivered).
A non-volumetric charge is one that does not reference a volume of a water right, such as an administration, service or outlet charge.
Off-river IOs levy a combination of these charges in order to recover the costs associated with:
– the day to day operation of Off-river networks, whether pressurised or gravity-fed, for the physical delivery and/or drainage of water
– maintaining and renewing infrastructure, and
– meeting overheads.
An Off-river IO may also incur one or both of:
– water planning and management (WPM) charges (as described in chapter 3)
– On-river infrastructure charges (as described in chapter 4)
90 Consistent with the responses to other questions, there were some differences between regions. The percentage of customers dissatisfied with the level of engagement from their operator ranged from 37 per cent (in the Goulburn-Broken region) to 5 per cent (in the Murray region). Similarly, the per cent of satisfied customers ranged from 65 per cent (in the Murray region) to 37 per cent (in the Goulburn-Broken region). The responses from irrigators in the northern basin and Murrumbidgee were fairly consistent.
in relation to water access rights it holds or uses in order to deliver water to its customers. IOs’ approaches to passing through the cost of these WPM and On-river infrastructure charges varies and is considered separately in section 5.3.1.
Table 5.2 summarises the charging arrangements Off-river IOs have in place to recover the costs of operating their networks.
Source: ACCC from data provided and published by infrastructure operators.
Note: where included in an operator’s schedule of charges, operator-specific terms have been replaced with ‘WDR’.
As can be seen in table 5.2, nearly all Off-river infrastructure operators apply both a fixed volumetric charge and variable volumetric charge.
Fixed volumetric charges are charges that reference a volume of a tradeable water right—typically a water delivery right—and do not vary with the volume of water delivered. Fixed charges are generally levied as a set amount per ML of water delivery right held. Some examples of alternative forms of fixed volumetric charges are:
Buddah Lake applies a fixed volumetric charge per 1250 ML, for historical purposes.
Customers’ access to Coleambally’s network is a function of their volume (in ML) of ‘delivery entitlement’, and their peak flow (denominated in ML per day) nominated for their outlet(s). Separate charges are levied on each of these aspects of the customer’s right of access.
MI applies tiered fixed volumetric charges, depending on the amount of water delivery right held by a customer.
Some operators’ schedules of charges describe fixed charges as being levied ‘per ML’, without stating which particular right the charge relates to. Historically, this has been less important as customers’ right to water (irrigation right or water access entitlement) would typically be the same volume as their water deliver right. However, given that customers are able to manage their rights separately, it is not clear how the charges would apply in the event a customer held different volumes of water delivery right and irrigation right/water access entitlement. For example, a customer may transform and/or trade some part of their irrigation right, but retain their full water delivery right volume. Alternatively, a customer may terminate some part of their water delivery right but retain their water access entitlement/irrigation right (see chapter 6).
Variable volumetric charges are generally levied as a set amount per ML of water delivered. Some examples of alternative forms of variable volumetric charges (considered further in section 5.3.1) are:
WMI applies a variable volumetric charge only when the volume of water delivered exceeds a specified proportion of the customer’s water delivery right
MIL applies tiered variable volumetric charges, where the amount per ML depends on the cumulative volume of water delivered to a customer.
Again, some operators’ schedules of charges do not state explicitly how the variable charges are applied. Notable approaches to levying variable volumetric charges (by WMI and MIL) are also considered in the sections following the table.
Non-volumetric charges are levied by eight Off-river IOs and are considered in section 5.3.4.
Table 5.2 shows that four reporting Off-river IOs also levy separate fixed and/or variable charges for drainage services. Drainage charges are discussed in section 5.3.2.
Off-river IOs are increasingly listing a specific ‘casual usage’ charge which applies on deliveries in excess of a customer’s WDR volume. Casual usage charges are considered in section 5.3.3.
5.3.1 Tiered charging arrangements
Tiered variable volumetric charges
As shown in table 5.2, Off-river IOs generally apply a constant variable volumetric charge for water usage/delivery at least up to the volume of a customer’s WDR.91 However, two Off-river IOs impose different variable volumetric charge amounts depending on how much water has been delivered.
Western Murray Irrigation (WMI) imposes for each of its networks a fixed ‘Access fee for delivery entitlement’ (‘access fee’) and a variable charge for ‘water usage above access fee allowance’. These charges are the same nominal amount, but are applied differently with reference to customers’ ‘access fee allowance’. The allowance is designated by WMI for each of its three networks as a particular percentage of a customer’s WDR. In 2014−15, the allowances were set at 57 per cent for the Buronga network, 45 per cent for Coomealla and 60 per cent for Curlwaa.
The relevant volume for the application of the fixed ‘access fee’ is the nominal value of the customer’s WDR, multiplied by the relevant allowance. For example, a customer in the Buronga network who holds 100 ML of WDR will incur the access fee in relation to 57 per cent of the WDR volume (i.e. 57 ML). Thus, WMI’s access fee is similar to fixed charges levied by other operators, except that it only applies to a proportion of WDR as set by the ‘allowance’, rather than referencing the entire volume of WDR held by a customer.
WMI’s variable volumetric charge applies only to water usage above the customer’s allowance. That is, a customer incurs no variable charge for water usage up to their ‘access fee allowance’ (being the nominal volume of their WDR multiplied by the percentage nominated by WMI for their network). Usage above this amount (but below the volume of the customer’s WDR) will incur the standard variable volumetric charge. Usage above the volume of the customer’s WDR will incur casual usage charges (see 5.3.3). Thus, WMI’s variable charges operate similarly to other operators’, except that variable charges do not apply to water usage below the relevant ‘allowance’ volume.
Chart 5.1 shows the application of this charging structure across WMI’s three networks, assuming a customer holds 100 ML of water delivery right and uses up to 100 per cent of the WDR volume (i.e. up 100 ML usage).
91 For usage beyond this amount, an Off-river IO may impose casual usage charges (see 5.3.3).
Chart 5.1: WMI—non-standard fixed and variable charges, 100 ML water delivery right, from 0 to 100 per cent water delivered, 2014−15
Source: ACCC from data provided and published by WMI.
Although WMI’s charging arrangements are unusual, the effect of these arrangements is the same for all customers within each network. That is, all customers face fixed charges levied on only a portion of their WDR, however the portion and the amount of the charge does not vary between customers within each of the three networks. Similarly, customers do not pay variable volumetric charges for usage up until their allowance, pay standard variable charges for water use beyond the allowance up to their total WDR, and casual usage charges beyond that. This means that customers of different sizes are treated equally under this arrangement.
In contrast, Murray Irrigation Limited (MIL) customers face a charging structure that benefits customers who use more water, regardless of the volume of WDR held. MIL employs a declining block tariff for variable charges.
MIL’s variable charges are based on three ‘tiers’ of usage—below 5 ML, 6−100 ML and above 100 ML. The tiers are applied to:
MIL’s own variable Off-river infrastructure charges, which apply to usage up to the volume of a customer’s WDR
MIL’s pass through of ‘government charges’—that is, variable On-river infrastructure charges (levied on MIL by WaterNSW) and variable WPM charges (levied on MIL by DPI Water)—which also apply to usage up to the volume of a customer’s WDR92 (see also section 5.3.5)
causal usage charges, which apply to usage above the volume of a customer’s WDR (discussed further in section 5.3.3).
Chart 5.2 shows the effect of MIL’s tiered variable charges for below the volume of WDR (i.e. casual usage charges are assumed not to apply). In this chart, the blue line represents the per ML hypothetical bill attributable to variable Off-river infrastructure charges only, while the red line represents the per ML amount attributable to all variable charges (i.e. Off-river infrastructure charges plus On-river and WPM variable charges passed through by MIL).
92 MIL’s variable charges also appear to include the recovery of WPM/On-river infrastructure charges—both fixed and variable—of MIL’s conveyance (distribution loss) licence.
Chart 5.2: MIL—$ per ML hypothetical bill with between 1 and 200 ML of water delivered, variable Off-river infrastructure charges and all variable charges, 2014−15
Source: ACCC from data provided and published by MIL.
Chart 5.2 clearly shows that the ‘tiering’ of the variable charge passing-through WPM and On-river infrastructure charges (included in the red line) is very pronounced. As listed on its 2014−15 schedule of charges, the ‘government charge’ for the first 0−5 ML delivered is $90.07/ ML, but drops to $16.24/ML for 6−100 ML delivered and then to $8.12 for deliveries beyond 100 ML. This charge structure has the effect that recovery of ‘government charges’ (i.e. charges levied by WaterNSW and DPI Water and ‘passed through’ to customers by MIL) is loaded onto the first few ML delivered. This differs noticeably from the manner in which WaterNSW and DPI Water levy variable charges, which is to simply levy a variable charge per ML of water delivered (in this case, delivered to MIL which in turn delivers the water to its customers). Compared to the hypothetical case of MIL simply passing through charges on the same basis as they are originally levied by WaterNSW and DPI Water, MIL’s charging arrangements mean that customers who use lower volumes of water pay relatively more towards recovery of these passed-through ‘government’ charges than customers who use larger amounts.
The ‘tiering’ of MIL’s own Off-river infrastructure charges (represented by the blue line) is less pronounced than for MIL’s own Off-river infrastructure charges, but is still substantial.
Overall, the per ML hypothetical bills for MIL variable charges are significantly higher for the first 5 ML of water delivered. As more water is delivered, the impact of the high charges for the first 5 ML reduces as these costs are spread across a greater volume of water delivered. This results in irrigators who have a small amount of water delivered in a particular year paying more per ML than irrigators who have larger volume of water delivered.
This tiered charging arrangement may also have implications for water trade. Given the high cost per ML of water delivered for small volumes, irrigators with only a small volume of water able to be delivered may instead elect to trade this water (potentially to a customer with a greater volume of water delivered (and hence, facing a lower per ML charge to have water delivered.
Tiered fixed volumetric charges
Murrumbidgee Irrigation Limited (MI) imposes a tiered charging arrangement for its own fixed infrastructure charges. MI does not apply the tiered arrangements in relation to the recovery of WPM and On-river infrastructure charges incurred (in contrast to MIL).
MI’s fixed charge consists of three tiers: 0−50 ML of WDR, 51250 ML of WDR and above 250 ML of WDR. MI also applies a tiered structure to one of the two parts of its causal usage charges (see section 5.3.3)
The per ML fixed charges for accessing MI’s infrastructure (i.e. exclusive of all variable charges and fixed charges for recovery of On-river and WPM charges) for different volumes of water delivery right held is shown below in chart 5.3.
Chart 5.3: MI—$ per ML hypothetical bill—Off-river fixed charge component—for water delivery right of between 10 and 310 ML, 2014−15
Source: ACCC from data provided and published by MI.
Note: HS = high security, GS = general security, SAS = Small Area Supplies, LAW = Large Area Supply Wah Wah excluding IHS, LAS = Large Area Supply, IHS = Integrated Horticulture Supply.
As seen in chart 5.3, the declining block tariff means that larger customers will pay less per ML of WDR held compared to smaller customers. Due to this structure, smaller customers will also face correspondingly higher per ML maximum termination fees compared to larger customers.
Tiered charging arrangements and underlying costs
In some cases, a declining block tariff may reflect lower costs of providing services to larger customers (‘economies of scale’). In these cases, levying differential charges based on size may be appropriate. However, if this is not the case, use of a declining block tariff would introduce a degree of cross-subsidy where smaller customers, subject to a higher per ML charge, cross-subsidise customers with larger holdings, subject to lower per ML charges. The degree of cross-subsidy in any particular case would depend on the extent to which the differential charges are not cost-reflective.
The ACCC does not collect any information about Off-river IOs’ costs. As such, the extent to which tiered charges reflect tiered cost structures is unknown.
5.3.2 Drainage charges
Drainage is the removal of surface or sub-surface water from a given area. It occurs naturally through evaporation and seepage into the water table or as a service provided by an infrastructure operator through either the same network as is used for deliveries or via additional infrastructure. The benefits associated with drainage include nutrient management, reduced water logging and salinity damage to properties, and reduced inundation from flooding.
Broadly there are two approaches to charging for drainage services taken by infrastructure operators.
The first approach is to incorporate costs associated with drainage into other charges that fund water delivery infrastructure. This is the approach most commonly used by Off-river IOs in relation to providing drainage services for irrigators. However, it is also common for these Off-river IOs to impose additional drainage charges for water use other than for the purpose of irrigation. That is, drainage costs are included in general access charges for irrigators, but are separated out for other users (the ACCC’s hypothetical bills assume customers are irrigators).
The second approach is where the Off-river IO imposes separate drainage charges on all customers (including irrigators). GMW, LMW, MIL and SunWater are the only infrastructure operators to impose additional charges for drainage services for irrigators.
As discussed earlier, the ACCC does not have access to reporting entity costs. The ACCC also does not have information about the nature and potential differences in the drainage services provided to irrigators and non-irrigation customers. As such, it is difficult to comment on whether these differences in charging arrangements for drainage services between customers reflect actual differences in costs and services provided.
5.3.3 Casual usage charges
An irrigator’s right to use an Off-river IO’s network is typically defined by the volume of water the irrigator is entitled to have delivered under their water delivery right over a specified period (usually an irrigation season). For example, an irrigator with 100 ML of water delivery right is entitled to have 100 ML of water delivered over the course of the irrigation season. However, most Off-river IOs also allow irrigators and other customers to have additional access to their infrastructure through casual use arrangements, provided the network is not constrained.
Charging arrangements for delivering water on a casual basis vary across operators. Some operators do not impose any additional charges on irrigators for water delivered above their water delivery right volume. These operators either impose their standard usage charge on water delivered above the irrigator’s volume of water delivery right held or impose a separately defined casual usage charge that is equal to the standard usage charge imposed on irrigators for water delivered within the volume of water delivery right held.
In other cases, operators will either impose a separate casual usage charge for all water delivered above the irrigator’s water delivery right volume or a premium in addition to the standard usage charge for each ML delivered above the water delivery right volume.
Table 5.3 sets out which operators impose which type of charging arrangements for casual use, where casual use is known to be possible.
Table 5.3: Off-river IOs—casual use charging arrangements
Operator Casual use charging arrangements apply to usage
Applicable charge(s) on casual use
CIT > 100% of WDR volume Standard usage charge
GMW > 100% of WDR volume Casual usage charge (higher than standard)
LMW > 100% of WDR volume Casual usage charge (equal to standard)
West Corurgan > 100% of WDR volume for ‘imported’ water only
Standard usage charge + premium
MIL > 120% of WDR volume Casual usage charge (higher than standard)
WMI > 100% of WDR volume Casual usage charge (higher than standard)
Coleambally > 100% of WDR volume Standard usage charge + premium
MI > 100% of WDR volume Casual usage charge (higher than standard)
Hay > 100% of WDR volume Standard usage charge
Jemalong > 100% of WDR volume, for irrigators Standard usage charge (for customers who hold WDR only)
All usage, for non-irrigators Premium usage charge (for customers who do not hold WDR)
Narromine > 150% of WDR volume Standard usage charge + premium
Trangie-Nevertire
> 100% of WDR volume Standard usage charge + premium
Marthaguy > 100% of WDR volume Casual usage charge (equal to standard)
Source: ACCC from data provided and published by infrastructure operators.
In 2014−15, seven Off-river IOs delivered water under casual use arrangements. Table 5.4 reports on water delivered under casual use arrangements during 2014−15 (total volume delivered under casual use arrangements, and casual use deliveries as a per cent of total water delivered). The table also shows the ratio of an operator’s total charge(s) for casual usage to the standard usage charge which apply up until the casual use threshold is reached.
Table 5.4: Off-river IOs—volume of water delivered above customers’ water delivery right, percentage of total water delivered, ratio of total charge(s) for casual usage to the standard usage charge, 2014−15
Operator Volume of water delivered under casual use arrangements (ML)
Per cent of total water delivered
Ratio—total charge(s) for casual usage
divided by standard usage charge
CIT 6 940 6.3 1.00
WMI 1 282 4.8 1.43−1.6193
MI 22 237 3.0 1.88−5.0594
MIL 11 600 1.6 1.00−3.3095
Coleambally 3 764 1.2 No usage charge
LMW 1 100 1.1 1.00
GMW 2 191 0.2 4.16−9.2796
Source: ACCC from data provided and published by infrastructure operators.
During 2014−15, a total of 49 113 ML was delivered by reporting entities in the MDB on a casual use basis (up slightly from the amount delivered in 2013−14). MI again delivered the largest volume of casual use water to irrigators. However this only represented 3 per cent of its deliveries. Of the seven operators who reported delivering water under casual use arrangements, CIT’s casual use deliveries constituted the highest proportion of total operator deliveries, at 6.3 per cent.
Table 5.4 suggests an inverse correlation between the proportion of water casual use arrangements and the charge premium for casual use, in that generally water delivered under casual use constitutes a greater proportion of total deliveries where the ratio of casual usage charges to standard usage charges is lower.
However, as shown, casual use deliveries were only around 1 per cent in LMW and Coleambally, despite these operators charging no premium for casual use. This indicates that while the volume of water delivered under casual use arrangements is likely to be impacted by the relative price of casual use, it will also depend on other factors, such as:
the degree to which the Off-river IO’s network is constrained in aggregate, since a high degree of network congestion may reduce the availability of casual use
the volume of WDR held by a customer in relation to their likely needs, since customers whose WDR is sufficient (or more than sufficient) for their need are unlikely to access casual use arrangements
prevailing water availability, climatic conditions and crop requirements
93 The ratio varies across WMI’s Off-river networks.94 MI impose a casual usage fee as well as a tiered causal use facilities fee for usage without a corresponding water
delivery right.95 In MIL, there is no additional charge payable for casual use where usage is up to 5 ML (hence a ratio of one),
subsequent causal usage incurs higher charges.96 The ratio varies across GMW’s Off-river networks.
whether customers are able to secure (permanently or temporarily) additional volumes of water delivery right to meet their needs (see section 6.3.3).
There are a range of different factors that Off-river IOs will take into account when considering whether to impose additional costs for water delivered above an irrigator’s volume of water delivery right and what charging arrangements to adopt. Many of these factors will reflect the nature and circumstances of the Off-river IO. Generally, the ACCC considers that the application and level of casual usage charges should only relate to the volume and type of WDR held by customers—that is, access to casual use (and associated charges) should not be differentiated based on other factors such as purpose of water use.
5.3.4 Non-volumetric charges
Non-volumetric charges are charges that an infrastructure operator imposes that are not linked to the volume of water delivery right, irrigation right or water access right the customer holds or uses. Eight Off-river IOs imposed non-volumetric charges in 2014−15.
These charges are typically levied per account or property, or are based on the size of landholding or the number and size of outlets/service points connected to the operator’s network. The actual non-volumetric charges imposed on customers in Victoria and NSW in 2014−15 vary between $38 and $1152 for Off-river infrastructure operators. Further, some Off-river IOs impose multiple non-volumetric charges on customers (for example, an account charge and a meter/outlet charge).
Chart 5.4 shows percentage of total hypothetical bills associated with these non-volumetric charges for the Off-river IOs that levy such charges.
Chart 5.4: Off-river infrastructure operators—proportions of hypothetical bills associated with non-volumetric charges, 50 ML, 250 ML and 1000 ML of water access entitlement/irrigation right and water delivery right, 50 per cent water delivered, 2014–15
Source: ACCC from data provided and published by infrastructure operators.
Note: HS = high security, GS = general security, SAS = Small Area Supplies, LAW = Large Area Supply Wah Wah excluding IHS, LAS = Large Area Supply, IHS = Integrated Horticulture Supply.
In dollar terms total non-volumetric charges in hypothetical bills vary between $200 and $2242 in NSW compared to between $100 and $480 in Victoria. As shown in chart 5.4, these charges can amount to a significant proportion of the hypothetical bill for some Off-river IO customers—nearly 70 per cent in MI’s LAW-GS pricing group for customers holding 50 ML of WDR. The proportions are slightly lower if assuming 100 per cent water delivered (not shown in chart).
Assuming non-volumetric charges apply consistently across customer size, they will account for a higher proportion of bills for customers with smaller water holdings (except for RIT97). This assumption is maintained for chart 5.4. In this case, use of non-volumetric charges produces a ‘tiered’ effect where smaller customers pay more in per ML terms than larger customers.
However, this assumption is not always applicable. For example, if a charge applies per outlet, a customer with larger volumes of water delivered may also face higher non-volumetric charges because they opt to have more outlets. The same is true if different charges apply for different outlet sizes, and larger customers opt to have larger outlets (note, however, that customers are generally able to have some discretion over choice of size and number of outlets).
Another case is where non-volumetric charges apply ‘per landholding’ or ‘per account’. Where some customers have several landholdings/accounts while others have a single landholding/account (possibly as a result of consolidation), and as such, it is clear that there is potential for customers to face substantially different charges in per ML terms. In these circumstances, the ability for customers to be able to consolidate landholding/accounts becomes important for charging outcomes.
The impact of non-volumetric charges on charging outcomes for customers is to a large extent dependent on how large the charges are relative to volumetric charges customers pay. Chart 5.5 shows how the contribution of non-volumetric charges to hypothetical bills has changed over time (assuming 250 ML WDR, 50 per cent delivered).
Beyond this, where non-volumetric charges are included in termination fees, they are also likely to impact irrigators decisions to whether to partially or fully terminate their water delivery right (see section 6.2.2).
97 RIT imposes an ‘irrigation access charge’ per ‘rated hectare’. This can be considered a non-volumetric charge as it is not related to a volume of water access right, irrigation right or water delivery right. Based on information provided by RIT, the ACCC uses a conversion factor of 9.28 hectares per ML in order to calculate hypothetical bills for RIT resulting in the ‘irrigation access charge’ being charged per ML. This has the effect of causing RIT’s non-volumetric charges to represent a near constant share of the total hypothetic bills.
Chart 5.5: Off-river infrastructure operators—proportions of hypothetical bills associated with non-volumetric charges, 250 ML water delivery right, 50 per cent water delivered, 2012−13 to 2014−15
Source: ACCC from data provided and published by infrastructure operators.
Note: HS = high security, GS = general security, SAS = Small Area Supplies, LAW = Large Area Supply Wah Wah excluding IHS, LAS = Large Area Supply, IHS = Integrated Horticulture Supply.
Chart 5.5 shows that on average, the proportion of hypothetical bills associated with non-volumetric charges has decreased slightly for customers of Off-river IOs in NSW since 2012−13, but still remain at relatively high levels.
The decrease in the proportion of hypothetical bill associated with non-volumetric charges in MI networks reflects the removal of the ‘EnviroWise’ charges.
The proportion of hypothetical bills associated with non-volumetric charges in Victoria and SA have remained relatively unchanged since 2012−13, increasing only slightly between 2013−14 and 2014−15 but remaining relatively small.
5.3.5 Pass-through of other water charges
In Victoria and Queensland, infrastructure operators are vertically integrated and provide both On-river and Off-river infrastructure services. Such operators levy On-river and Off-river infrastructure charges separately and/or apply WPM charges directly to customers.
In contrast, in NSW and SA, WPM and On-river infrastructure charges are incurred by Off-river IOs in relation to the water access rights they or their customers hold and/or use.
In some cases, Off-river IOs incur On-river and/or WPM charges because of actions they take on behalf of particular customers. For example, an Off-river IO may hold a group WAE which is used to service a customer’s entitlement to water under their irrigation right. Also, the Off-river IO can extract water pursuant to a water allocation for delivery within their network to the customer who owns the water allocation. WPM or onriver infrastructure charges incurred by the Off-river IO for holding the WAE or delivering water allocation can in these cases be considered ‘directly attributable’ to the relevant customer(s).
WPM and On-river infrastructure charges can also be incurred by Off-river IOs in relation to water held and used to cover distribution losses. Distribution losses occur when water is lost (e.g. through evaporation or seepage to groundwater) from a network in the course of delivering water to customers. Off-river IOs may provide for these distribution losses by holding a separate WAE for this purpose (sometimes referred to as a ‘conveyance licence’), by withholding a proportion of their customer’s irrigation right, or some combination of the two methods. Charges Off-river operators incur in relation to water used for distribution losses are generally ‘shared’ across all customers, rather than being directly attributable,
Operators use a range of approaches to ‘passing-through’ On-river and WPM charges they incur. These approaches, discussed below, have different degrees of transparency for customers.
Approach 1—straight pass-through
There are only five Off-river IOs that clearly pass-through directly attributable WPM and onriver infrastructure charges incurred98:
Hay
Narromine
CIT
RIT
LMW (On-river charges only; WPM ‘charges’ (the Environmental Contribution) are incorporated into LMW’s own charges, see box 4.2).
This is the most transparent and clear approach used by Off-river IOs. As all WPM and On-river infrastructure charges are clearly identifiable on the Off-river IO’s schedule of charges, irrigators can easily understand what their obligations for pass-through charges are.
Approach 2—an aggregated single fixed and/or variable ‘government charge’
98 Note that CIT and RIT do not incur relevant On-river infrastructure charges.
A common approach to pass-through charges in NSW is to combine the WPM charge imposed by DPI Water with WaterNSW’s On-river infrastructure charges into a single fixed or variable ‘government charge’. This approach is taken by eight Off-river IOs in NSW.
Of these eight, Coleambally and WMI list a single fixed and a single variable government charge on their schedule of charges. These charges are equal to the sum of DPI WPM charge and WaterNSW’s On-river infrastructure charge.
Coleambally and WMI also incur WPM and On-river infrastructure charges associated with water used for distribution losses. These costs are covered by revenue from other infrastructure charges and the irrigation corporation and district (ICD) rebate WaterNSW provides to these Off-river IOs.99
The other six Off-river IOs who combine WPM and On-river charges list a single fixed and/or variable ‘government charge’ that is either higher or lower than the sum of DPI’s WPM charge and WaterNSW’s On-river infrastructure charge. These operators are:
Eagle creek
Jemalong
MIL
MI
Trangie-Nevertire
West Corurgan.
The two most common explanations for the difference are charges imposed in relation to distribution losses, and the ICD rebate provided by WaterNSW to some Off-river IOs.
Off-river IOs have different approaches to how they use the ICD rebate and recover additional costs associated with distribution loss water. In some cases, the rebate is used to cover all, or a significant proportion, of WPM and On-river infrastructure charges associated with distribution losses.
The rebate may also be used to offset a proportion of WPM and On-river infrastructure charges that are directly attributable to customers’ holding and use of water rights. In this situation, the listed ‘government’ charge will be less than the sum of WPM and On-river infrastructure charges.
In other cases, Off-river IOs do not receive a rebate, or choose to use the rebate to reduce infrastructure charges imposed in relation to their own network generally. In these cases, the listed ‘government’ charge imposed per ML of customers’ water holdings and use may be larger than the sum of the WPM and On-river infrastructure charges, as it has been inflated to cover the cost of charges relating to distribution losses.
Where the listed ‘government’ charge(s) differ from those actually incurred by the Off-river IO, there is the potential for customers to be misled. The way in which any such rebates are used to adjust Off-river IO charges, and the approach taken to recover charges on distribution losses, should be clearly explained on the schedule of charges.
Approach 3—incorporation into general fixed and/or variable Off-river infrastructure charges
Some Off-river IOs pass-through fixed and/or variable WPM and On-river infrastructure charges by inflating their own Off-river infrastructure charges.
Five Off-river IOs include variable WPM and On-river infrastructure charges in their variable Off-river infrastructure charge:
Buddah Lake
Hay
Marthaguy
West Corurgan
99 The rebate is based on the costs that WaterNSW avoids incurring because ICD customers are not their own customers.
Tenandra.
Three Off-river IOs include fixed WPM and On-river infrastructure charges in their fixed Off-river infrastructure charge:
Buddah lake
Moira
Tenandra.
This is the least transparent of all approaches for passing through WPM and On-river infrastructure charges. Further, if the inflated charges are not adjusted before being used in the calculation of termination fees, there may be a contravention of the WCTFR. Buddah Lake, Moira and Tenandra all separately list a termination fee which appears to exclude WPM and On-river infrastructure charges.
Finally, rolling directly attributable WPM and On-river infrastructure charges into an Off-river IO’s own charges can lead to difficulties where a customer has transformed their irrigation right held into a statutory held water access entitlement, but retained their water delivery right. In this situation is it possible that transformed irrigators could be paying WPM and onriver infrastructure charges twice—once when levied directly by the Basin State department and On-river IO on the WAE resulting from transformation, and again when built into Off-river infrastructure charges.
5.4 Off-river infrastructure operator hypothetical bills for 2014−15
5.4.1 Approach to hypothetical bills for Off-river infrastructure operators for 2014−15
Similar to the hypothetical bills for On-river IOs customers presented in Chapter 4 and previous water monitoring reports, the ACCC has constructed hypothetical bills to represent the level of charges imposed by an Off-river IO on its customers. A hypothetical bill is a simple representation of how regulated charges translate into an individual customer bill, enabling comparisons across Off-river IOs with different tariff structures. The 2014−15 hypothetical bills also include pass through charges levied by Off-river IOs to recover charges imposed on the Off-river IO by Basin State departments, water authorities and On-river IOs.
In South Australia, some WPM charges are imposed directly on both On-river irrigators (private diverters) and Off-river irrigators by the Department of Environment, Water and Natural Resources, rather than being passed through by Off-river IOs. These charges have nevertheless been included in hypothetical bills in order to enable a better comparison of total bills faced by Off-river customers across operators.
Hypothetical bills have been produced for networks assuming the customer holds 50 ML, 250 ML or 1000 ML of water access entitlement and equivalent volume of water delivery right, as presented in tables 5.5 and 5.6; all subsequent charts are presented for 250 ML of water access entitlement only. It is also assumed the volume of water delivered to irrigators is equivalent to either 50 per cent or 100 per cent of the water access entitlement volume held.
Hypothetical bills for Off-river IOs are presented below separately for gravity-fed and pressurised networks. A complete list of each Off-river infrastructure charge included in the hypothetical bills for Off-river IOs can be found in 2014−15 Water Monitoring Report—monitoring approach and assumptions, available on the ACCC’s website.100
5.4.2 Hypothetical bills for 2014−15
The hypothetical bills for customers in pressurised and gravity-fed networks, expressed in dollars per ML delivered, are presented in table 5.5 and 5.6 for 50 ML, 250 ML and 1000 ML of water access entitlement with 100 per cent of this volume delivered.
100 See https://www.accc.gov.au/regulated-infrastructure/water/water-monitoring-reporting.
Table 5.5: Off-river IOs—$ per ML hypothetical bills for irrigators in pressurised networks—50 ML, 250 ML and 1000 ML of water access entitlement, 100 per cent water delivered, 2014−15
State Operator Network/ entitlement category
50 ML$/ML
250 ML$/ML
1000 ML$/ML
Ratio—$/ML for 50 ML delivered: $/ML for 1000 ML
delivered
SA CIT High pressure 80.73 80.65 80.11 1.01
Medium pressure 68.46 68.38 67.84 1.01
Low pressure 57.23 57.15 56.61 1.01
RIT 85.32 85.24 84.70 1.01
Vic GMW Tresco 75.35 72.79 72.31 1.04
Nyah 76.26 72.26 71.51 1.07
Woorinen 87.76 83.76 83.01 1.06
LMW Robinvale 211.01 209.41 203.11 1.04
NSW WMI Curlwaa 71.00 71.00 71.00 1.00
Coomealla 94.58 94.58 94.58 1.00
Buronga 149.66 149.66 149.66 1.00
MI IHS-HS 113.60 90.89 81.19 1.40
Source: ACCC from data provided and published by Off-river infrastructure operators.
Note: HS = high security, GS = general security, IHS = Integrated Horticulture Supply.
Table 5.6: Off-river IOs—$ per ML hypothetical bills for irrigators in gravity-fed networks—50 ML, 250 ML and 1000 ML of water access entitlement, 100 per cent of water delivered, 2014−15
State Operator Network/ entitlement category
50 ML$/ML
250 ML$/ML
1000 ML$/ML
Ratio—$/ML for 50 ML delivered:
$/ML for 1000 ML
delivered
Vic GMW Central Goulburn 63.74 56.06 54.62 1.17
Loddon Valley 65.90 58.22 53.76 1.23
Murray Valley 62.80 55.12 53.68 1.17
Rochester 58.90 51.22 49.78 1.18
Shepparton 88.51 80.83 79.39 1.11
Torrumbarry 64.40 56.72 55.28 1.16
LMW Merbein 113.04 111.44 111.14 1.02
Mildura 138.30 136.70 136.40 1.01
Red Cliffs 119.39 117.79 117.49 1.02
NSW West Corurgan
44.50 44.50 44.50 1.00
Moira 45.29 45.29 45.29 1.00
MIL B1 Class C 93.44 45.94 35.15 2.66
Eagle Creek 20.51 20.51 20.51 1.00
Coleambally 48.55 29.04 25.88 1.88
MI SAS-GS 62.70 39.22 31.02 2.02
SAS-HS 75.47 49.53 38.92 1.94
LAW-GS 75.61 36.56 26.77 2.82
LAS-GS 80.18 40.34 29.80 2.69
LAS-HS 90.86 49.03 36.55 2.49
Hay 54.38 47.48 46.18 1.18
Jemalong 49.8 49.79 49.79 1.00
Narromine 54.88 51.68 51.08 1.07
Buddah Lake 46.92 46.92 46.92 1.00
Trangie-Nevertire
56.50 56.50 56.50 1.00
Tenandra 46.70 46.70 46.70 1.00
Marthaguy 43.11 43.11 43.11 1.00
Qld SunWater St George 62.61 62.61 62.61 1.00
Source: ACCC from data provided and published by Off-river infrastructure operators.
Note: HS = high security, GS = general security, SAS = Small Area Supplies, LAW = Large Area Supply Wah Wah excluding HIS, LAS = Large Area Supply.
As shown in tables 5.5 and 5.6, per ML hypothetical bills for Off-river IOs vary significantly across operators and between pressurised and gravity-fed networks. Generally, hypothetical bills in gravity-fed networks are lower than hypothetical bills for pressurised networks. This reflects the relatively high capital costs for pipes and pumps (compared to gravity-fed networks) and higher electricity costs in a pressurised network.
It is noticeable that per ML hypothetical bills decrease significantly in the GMW, MI, Coleambally and MIL networks with increasing volumes of water access entitlement/delivery, whereas per ML bills are stable or decrease only slightly for other Off-river IOs and their networks. The differences in GMW, MI and MIL networks reflect the particular charging arrangements employed by these operators (see section 5.3).
5.4.3 WPM, On-river and Off-river components of hypothetical bills
As previously described, customers pay charges in addition to those levied for access to and use of the Off-river IO’s infrastructure. These include charges levied on customers to recover On-river infrastructure charges and WPM charges payable by the Off-river IO.101
Charts 5.6 and 5.7 present WPM, On-river and Off-river components of total hypothetical bills in 2014−15 for pressurised and gravity-fed networks.
In some cases, charges levied by Off-river IOs that pass through WPM and On-river infrastructure charges are clearly distinguished on the Off-river IO’s schedule of charges. In these instances, the WPM, On-river and Off-river components of hypothetical bills can be calculated directly using the charges as set out in the Off-river IO’s schedule of charges.
In other cases, Off-river IOs do not clearly distinguish between the charges they levy to recover costs of providing Off-river infrastructure services and those they levy to recover (from customers) the costs of WPM and/or On-river infrastructure charges they have incurred (for a discussion on how operators pass through such charges, see section 5.3.5). In these instances, the ACCC has used information provided by On-river IOs, Basin States and water authorities in addition to information provided by
101 As indicated previously, WPM charges in South Australia are charged directly to irrigators, but for the purposes of comparison have been included in hypothetical Off-river IO bills as if they were passed through by Off-river IOs.
Off-river IOs to calculate the proportion of an Off-river IO’s charges that should properly be classified as charges relating to WPM activities or On-river infrastructure services, as applicable. Details on this approach, and calculations for specific operators, are provided in 2014−15 Water Monitoring Report—monitoring approach and assumptions.
Chart 5.6: Off-river IOs—total hypothetical bills for irrigators in pressurised networks—250 ML of water access entitlement, 50 per cent and 100 per cent water delivered—WPM, On-river and Off-river components, 2014−15
Source: ACCC from data provided and published by Off-river infrastructure operators.
Note: HP = high pressure, MP = medium pressure, LP = low pressure, HS = high security, GS = general security, IHS = Integrated Horticulture Supply.
Chart 5.7: Off-river IOs—total hypothetical bills for irrigators in gravity-fed networks—250 ML of water access entitlement, 50 per cent and 100 per cent water delivered—WPM, On-river and Off-river components, 2014−15
Source: ACCC from data provided and published by Off-river infrastructure operators.
Note: HS = high security, GS = general security, SAS = Small Area Supplies, LAW = Large Area Supply Wah Wah excluding IHS, LAS = Large Area Supply.
As seen in charts 5.6 and 5.7:
Off-river infrastructure charges form a significant majority of hypothetical bills in almost all pressurised and gravity-fed networks
WPM charges form a small portion of all hypothetical bills
smaller Off-river IOs’102 hypothetical bills have a larger proportion associated with On-river infrastructure and WPM charges compared to larger Off-river IOs, reflecting that:
– smaller IOs generally have lower Off-river infrastructure charges, and
– they tend to be located in the northern MDB, where charges for On-river infrastructure services are higher.103
Total hypothetical bills vary greatly across both pressurised and gravity-fed networks. For example, the hypothetical bills for the CIT-LP pressurised network are $11 350 (50 per cent water delivered) and $14 288 (100 per cent water delivered), while the hypothetical bill for LMWRobinvale is $42 795 (50 per cent water delivered) and $52 352 (100 per cent water delivered).
For gravity-fed networks, the lowest hypothetical bills are in Eagle Creek,at $3520 (50 per cent water delivered) and $5126 (100 per cent water delivered), while the highest are LMWMildura, at $28 045 (50 per cent water delivered) and $34 176 (100 per cent delivered).
5.4.4 Fixed and variable charges
As noted earlier, Off-river IOs generally levy fixed and variable charges to recover the costs of providing infrastructure services. Some Off-river IOs also impose non-volumetric charges that are not linked to the volume of water delivery right, irrigation right or water access right the customer holds or to the volume of water delivered. These charges are instead generally levied per account, connection, landholding or customer. In this chapter (and chapter 4), these non-volumetric charges are grouped together with fixed volumetric charges under the label ‘fixed charges’. For an in depth analysis of non-volumetric charges and the impact they have on irrigators, see section 5.3.4.
Off-river IOs with gravity-fed networks face largely fixed costs, which do not vary with the volume of water delivered to customers. However, the ratio of fixed to variable charges in Off-river IO tariff structures varies considerably. In some networks, fixed charges will recover both fixed and variable costs, while in others variable will recover not only variable costs but also contribute to the recovery of fixed costs.
Chart 5.8 shows the proportion of hypothetical bills attributable to WPM, On-river and Off-river fixed and variable charges.
Fixed charges are shown on the left hand side and variable charges on the right. The overall width of the bar reflects the total hypothetical bill.
102 Smaller irrigation networks include Eagle Creek, Jemalong, and operators in the Macquarie River system (Narromine, Buddah Lake, Trangie-Nevertire, Tenandra and Marthaguy).
103 On-river charges in the northern Basin tend to be higher than those in the southern Basin for a variety of reasons, as explained in chapter 4.
Chart 5.8: Off-river IOs—total hypothetical bills for irrigators—250 ML of water access entitlement, 100 per cent water delivered—WPM (fixed and variable), On-river (fixed and variable) and Off-river (fixed and variable) charge components, 2014−15
Source: ACCC from data provided and published by Off-river infrastructure operators.
Note: HP = high pressure, MP = medium pressure, LP = low pressure, HS = high security, GS = general security, SAS = Small Area Supplies, LAW = Large Area Supply Wah Wah excluding IHS, LAS = Large Area Supply, IHS = Integrated Horticulture Supply.
As seen in chart 5.8, the proportion of fixed charges as a percentage of the hypothetical bill varies greatly between Basin States and between Off-river IOs. In SA, fixed charges make up around half of all charges in hypothetical bills. In Victoria, this proportion is greater with 60 per cent of hypothetical bills being fixed charges for LMW and generally more than 80 per cent for GMW. Larger Off-river IOs in NSW tend to recover between one-third and half of costs in fixed charges, and smaller Off-river IOs generally recover a greater percentage of costs through variable charges.
WPM charges do not form a significant part of hypothetical bills for most Off-river IOs.
Generally in NSW, the variable part of On-river charges is significantly greater than the fixed part while the opposite is true in other Basin States (see chapter 4 for further discussion of On-river infrastructure charges).
5.5 Changes to Off-river infrastructure operator hypothetical bills for 2014−15Hypothetical bills in most networks increased between 2013−14 and 2014−15. Charts 5.9 and 5.10 set out the percentage changes in hypothetical bills for pressurised (chart 5.9) and gravity-fed (chart 5.10) networks. The rate of change in the consumer price index is shown for illustrative purposes.104
Chart 5.9: Off-river IOs—percentage changes in total hypothetical bills for irrigators in pressurised networks—250 ML of water access entitlement, 50 per cent and 100 per cent water delivered, 2013−14 to 2014−15 (nominal)
Source: ACCC from data provided and published by Off-river infrastructure operators.
Note: HP = high pressure, MP = medium pressure, LP = low pressure, HS = high security, GS = general security, IHS = Integrated Horticulture Supply.
104 The percentage change in CPI from 2013−14 to 2014−15 is calculated as the percentage change in the financial year index (average of four quarters) between 2013−14 and 2014−15. The CPI figure is 1.71 per cent. Source: Australian Bureau of Statistics, Consumer Price Index, Australia, Cat. No. 6401.0.
Chart 5.10: Off-river IOs—percentage changes in total hypothetical bills for irrigators in gravity-fed networks—250 ML of water access entitlement, 50 per cent and 100 per cent water delivered, 2013−14 to 2014−15 (nominal)
Source: ACCC from data provided and published by Off-river infrastructure operators.
Note: HS = high security, GS = general security, SAS = Small Area Supplies, LAW = Large Area Supply Wah Wah excluding IHS, LAS = Large Area Supply.
As seen in charts 5.9 and 5.10, between 2013−14 and 2014−15:
the majority of hypothetical bills for Off-river IOs have increased in real terms (shown by an increase above the CPI line)
for pressurised networks, hypothetical bills have declined in the CIT and MI–IHS–HS networks, but increased in other pressurised networks
changes in hypothetical bills have generally been more varied for gravity-fed networks than pressurised networks, particularly in NSW.
Within CIT pressurised networks, hypothetical bill changes have decreased by 1 to 2 per cent in real terms since 2013−14. The hypothetical bills in the MI–IHS–HS network have also shown significant real declines of 5 per cent (50 per cent water delivered) and 6.3 per cent (100 per cent water delivered). Over the same time, GMW, LMW and WMI pressurised networks have increased by between 1 and 4 per cent in real terms.
Hypothetical bills for GMW gravity-fed networks generally had small increases of less than 1 per cent in real terms, except for the Shepparton district, where bills declined by 1.6 per cent. Changes in hypothetical bills were more varied in the LMW networks, with hypothetical bill changes ranging between a decrease of 5 per cent (7 per cent in real terms) for LMW-Red Cliffs and an increase of 4 per cent (2 per cent in real terms) for LMW-Mildura.
Hypothetical bills for NSW gravity-fed networks have generally increased, often by larger amounts than in Victorian gravity-fed networks. The largest increases in hypothetical bills were in West Corurgan and MIL–B1–Class C (general security) with real increases of around 8 per cent.
There are a range of factors that may influence the size of changes in hypothetical bills, including:
changes to input costs (e.g. electricity prices)
changes to costs resulting from network reconfiguration/upgrades
changes to the Off-river IO’s regulatory or legal obligations which have cost impacts (e.g. changes to licence conditions, regulatory compliance costs)
changes to On-river infrastructure and WPM charges incurred by the Off-river IO (and passed on to customers by the Off-river IO)
changes to the level of cost-recovery
revenues from other sources (e.g. grants/irrigation efficiency upgrade funding and rebates)
changes to the cost base (e.g. number and composition of customers).
An Off-river IO’s ability to influence cost and revenue drivers varies. For example, an Off-river IO may have little to no ability to affect input costs and On-river and WPM charges that it incurs, whereas it is likely to be able to exercise substantial control over decisions about where and when to upgrade or reconfigure networks, and the degree of cost-recovery it chooses to pursue.105
In order to better understand the drivers of total hypothetical bill changes, charts 5.11 and 5.12 set out the changes (in dollars) in hypothetical bills between 2013−14 and 2014−15. These charts show how changes in WPM, On-river and Off-river infrastructure charges contribute to the overall change in hypothetical bills between 2013−14 and 2014−15.
Chart 5.11: Off-river IOs—dollar changes in WPM, On-river and Off-river charges for irrigators in pressurised irrigation networks—250 ML of water access entitlement, 100 per cent of water delivered, 2013−14 to 2014−15 (nominal)
Source: ACCC from data provided and published by Off-river infrastructure operators.
Note: HP = high pressure, MP = medium pressure, LP = low pressure, HS = high security, GS = general security, IHS = Integrated Horticulture Supply.
105 Note, however, that charges for Off-river infrastructure services provided by GMW, LMW and SunWater are subject to regulatory processes, which decreases the ability of these operators to independently choose the level of cost-recovery.
Chart 5.12: Off-river IOs—dollar changes in WPM, On-river and Off-river charges for irrigators in gravity-fed networks—250 ML of water access entitlement, 100 per cent water delivered 2013−14 to 2014−15 (nominal)
Source: ACCC from data provided and published by Off-river infrastructure operators.
Note: HS = high security, GS = general security, SAS = Small Area Supplies, LAW = Large Area Supply Wah Wah excluding IHS, LAS = Large Area Supply.
As seen in Charts 5.11 and 5.12:
For pressurised networks (except WMI), changes in hypothetical bills have been largely driven by changes in Off-river infrastructure charges.
There have generally been very small increases in WPM charges in all networks, with some networks even experiencing a decline in WPM charges between 2013−14 and 2014−15.
For gravity-fed networks, the drivers of changes in hypothetical bills have been more diverse, often varying state-to-state and between Off-river IOs within states.
Changes in hypothetical bills for smaller Off-river IOs have generally been driven by changes in On-river infrastructure rather than changes in Off-river IO charges.
For Victorian gravity-fed networks, hypothetical bills have increased for most networks and decreased in others, but in all cases the changes have been driven by changes in Off-river infrastructure charges.
For NSW and Queensland gravity-fed networks, changes in hypothetical bills have been more diverse. Hypothetical bill changes in a majority of networks have been driven by changes in On-river infrastructure charges. This includes smaller Off-river IOs in the southern part of NSW (such as West Corurgan and Moira) as well as large ones, such as MI. However, in a significant minority of cases, changes in hypothetical bills have been driven by changes in Off-river charges (e.g. West Corurgan, Hay, Jemalong, SunWater-St George) determined directly by the Off-river IO.
WPM charges have not been a major driver in changes to hypothetical bills in pressurised and gravity-fed networks between 2013−14 and 2014−15.
The ACCC does not collect cost or revenue data from Off-river IOs.106 However, the following observations below provide some insight into the drivers of changes in hypothetical bill components for 2014−15 compared to the previous year.
Increases in total hypothetical bills are in part driven by increases in On-river infrastructure charges for all operators except those in the Macquarie system (in which On-river infrastructure charges decreased) and SA Murray (where there are no On-river infrastructure charges). However, Off-river IOs are able to alter their own charges to offset the influence of changes in On-river infrastructure charges. Buddah Lake levies a single variable and a single fixed charge (see section 5.3 for further discussion on Buddah Lake’s charging arrangements). In 2014−15, Buddah Lake again maintained charges at 2012−13 levels. While On-river infrastructure charges incurred by Buddah Lake declined in 2014−15 there was a net zero change in their charges, reflecting a corresponding increase the proportion of their charge attributable to Off-river infrastructure services.
Another factor influencing hypothetical bills that the ACCC is able to report on is the effect of infrastructure upgrades in 2013−14 and 2014−15 on Off-river components of 2014−15 hypothetical bills. Of the operators represented in charts 5.11 and 5.12, six operators (CIT, West Corurgan, Jemalong, Buddah Lakes and SunWater-St George) reported no upgrade, restructure or rationalisation of their networks in either 2013−14 or 2014−15. In addition, WMI reported a pipeline replacement in the Coomealla district, but no network changes for Curlwaa or Buronga. All other Off-river IOs reported upgrading, restructuring or rationalising their networks 2013−14, 2014−15 or both.
As shown in charts 5.11 and 5.12, the components of Off-river IO hypothetical bills attributable to Off-river charges declined for most cases where no network changes were made in 2013−14 or 2014−15, and increased for all networks where changes have occurred except Eagle Creek, GMW-Shepparton, LMW-Mildura and LMW-Merbein. These correlations suggest a link between network changes and charge increases.
However, charge increases resulting from rationalisations could be short-term (e.g. the expenditure results in higher initial charges but lower future charges due to lower costs from a smaller, more efficient network) or long term (e.g. higher ongoing costs due to changing to a system that requires higher electricity pumping costs, or a greater emphasis on charges being sufficient to fund future capital works). Also, although charges may increase when networks are modified, customers are likely to benefit in other ways such as improved network efficiency and reducing conveyance losses.
5.6 Longer term trends in Off-river infrastructure operator total hypothetical billsThis is the sixth year the ACCC has produced hypothetical bills for Off-river IOs. The following section looks at the changes to bills since 2009−10.107
5.6.1 Changes in total hypothetical bills since 2009−10
Charts 5.13 to 5.15 show the changes in bills over these years for pressurised and gravity-fed networks.
106 The ACCC previously did collect information on revenues from regulated charges in the past, but has ceased collecting this data in response to concern about the regulatory burden of its annual requests for information.
107 Due to changes in Off-river IO tariff structures, regulated charges and schedules of charges, it is not possible to reproduce all six years of hypothetical bills in consistent a way for all Off-river IOs. For this reason, the long-term hypothetical bill does not include Trangie-Nevertire or MI’s IHS high security network. In addition, where it has not been possible to apply the 2014−15 assumptions to all previous years, the previous set of assumptions (used in 2009−10) have been used to enable accurate comparison.
Chart 5.13: Off-river IOs—total hypothetical bills for irrigators in pressurised networks—250 ML of water access entitlement, 50 per cent and 100 per cent water delivered 2009−10 to 2014−15 (real, $2014−15)
Source: ACCC from data provided and published by Off-river infrastructure operators.
Notes: HP = high pressure, MP = medium pressure, LP = low pressure, HS = high security, GS = general security, IHS = Integrated Horticulture Supply. To assist the readability of the chart, not all years are shown along the horizontal axis. Hypothetical bill data relating to MI-IHS-HS is shown only 2012−13 onwards. This is due to information availability relating to the additional electricity charge that customers in the IHS network pay.
Chart 5.14: Off-river IOs—total hypothetical bills for irrigators in Victorian gravity-fed networks—250 ML of water access entitlement, 50 per cent and 100 per cent water delivered 2009−10 to 2014−15 (real, $2014−15)
Source: ACCC from data provided and published by Off-river infrastructure operators.
Chart 5.15: Off-river IOs—total hypothetical bills for irrigators in NSW and Queensland gravity-fed networks—250 ML of water access entitlement, 50 per cent and 100 per cent water delivered 2009−10 to 2014−15 (real, $2014−15)
Source: ACCC from data provided and published by Off-river infrastructure operators.
Note: HS = high security, GS = general security, SAS = Small Area Supplies, LAW = Large Area Supply Wah Wah excluding IHS, LAS = Large Area Supply.
In pressurised networks, hypothetical bills since 2009–10 have increased in real terms for almost all operators for which the ACCC has data. The exception is the MI-IHS-HS network, where bills declined in real terms by 12 per cent (50 per cent delivered) and 16 per cent (100 per cent delivered) since 2012−13. 108
While hypothetical bills have increased for most pressurised networks, the size of the increase has differed significantly across operators. For example, the hypothetical bills for WMI-Curlwaa have increased in real terms by 3 per cent (50 per cent delivered) and 5 per cent (100 per cent delivered) over the last six years. In contrast, hypothetical bills for GMWNyah have increased 31 per cent (50 per cent delivered) and 22 per cent (100 per cent delivered).
The gravity-fed networks display even greater differences. Hypothetical bills for Coleambally general security customers declined in real terms by 6 per cent for 50 per cent delivered and 5 per cent for 100 per cent delivered. In contrast, bills for GMW-Loddon, Hay, Narromine and Tenandra all increased by around 50 per cent in real terms (for 100 per cent delivered). In gravity-fed networks, the largest increases in hypothetical bills have been generally found in the smaller networks.
Real increases in hypothetical bills have generally been lower in Victorian networks than in networks in NSW and Queensland. An exception to this trend is MI networks, for which bills remained relatively stable or declined slightly across the period.
5.6.2 WPM, On-river and Off-river components of hypothetical bills
Charts 5.16 to 5.18 show how the proportions of hypothetical bills attributable to Off-river charges versus on-river/WPM charges have changed since 2009−10.
108 Hypothetical bills decreased in the MI-IHS-HS network since 2012−13, the period for which the ACCC has data.
Chart 5.16: Off-river IOs—proportional contribution of Off-river and on-river/WPM charges to hypothetical bills in pressurised networks—250 ML of water access entitlement, 100 per cent water delivered, 2009−10 to 2014−15
Source: ACCC from data provided and published by Off-river infrastructure operators.
Notes: HP = high pressure, MP = medium pressure, LP = low pressure, HS = high security, GS = general security, IHS = Integrated Horticulture Supply. Hypothetical bill data relating to MI-IHS-HS is shown only 2012−13 onwards. This is due to information availability relating to the additional electricity charge that customers in the IHS network pay.
Chart 5.17: Off-river IOs—proportional contribution of Off-river and on-river/WPM charges to hypothetical bills in gravity-fed networks—250 ML of water access entitlement, 100 per cent water delivered, 2009−10 to 2014−15 (Victoria)
Source: ACCC from data provided and published by Off-river infrastructure operators.
Chart 5.18: Off-river IOs—proportional contribution of Off-river and on-river/WPM charges to hypothetical bills in gravity-fed networks—250 ML of water access entitlement, 100 per cent water delivered, 2009−10 to 2014−15 (NSW and Queensland)
Source: ACCC from data provided and published by Off-river infrastructure operators.
Note: HS = high security, GS = general security, SAS = Small Area Supplies, LAW = Large Area Supply Wah Wah excluding IHS, LAS = Large Area Supply.
As seen in chart 5.16, for pressurised networks:
although Off-river IO charges constitute the largest proportion of hypothetical bills each year, in most pressurised networks, the contribution of on-river/WPM charges to hypothetical bills is growing over time.
For the gravity-fed networks, charts 5.17 and 5.18 show that:
in Victoria, Off-river charges form around 80 per cent (GMW) and 90 per cent (LMW) of hypothetical bills.
in NSW and Queensland, the balance between on-river/WPM and Off-river charges varies between networks. However, for most networks, it appears that the proportion of Off-river charges as a proportion of hypothetical bills is decreasing. This trend is most apparent in Marthaguy-GS, SunWater-St George and for all operators in the Macquarie valley (Jemalong, Narromine, Buddah Lake, Tenandra and Marthaguy)
the contribution of on-river/WPM charges is noticeably higher, at around 40−50 per cent, for operators in the Macquarie valley.
5.6.3 Fixed and variable charges
As set out in section 5.4, a component of each Off-river IO’s hypothetical bill is attributable to Off-river charges—the charges determined by the Off-river IO directly, to fund their provision of infrastructure services—and this can be further broken down into fixed or variable charges. The proportion of Off-river charges attributable to fixed charges varies across operators and over time.
Determining what weighting to give fixed compared to variable charges is a key decision for an operator. The greater the proportion of revenue that is recovered via fixed charges, the more stable the operator’s revenue over time, as it is not dependent on water availability or usage. However, a low proportion of fixed charges may be favoured by customers with medium or low reliability water entitlements, so that timing of operator bills more closely matches customers’ own revenue streams.
The level of fixed Off-river infrastructure charges will also influence the maximum termination fee that can be imposed on a customer if they terminate access to the Off-river IO’s network (for further information, see section 7.2.3).
In pressurised networks in the MDB, fixed Off-river infrastructure charges represent varying proportions of the total Off-river infrastructure part of the hypothetical bills across networks, ranging from 30 to 34 per cent for MI-IHS-HS, to 79 to 81 per cent for GMW–Tresco. However, these proportions have remained relatively stable in each network since 2009−10.
For the larger gravity-fed networks, between 2009−10 and 2010−11, there was generally an increased reliance on fixed Off-river infrastructure charges in hypothetical bills. However, since then, this proportion has largely remained stable in each network. The network with the lowest proportion of fixed charges is LMW, where fixed Off-river charges as a proportion of total Off-river infrastructure charges is around 60 per cent for all networks. The Off-river operator with the highest proportion of fixed Off-river charges is Coleambally where Off-river infrastructure charges are 100 per cent fixed.
For the smaller gravity-fed networks the proportional contribution of fixed charges to Off-river hypothetical bills is much more varied (see chart 5.19), ranging in 2014−15 from 34 per cent (Moira) to 87 per cent (SunWater-St George). Since 2009−10, the largest shift towards fixed infrastructure charges occurred in Marthaguy GS (24 per cent in 2009−10 increasing to 53 per cent in 2014−15). The largest decline was in Moira (52 per cent in 2009−10 decreasing to 34 per cent in 2014−15). Chart 5.19 shows the changes in these proportions since 2009−10. The chart shows that SunWater-St George has consistently relied more on fixed charges than other small operators. Beyond this, there is little discernible pattern for changes in these proportions, save for a period of stability between 2012−13 and 2013−14 for most networks.
Chart 5.19: Smaller Off-river IOs—fixed charges as a proportion of Off-river infrastructure charges in hypothetical bills—250 ML of water access entitlement, 100 per cent water delivered, 2009−10 to 2014−15
Source: ACCC from data provided and published by Off-river infrastructure operators.
Note: HS = high security, GS = general security.
There are a number of factors affecting an Off-river IO’s decision on the relative weighting of fixed and variable charges for their Off-river infrastructure service. These include:
More ‘reactive’ tariff setting: operators may change tariff structures in response to seasonal conditions or to customer views. It is easier for smaller Off-river IOs to change tariff structures from year-to-year. Larger infrastructure operators have more formalised processes and many are required to set out estimated future regulated charges in their network service plan or have their charges approved or determined by a regulator.109
Infrastructure upgrades: some Off-river IOs may adopt higher fixed charges to recover the capital and ongoing costs of infrastructure upgrades. However, where a system moves from being a gravity-fed network to a pressurised system, a higher variable charge may be sought to better reflect the higher variable costs the operator will be facing.
Network rationalisation: in some networks, a disproportionate amount of fixed costs may be spent servicing a relatively small number of customers. Where these customers are removed from the network and the network can be rationalised, the proportion of fixed to total costs could reduce. However, this depends on several factors such as the degree of cross-subsidisation or use of ‘postage stamp pricing’ across customer groups for whom the underlying fixed costs of service differ.
Changing customer base: if an Off-river IO experiences a number of terminations, there are fewer customers over which to spread the fixed costs needed to maintain the network (assuming the network cannot be proportionally rationalised as customers exit). Where this occurs, fixed charges as a proportion of overall charges for irrigators may increase. However, use of termination fees paid when customers exit can mitigate against increased fixed costs for a number of years.
Loss of subsidies: where an Off-river network exhibits high fixed costs, Basin State governments may have previously subsidised these fixed costs by means of a community service obligation (CSOs). However, if CSOs are reduced or removed (whether to move to upper bound pricing, or for other reasons) the Off-river IO will be required to recover a greater amount of fixed costs than they had previously.
Decision by operator to move to cost-reflective tariff structure: historically in the MDB many operators have recovered a significant amount of their primarily fixed costs through variable charges. If an operator elects to re-balance their tariff structure towards charges that are more cost-reflective, this is likely to result in the proportion of Off-river bills attributable to fixed charges increasing.
109 WCIR, rule 19(1)(g) and WCIR Part 6.
Customer preferences: where customers do not hold high reliability entitlements (e.g. general security), they are likely to prefer a tariff structure that gives more weight to variable charges rather than fixed charges. An operator’s decisions on how to weight customer preferences in this regard against other factors may change over time, resulting in fixed-variable ratios changing.
6.Transformation, termination and tradeThis chapter discusses: trends in the transformation of irrigation rights and termination of water
delivery rights the level and drivers of termination fees the interaction between transformation, termination and trade the magnitude of water allocation trade into, out of and within IIOs, and water
delivery right trade within IIOs Basin State and infrastructure operator’s trade-related charges.
Findings In 2014−15, there was an increase in the number of transformations and total volume
transformed but a decrease in the average volume transformed in each application.
Irrigators may be transforming for reasons other than government water recovery programs, such as flexibility of managing water rights and incentives in water markets.
In 2014−15, there was significant variation across IIOs in the proportion of irrigation right transformed by customers. Coleambally and MIL had the largest volumes of irrigation right transformed in 2014−15, at just over 17 GL each.
In NSW, the proportion of customers transforming more than 75 per cent of irrigation right declined substantially in 2014−15, from around 65 per cent to less than 40 per cent. The opposite trend occurred in South Australia, where there was an increase in the proportion of customers transforming most of their irrigation right, from 14 per cent to 21 per cent.
Delays to transformation processing may impact irrigators’ trading decisions. Median processing times for both operator and state approval authority were substantially longer in NSW (eight days) than in SA (two days).
For 2014−15, around 6 GL, or less than 1 per cent of the volume of water delivery right (WDR) held on 1 July 2009, was terminated for operators that can give effect to transformation. The volume of WDR terminated in 2014−15 is the lowest on record.
The proportion of terminations in joint water supply schemes (JWSSs) is considerably higher than for operators that can give effect to transformation.
Of the 132 terminations that occurred in 2014−15, around 40 per cent terminated all WDR held. As such, the majority of irrigators are choosing to terminate only a portion of their WDR.
For operators who can give effect to transformation, a greater proportion of irrigation right has been transformed (16 per cent) than water delivery rights terminated (7 per cent). This indicates that many irrigators are transforming their irrigation rights but electing not to reduce their right of access to their irrigation network.
Transformation, termination and trade decisions are the key means by which irrigators adjust their water right holdings and are often closely interlinked. Most operators had some water allocation trade during 2014−15. However, the nature of the trade varied significantly across operators.
Charges imposed in relation to trade activities are typically used to recover costs of Basin States (or their delegates) and/or infrastructure operators administering trade. Where infrastructure charges are applied in relation to water traded out of an area, or between customer types, trading decisions and market outcomes can be distorted.
6.1 TransformationTransformation occurs when an irrigator converts their entitlement to water under an irrigation right—typically the irrigator’s contractual share of an irrigation infrastructure operator110 (IIO)’s water access entitlement (WAE)—into a separate WAE held by the irrigator or by some other person. Transformation allows an irrigator to participate in water markets more easily and provides the irrigator with greater control over decisions related to timing, quantity and location of trade.
However, as identified in section 6.1.2, there are transaction costs associated with the transformation process itself. In some cases, there may also be additional costs to an irrigator associated with holding a WAE rather than an IR—for example, costs incurred to trade water allocation to an operator’s account prior to delivery of water through an Off-river IO’s network. As such, irrigators’ decisions to transform take into account a range of costs and benefits. It is expected that transformation outcomes will differ across operators in part because of differences in transactions costs associated with transformation and holding WAE versus IR, and individual irrigator decisions about water use and trade.
Operators that can give effect to transformation are concentrated in NSW and SA. These operators typically hold a group WAE on behalf of their customers, who in turn hold an irrigation right against the operator. In Victoria and Queensland, irrigators typically already hold a WAE directly and as such the concept of transformation is not relevant.
6.1.1 Transformation activity
Table 6.1 shows the number of transformations and the total and average volume of irrigation rights transformed for all IIOs that can give effect to transformation since 2009−10.
Table 6.1: Number and volume of transformations, 2009−10 to 2014−15
Year Number of applications for transformation
Average volume transformed
(ML)
Total volume transformed(GL)
2009−10 465 310 144
2010−11 291 331 96
2011−12 298 262 78
2012−13 287 336 97
2013−14 213 198 42
2014−15 342 185 63
Total 1896 275 521
Source: ACCC from data provided and published by reporting operators.
Over the period 2009−10 to 2014−15, 521 GL of irrigation right has been transformed, in 1896 transactions. This volume represents around 16 per cent of the total volume of irrigation right on issue at 1 July 2009 for those operators who are able to give effect to transformation.
110 As explained in section 2.1.2, an irrigation infrastructure operator is a specific type of Off-river infrastructure operator.
In 2014−15 the number of applications for transformations increased by 61 per cent compared to the previous year, reversing a general downward trend that had been evident since 2009−10. On average, volumes transformed in individual transactions decreased slightly. The total volume transformed rose by 50 per cent compared to 2013−14. However, volumes transformed in 2014−15 are significantly below those in years prior to 2013−14.
In past years, the total volume of transformations has largely followed trends in Commonwealth water access entitlement acquisitions (via direct buyback and investment in water infrastructure programs).111 However, as shown in chart 6.1, the volume of transformations increased in 2014–15, while the amount of Commonwealth acquisitions declined substantially compared to previous years. This data suggests that irrigators may increasingly be transforming for reasons other than participation in government water recovery programs, such as flexibility of managing water rights and incentives in water markets.
Chart 6.1: Total volume of transformations and Commonwealth water acquisitions, 2009–10 to 2014−15
Source: ACCC from data provided and published by reporting operators, MDBA, National Water Commission.
Note: Commonwealth water acquisitions are denominated in GL Long Term Average Annual Yield (LTAAY), which is a measure that adjusts the volume of a water access entitlement by its long term reliability. As such, volumes of Commonwealth acquisitions are not directly comparable to volumes transformed.
Chart 6.2 shows the volume transformed in the four largest IIOs (by amount of WAE held or managed on behalf of customers) since 2009−10.
111 Due to the nature of Commonwealth buyback, transformation applications and the data provided to the ACCC, the ACCC is unable to calculate the absolute number or volume of transformations associated with the Commonwealth buyback. However, relative comparisons of the volume of transformations and the amount of Commonwealth acquisitions are provided.
Chart 6.2: Large IIOs—volume of transformations, 2009−10 to 2014−15
Source: ACCC from data provided and published by reporting operators.
The total volume of transformations for the operators represented in chart 6.2 increased by 51 per cent in 2014−15, with decreases in transformations in MI more than offset by substantial increases in transformations in Coleambally, CIT and MIL. Across operators, Coleambally and MIL had the largest volumes of irrigation right transformed in 2014−15, at just over 17 GL each. Although the aggregate volume of transformations across these four operators increased compared to 2013−14, it is the second lowest since 2009−10.
Chart 6.3 shows the volume transformed in all other reporting IIOs since 2009−10.
Chart 6.3: Other IIOs—volume of transformations, 2009−10 to 2014−15
Source: ACCC from data provided and published by reporting operators.
The total volume of transformations in smaller operators increased by 41 per cent in 2014−15 compared to the previous year. Of the operators represented in chart 6.3, only Narromine and West Corurgan reported zero transformations, and Hay recorded a decline in transformations. Transformations increased in all other operators.
Chart 6.4 shows the volume of irrigation rights that have been transformed in reporting IIOs to date as a percentage of irrigation rights held on 1 July 2009.
Chart 6.4: All operators that can give effect to transformation—per cent of irrigation rights transformed since July 2009
Source: ACCC from data provided and published by reporting operators.
For Hay, Narromine, WMI and CIT, the proportions of irrigation right transformed since 1 July 2009 exceeds 20 per cent. Jemalong, Moira and West Corurgan—all relatively small operators—have the smallest cumulative proportions of IR transformed.
Chart 6.5 shows in aggregate the cumulative volume of irrigation rights transformed across all relevant operators to date, as a percentage of irrigation rights held on 1 July 2009.
Chart 6.5: Per cent of irrigation rights transformed since July 2009
Source: ACCC from data provided and published by reporting operators.
Since 2009−10, irrigators have transformed 16 per cent of the volume of irrigation rights held at 1 July 2009. Up until 2013−14, there had been a clear downward trend in the annual percentage transformed, but this did not continue in 2014−15.
When an irrigator transforms, they may elect to transform only part of their entitlement to water under their irrigation right. Chart 6.6 shows the breakdown of the percentage of irrigation right transformed for all IIOs that had transformations in 2014−15.
Chart 6.6: All IIOs that had transformations—number of transformations, broken down by per cent of irrigation right transformed, 2014−15112
Source: ACCC from data provided and published by reporting operators.
In 2014−15, there was significant variation across IIOs in the proportion of irrigation right transformed by customers. In Coleambally, WMI and CIT, a significant proportion of customers transformed at least 75 per cent of their irrigation right volume, which may indicate irrigators exiting the network or irrigation altogether. However, for all operators except WMI, the majority of customers transformed less than 50 per cent of their irrigation right volume, which is consistent with irrigators rationalising their irrigation right holdings but continuing irrigation. In some cases, irrigators who transform part of their irrigation right do so in order to be able to deal flexibly in water markets with the transformed portion, but also retain a part of their irrigation right so that water can be easily delivered to an Off-river property.113
Chart 6.7 groups together IIOs in NSW and SA to show the breakdown of the percentage of irrigation right transformed in each state.
112 Chart does not include Narromine, which recorded no transformations in 2014−15. Also, in 2014−15 SunWater and GMW both reported a small number of ‘transformations’ of licences into statutory water access entitlements, which are not shown.
113 As reported in chapter 2, most operators require water to be transferred to the operator’s account for delivery within the network. This means that water allocated to an irrigator’s water access entitlements obtained via transformation would need to be traded prior to delivery, increasing costs. Thus, irrigators who wish to both have water delivered and undertake external trades may opt to hold both irrigation right and (transformed) water access entitlement.
Chart 6.7: NSW and SA IIOs—number of transformations, broken down by per cent of irrigation right transformed, 2013−14 and 2014−15
Source: ACCC from data provided and published by reporting operators.
Note: Numbers on chart are the number of transformation applications for each category.
In NSW, the proportion of transforming customers that transformed more than 75 per cent of irrigation right declined substantially in 2014−15, from around 65 per cent to less than 40 per cent. The opposite trend occurred in South Australia, where there was an increase in the proportion transforming most of their irrigation right, from 14 per cent to 21 per cent.
Chart 6.8 shows the breakdown of the percentage of irrigation right transformed in all reporting IIOs since 2009−10.
Chart 6.8: All IIOs that had transformations—proportion of transforming customers, broken down by per cent of irrigation right transformed, 2009−10 to 2014–15
Source: ACCC from data provided and published by reporting operators.
Across both states, the proportion of customers transforming less than 25 per cent of irrigation right was stable in 2014−15.
From 2009−10 until 2012−13, transformations involving more than 75 per cent of irrigation right held decreased as a proportion of all transformations. By 2014−15, only 26 per cent of transformations involved greater than 75 per cent of the irrigation right held.’
6.1.2 Transformation: processing times and fees
Each operator has its own arrangements in place for transformation. However, in each case there are at least two stages: processing of an application by the operator, and then the state authority.
These steps occur because generally an irrigation right is a contractual right against the operator itself, whereas the water access entitlement that is formed out of the transformation process is a statutory right under state water management law.
State authority processing involves both approval of the application and registration (reduction of the IIO’s WAE, and registration of the irrigator’s separately held WAE). In SA, an operator will forward an IIO-approved application to DEWNR. This government department performs both the state approval and registration roles.
In NSW there are two separate government departments involved. DPI provides the state approval role for the operator’s WAE to be subdivided, and then returns the application to the operator. The operator then separately submits the approved application to the NSW Land and Property Information (NSW LPI) for registration in the NSW water register.
The Water Market Rules (WMR) seek to limit the transaction costs that an operator could impose on the transforming irrigator during the transformation process. The purpose of these rules is to reduce barriers to transformation, which in turn reduce barriers to participation in water markets more generally.
Application processing times are a key transaction cost of the transformation process, in addition to processing administration fees. During the time an application is being processed, an irrigator is generally not free to trade or engage in other dealings with the irrigation right that is to be transformed (although they may continue to have water currently available under the irrigation right delivered). This means that delayed processing may impact on trading decisions. Also, given that many transformations are undertaken in conjunction with trade, delays in processing could mean that the market price for the WAE that results from the trade could be substantially different once the transformation is completed compared to the price at the time the application was first made. Thus, transformation processing times can have important implications for water users involved.
Operators are required by the WMR to process applications for transformation within 20 business days. Some conditions apply to extend this period, including the time taken for the operator and the applicant to agree on the details of the irrigation right (or water delivery right, where relevant), and to obtain the consent of those with an interest in the irrigation right that is to be transformed.
Chart 6.9 shows the breakdown of the median number of days for the operator and state approval authority to process transformation applications in NSW and SA in 2014–15.
Chart 6.9: NSW and SA—median days to process applications for transformation, breakdown between IIO and State authority processing, 2014−15
Source: ACCC from data provided and published by reporting operators.
As in previous years, median processing times for both operators and state approval authorities were substantially longer in NSW than in SA. Median total (initial) operator approval time in NSW was 8 days, compared to 2 days in SA. Additionally, because NSW has a separate registration stage, there was an additional median period of 35 days in NSW between when applications were returned from DPI to the operator and when the operator submitted the application to NSW LPI for registration. Median state approval authority processing times in NSW were also about twice as long than in SA (32 total days in NSW compared to 15 days for SA).
Chart 6.10 reports the median total number of days to process an application for transformation for operators in NSW and SA since 2009−10. The total number of days is calculated as the time between the submission of the application to the IIO and the registration of the irrigator’s separate WAE that results from transformation.
Chart 6.10: NSW and SA—median days to process a transformation application, 2009−10 to 2014−15
Source: ACCC from data provided and published by reporting operators.
6.2 Termination
6.2.1 Termination activity
As set out in section 2.2.3, an irrigator’s right to access an IIO’s irrigation network is often represented by their water delivery right. When an irrigator wants to reduce their right of access to an irrigation network, they can terminate some or all of their water delivery right.114 IIO’s will typically impose a termination fee (considered in detail below) which, once paid, will remove any ongoing obligation on the irrigator to pay recurring access charges.
The following sections report separately on termination activity in IIOs that can give effect to transformation, and in other IIOs.115
Table 6.2 shows the number and volume of terminations since 2009−10.
Table 6.2: Number and volume of terminations—IIOs that can give effect to transformation, joint water supply schemes, GMW, LMW, 2009−10 to 2014−15
Year Number ofterminations
Average of WDR terminated (ML)
Total volume of WDR terminated
(GL)
Cumulative % of WDR right held on
1 July 2009 terminated
Operators that can give effect to transformationa
2009−10 414 256 106 3%
2010−11 94 346 33 4%
2011−12 76 397 30 5%
2012−13 103 222 23 5%
2013−14 89 410 37 7%
2014−15 36 154 6 7%
Total 812 298 233
Joint Water Supply Schemesb
2009−10 0 NA 0 0%
2010−11 10 545 5 3%
2011−12 34 922 31 23%
2012−13 3 319 1 24%
2013−14 2 115 0 24%
114 While an irrigator’s right of access may also include a right to drainage through the irrigation network, for simplicity, this section will refer to irrigators terminating their water delivery right.
115 Throughout this monitoring report, unless otherwise stated, termination volumes include water delivery right surrendered.
2014−15 6 262 2 25%
Total 55 720 40
GMW LMW
Number ofterminations
Delivery share terminated(ML/day)c
Number of terminations
Delivery share terminated
(ML/14 days)
2009−10 43 35 90 593
2010−11 69 67 11 35
2011−12 130 100 9 36
2012−13 161 191 7 20
2013−14 136 149 9 25
2014−15 76 80 14 66
Total 615 622 140 774
Source: ACCC from data provided and published by reporting operators.
a Coleambally, Hay, Jemalong, Moira, MIL, MI, Narromine, West Corurgan, WMI, CIT, RIT.
b Buddah Lakes, Eagle Creek, Tenandra, Trangie, Marthaguy.
c GMW delivery shares entitle a user to have 1 ML/day delivered for 270 days in gravity-fed networks and 1 ML/day for 365 days for piped networks.
To date, a cumulative 7 per cent of WDR has been terminated since 2009−10 for operators that can give effect to transformation (including reported surrenders where a termination fee was not imposed). For 2014−15, around 6 GL, or less than 1 per cent of the volume of WDR held on 1 July 2009, was terminated for these operators. The volume of WDR terminated in 2014−15 is the lowest on record since 2009−10.
Noticeably, the proportion of terminations in joint water supply schemes (JWSSs) is considerably higher than for operators that can give effect to transformation. This also corresponds with the fact that transformations have also been higher in JWSSs, which suggests that a significant proportion of irrigators have exited these operators altogether since 2009−10 as a result of water recovery by the Commonwealth (including through infrastructure upgrades) or other factors. The number and volumes of terminations in GMW decreased in 2014−15, but increased in LMW.
Across all operators, of the 132 terminations that occurred in 2014−15, around 40 per cent terminated 100 per cent of WDR held, 4 per cent terminated between 95 and 100 per cent, and all remaining customers terminated less than 95 per cent. This indicates that the majority of terminating irrigators are retaining a portion of their WDR. This may be for several reasons.
On the one hand, these terminating irrigators may simply be rationalising their WDR holdings to suit on-farm needs. However, irrigators may also be deterred from fully terminating by the inclusion of relatively high non-volumetric charges (e.g. account, landholding or outlet charges) when calculating termination fees for ‘full’ terminations. Where this occurs, the result can be that irrigators retain small volumes of WDR on land that is no longer being used for irrigated agriculture. This is considered in more detail below.
6.2.2 The effect of non-volumetric charges on termination fees
When an irrigator decides to terminate, an Off-river IO can impose a termination fee set at a multiple of both fixed volumetric Off-river infrastructure charges and non-volumetric Off-river infrastructure charges.
In some cases, Off-river IOs who impose non-volumetric infrastructure charges do not include these charges in their calculation of a termination fee. As such, the termination fee imposed is proportional to that irrigator’s right of access represented by the volume of water delivery right held.
Non-volumetric charges are imposed on irrigators until the last ML of water delivery right is terminated. As such, irrigators will incur a substantially higher per ML termination fee for the very last ML of water terminated compared to all previous ML terminated. This affects the per ML termination fee imposed when irrigators terminate different proportions of their water delivery right. Chart 6.11 shows the per ML termination fee for when an irrigator terminates different proportions of water delivery right assuming the irrigator holds 100 ML of water delivery right.
Chart 6.11: Effect of non-volumetric charges—$ per ML hypothetical termination fee for 100 per cent volume terminated (retain connection) and marginal additional per ML termination fee for 100 per cent volume terminated (disconnection)
Source: ACCC from data provided and published by reporting operators.
The inclusion of non-volumetric charges in termination fees significantly disadvantages irrigators when they choose to disconnect from the network altogether. The inclusion of non-volumetric charges in termination fees provides incentives for customers who would otherwise wish to fully terminate (i.e. no longer irrigate or have access to the operator’s network) to instead retain a small portion of their right of access. This can affect irrigators’ ability to flexibly manage their tradeable water rights, and also has implications for operators, particularly in relation to the network configuration and ensuring the network operates as efficiently as possible.
On the other hand, where an operator recovers ongoing costs through non-volumetric charges, the fixed volumetric charge(s)—and therefore the maximum termination fee when only part of a right of access is terminated—may be lower than if only volumetric fixed charges are levied.
Of course, any portion of charges (non-volumetric or fixed volumetric) that exceeds an amount based on the recovery of recurrent or capital costs of the operator in relation to the right of access being terminated should not be included in the calculation of termination fees.116
In Murrumbidgee Irrigation (MI), incentives to retain a small portion of a right of access occasioned by inclusion of non-volumetric charges in termination fees are compounded by the use of a tiered tariff structure for fixed charges levied on customers’ water delivery rights. As set out in section 5.3.1, MI levies its fixed charges in 3 ‘tiers’: Tier 1 applies for the first 50 ML of WDR held, Tier 2 for WDR volumes between 51−250 ML and Tier 3 for WDR volumes above 250 ML. MI’s Schedule of Charges states that when a customer terminates, Tier 3 type WDR are terminated first, then Tier 2, then Tier 1.117 This has the effect that customers holding a larger amount of WDR face a lower per ML termination fee. Chart 6.12 demonstrates these effects for various scenarios, varying the volume of WDR held by the customer (50 ML, 100 ML and 250 ML) and the level of termination (50 per cent volume terminated, 100 per cent volume terminated, retain connection, 100 per cent volume terminated, disconnect).
Chart 6.12: MI—$ per ML hypothetical termination fee—50 ML, 100 ML or 250 ML of WDR—50 per cent volume terminated, 100 per cent volume terminated (retain connection) and 100 per cent volume terminated (disconnect)
6.2.3 Actual termination fees imposed in 2014−15
A termination fee can be imposed on irrigators terminating their right of access to an IIO’s irrigation network. A right of access includes a right to delivery and in some networks, a right to drainage. Termination fees are regulated under the Water Charge (Termination Fees) Rules 2009 (WCTFR).
The WCTFR seek to ensure that when the right of access to an irrigation network is terminated, the termination fee mitigates the impact on other irrigators that remain within the network. However, the interests of terminating irrigators and the broader market impacts of termination fees are also recognised. Broadly, the WCTFR cap the total amount of termination fee that can be charged to ensure there is an appropriate balance between the need to reduce barriers to trade and the
116 See the definition of Total Network Access Charge (TNAC) in WCTFR rule 3(d).117 See p. 4 of MI’s 2014−15 Schedule of Charges, available in the ACCC’s 2014–15 Water Monitoring Report—monitoring
approach and assumptions document, available on the ACCC’s website. See https://www.accc.gov.au/regulated-infrastructure/water/water-monitoring-reporting.
legitimate interests of IIOs and remaining customers. The maximum amount of the termination fee under the WCTFR is 10 times the Total Network Access Charge (TNAC). The TNAC comprises the fixed Off-river infrastructure charges associated with a right of access to an irrigation network.
Operators are not required to charge a termination fee, and in many cases may elect to waive part or all of a termination fee in order to encourage network rationalisation. In 2014–15, IIOs did not actually impose a termination fee on terminating customers on most occasions; 51 customers out of 132 reported terminations were charged a non-zero termination fee. This was largely due to the funding provided from government-funded infrastructure programs, particularly the GMW Connections Project (GMW accounted for 66 of the 81 terminations reported where no termination fee was imposed).
Chart 6.13 reports per ML average termination fees across NSW and SA operators since 2009−10, for terminations where a non-zero termination fee was reported to the ACCC.
Chart 6.13: NSW and SA operators—average per ML termination fee imposed ($/ML), 2010−11 to 2014−15 ($2014−15)
Source: ACCC from data provided and published by reporting operators.
For most operators, average termination fees have been relatively stable across the reporting period. Average termination fees have increased slightly in Coleambally, CIT and Hay, but have decreased in Eagle Creek. Average termination fees in WMI have decreased substantially since 2012−13, but remain higher than the average reported for 2010−11.
Chart 6.13 omits data for GMW and LMW because of data limitations. However, in those operators, termination fees have varied substantially over the reporting period, particularly in GMW where extensive network rationalisation has occurred under the Goulburn-Murray Connections Project (formerly the Northern Victoria Irrigation Renewal Project (NVIRP)).
6.2.4 Hypothetical termination fees for 2014−15
In addition to reporting on the actual average termination fees levied by operators, the ACCC also constructs hypothetical termination fees in order to provide a meaningful comparison of potential termination fees across IIOs, assuming no discounts or waiving of termination fees occur.
The key assumptions118 of this analysis are that an irrigator holds 250 ML of water delivery right119, and terminates either 50 per cent or 100 per cent of this volume.
Some IIOs list on their schedule of charges a termination fee that is lower than that implied by their fixed Off-river (access) charge. In these cases, the hypothetical termination fee is calculated using this lower amount.
Furthermore, some IIOs:
impose other fixed Off-river charges which are not levied on the basis of the volume of water delivery right held—such as outlet charges or charges per property and/or
have a tiered structure for fixed Off-river charges where the amount paid per ML of water delivery right varies with the total volume of water delivery right held.
In these cases, the TNAC amount, and therefore the hypothetical termination fee (when expressed per ML) will depend upon whether an IIO customer terminates some or all of their right of access.
The charts in this section are shown separately for pressurised and gravity-fed networks. This allows for comparisons between the charts in chapter 5 for Off-river IO hypothetical bills for fixed Off-river charges. Given that for many operators the termination fee is equivalent to ten times the fixed Off-river charge/s, many of the trends discussed in chapter 5 are relevant to hypothetical termination fees.
Chart 6.14: IIOs—$ per ML hypothetical termination fees for irrigators in pressurised networks, 2014−15
Source: ACCC from data provided and published by reporting operators.
Chart 6.14 shows that there is considerable variability in the level of hypothetical termination fees between operators with pressurised networks. The differences are similar to the observation in section 5.4.4 of significant variability in the proportion of fixed to variable charges.
Charts 6.15 and 6.16 show the level of hypothetical termination fees in gravity-fed networks for large and small operators, respectively. IIOs have been classified as large or small according to the volume of irrigation rights/water access entitlements held or managed on behalf of customers (volumes over 125 GL are classified here as ‘large IIOs’).
118 Further details on the assumptions made in the analysis can be found in 2014−15 Water Monitoring Report—monitoring approach and assumptions, available on the ACCC’s website. See https://www.accc.gov.au/regulated-infrastructure/water/water-monitoring-reporting.
119 For IIOs that do not quantify their water delivery rights by ML, the same assumptions are used in calculating per ML hypothetical termination fees as those used in calculating IIO’s hypothetical bills. See 2014−15 Water Monitoring Report—monitoring approach and assumptions,
For many gravity-fed networks, hypothetical termination fees are simply ten times the fixed Off-river infrastructure charges levied on the basis of water delivery right. For these operators, the per ML hypothetical termination fee is the same regardless of the volume of water delivery right terminated. Therefore, only the one termination scenario is presented.
However, some of the IIOs in charts 6.15 and 6.16 impose ‘non-volumetric’ Off-river charges which are not levied according to the volume of water delivery right held, but rather on the number and size of connections, the size of landholding, per account, or some other way (see 6.2.2). Other IIOs have a tiered tariff structure for charges levied on the basis of water delivery right volumes. In both cases, the effect of these arrangements is that the per ML amount of the termination fee may vary according to the proportion of rights terminated. In particular, non-volumetric charges in many cases are only included in termination fees when an irrigator fully terminates. Therefore, where relevant the hypothetical termination fee is reported for both the 50 per cent and 100 per cent termination scenario.
Chart 6.15: Large IIOs—$ per ML hypothetical termination fees for irrigators in gravity-fed networks, 2014−15
Source: ACCC from data provided and published by reporting operators.
Note: although GMW imposes significant non-volumetric charges, GMW does not include these charges in termination fee calculations. Accordingly, hypothetical bill calculations for GMW do not include non-volumetric charges.
Chart 6.16: Small IIOs—$ per ML hypothetical termination fees for irrigators in gravity-fed networks, 2014−15
Source: ACCC from data provided and published by reporting operators.
The per ML hypothetical termination fees are lower and less variable in most small IIOs than in large IIOs. This broadly reflects the fact that fixed Off-river infrastructure charges are lower in smaller operators (see section 5.4.4).
Per ML hypothetical termination fees are highest in LMW at $742/ML, consistent with the fact that LMW has the highest Off-river infrastructure charges of all operators. Although LMW has a lower proportion of fixed charges compared to other operators (at around 60 per cent of total Off-river charges in 2014−15), the level of LMW’s charges overall are high relative to those of other operators. LMW’s charges are determined under Part 6 of the WCIR, by the Essential Services Commission Victoria (ESC), and as such differences in approaches to setting charges (and in particular an emphasis on full cost recovery) are part of the reason why LMW’s charges are high relative to other operators of similar size.120
Hay’s hypothetical termination fee is larger than other small operators. This is consistent with section 5.4.4, which shows that of the small operators, Hay has the largest proportion of fixed to variable Off-river charges. While Eagle Creek and Jemalong also have a large proportion of fixed to variable charges, the charges overall are lower and therefore the hypothetical termination fees are relatively low.
Charts 6.17 to 6.19 report the nominal percentage change in hypothetical termination fees in pressurised and gravity-fed networks. Most of the percentage change in hypothetical termination fees is due to changes in fixed Off-river infrastructure charges (trends in the percentage change of fixed Off-river charges were analysed in section 5.6.3.).
120 A benchmarking study of LMW’s costs and tariff structure found that ‘[t]here is no single reason why CIT, GMW and WMI charge less than LMW, instead there are several reasons and they differ by system. The reasons include: under-recovery of costs, alternative revenue streams, shrinking customer base and lower total costs.’ The report also found that ‘[r]eturn on capital and return of capital are major cost drivers for LMW’s high pressure systems.’ Marsden Jacob Associates (June 2015), Lower Murray Water: Independent benchmarking study of rural irrigation services—Report prepared for Lower Murray Water, pp. ES.i, 36. Available at http://www.lmw.vic.gov.au/LowerMurrayWaterSite/media/General-Reports/LMW-Benchmarking-Final-report-B.pdf.
Chart 6.17: IIOs—percentage change in $ per ML hypothetical termination fees for irrigators in pressurised networks, 2013−14 to 2014−15 (nominal)
Source: ACCC from data provided and published by reporting operators.
Pressurised networks in GMW all experienced a relatively large increase in hypothetical termination fees of around 6 to 9 per cent from 2013−14 to 2014−15. These changes reflect increases in the fixed ‘infrastructure access fee’ in these districts. Hypothetical termination fees for WMI’s Buronga network also increased substantially, by around 7 per cent compared to 2013−14. However, hypothetical termination fees in WMI’s other networks remained stable. Hypothetical termination fees in CIT, RIT and LMW’s Robinvale network increased by a small percentage.
Charts 6.18 and 6.19 show the percentage change in per ML hypothetical termination fees for large and small gravity-fed networks. For most networks in large operators, per ML termination fees have increased by around 1 to 2 per cent. For smaller IIOs, changes were considerably more varied. West Corurgan was an outlier, with hypothetical termination fees increasing by more than 6 per cent compared to the previous year.
Chart 6.18: Large IIOs—percentage changes in $ per ML hypothetical termination fees for irrigators in gravity-fed networks, 2013−14 to 2014−15 (nominal)
Source: ACCC from data provided and published by reporting operators.
Chart 6.19: Small IIOs—percentage changes in $ per ML hypothetical termination fees for irrigators in gravity-fed networks, 2013−14 to 2014−15 (nominal)
Source: ACCC from data provided and published by reporting operators.
In 2014−15, the largest percentage increases in small gravity-fed networks were in Tenandra and West Corurgan, corresponding to increases in their fixed Off-river charges. These changes in hypothetical termination fees reflect trends in hypothetical bills—West Corurgan had the largest increase in hypothetical bills among gravity-fed operators, while Tenandra had the third largest.
There was no change in fixed Off-river charges for Marthaguy and Narromine from 2013−14 to 2014−15. Accordingly, there was no change in hypothetical termination fees in these IIOs. Similarly, there was no change to the termination fee listed on Buddah Lake’s schedule of charges. However,
as shown in chart 5.12, derived fixed Off-river charges increased for Buddah Lake over this period as a result of Buddah Lake not passing on the decrease in State Water’s fixed bulk water charge.121 The separately listed termination fee was not affected by this decision.
There was a decrease in hypothetical termination fees for several gravity-fed networks—LMW Mildura, LMW-Red Cliffs, several MI fee classes, Eagle Creek and Jemalong. These decreases generally correspond to decreases in the fixed volumetric Off-river charges.
6.3 Transformation, termination and trade decisionsTransformation, termination and trade decisions are often closely interlinked, as they are the key means by which irrigators adjust their water right holdings (see section 2.2). Under the Water Market Rules and Basin Plan Water Trading Rules, an irrigator is free to make transformation and trade decisions separately to their decisions about the level of access to their operator’s network (i.e. decisions relating to water delivery rights).
An irrigator can transform their irrigation right and trade the resulting WAE (or water allocations made to it) without terminating their water delivery right. For example, an irrigator that does not terminate their water delivery right upon selling their WAE could undertake ‘temporary trade’—either water allocated to irrigation rights (within their irrigation network) or water allocation (from outside their irrigation network) and still have this water delivered against their water delivery right within their operator’s network.
Alternatively, an irrigator might consider trading the WAE resulting from transformation in order to downsize their irrigation activity (or to change to a less intensive form of irrigation activity) and may trade or terminate some of their water delivery right within the irrigation network when transforming. An irrigator may also decide to trade the WAE and exit irrigation altogether and therefore elect to trade or terminate all of their water delivery right.
6.3.1 Termination with a corresponding transformation
This section provides an overview of the relationship between transformation and termination decisions within IIOs that can give effect to transformation.
Table 6.3 shows the volume of irrigation rights transformed and water delivery rights terminated since 1 July 2009, for all IIOs that can give effect to transformation.
Table 6.3: All IIOs that can give effect to transformation—volume of irrigation rights transformed and water delivery rights terminated since 1 July 2009, 2009−10 to 2014−15
Year Volume transformed as a per cent of irrigation rights held at 1 July 2009
Volume terminated as a per cent of water delivery rights held at 1 July 2009
2009−10 4.4% 3.3%
2010−11 2.9% 1.0%
2011−12 2.4% 0.9%
2012−13 3.0% 0.2%
2013−14 1.3% 1.1%
121 Buddah Lake has elected to keep its total fixed and variable charges constant in recent years. As such, when pass-through components of these charges change, the amount of the charge attributable to Buddah Lake as Off-river charges changes correspondingly.
2014−15 1.9% 0.1%
Total 16.0% 7.0%
Source: ACCC from data provided and published by reporting operators.
As a percentage held at 1 July 2009, the volume of irrigation rights transformed is significantly larger than the percentage of water delivery rights terminated. This indicates that many irrigators are transforming their irrigation rights but electing not to reduce their right of access to the irrigation network. For some irrigators at least, this may be due to an intention to continue irrigating using water allocation purchased from other parties or traded in from other property holdings. However, for other irrigators the up-front cost of termination fees may be too high.
Chart 6.20 shows the number of customers making transformation and/or termination decisions since 2009−10.
Chart 6.20: All IIOs that can give effect to transformation—number of customers, transformation and/or termination decisions, 2009−10 to 2014−15
Source: ACCC from data provided and published by reporting operators.
Since 2009−10, there has been a rapid decline in the number of customers transforming and terminating at the same time. From 2010−11 on, the majority of customers making transformation and/or termination decisions have been customers who transformed without terminating, and in 2014−15 transformations without terminations reached the highest point since the rules commenced.
There has also been a decrease in the number of customers who terminated without transforming in the same transaction. Since terminations unaccompanied by transformation are most commonly associated with infrastructure upgrades and network rationalisation, this decrease likely reflects a lessening of infrastructure upgrade and rationalisation activity in 2014−15.
Chart 6.21 shows the volume of water delivery rights terminated with and without transformation (in the same application) since 2009−10.
Chart 6.21: All IIOs that can give effect to transformation—volume of water delivery rights terminated with and without transformation, 2009−10 to 2014−15
Source: ACCC from data provided and published by reporting operators.
As indicated earlier, the volume of WDR terminated in 2014−15 was the lowest recorded for the period over which the ACCC has been monitoring termination activity. Of that small volume, there was an equal volume terminated with and without a corresponding transformation. This differs markedly from termination activity in the previous year, where there was both a more substantial volume of WDR terminated and a significant increase in the proportion of water delivery rights terminated without a transformation.
Chart 6.22 shows the breakdown of the total volume of irrigation rights transformed since 2009−10 by customers who transformed with a termination compared to those customers who transformed without a termination.
Chart 6.22: All IIOs that can give effect to transformation—volume of irrigation rights transformed with and without termination, 2009−10 to 2014−15
Source: ACCC from data provided and published by reporting operators.
Chart 6.22 shows that, consistent with the trend over previous years, the vast majority of transformations occur without a corresponding termination in the same application. The volume of transformations increased compared to 2013−14, but remains low in historical terms.
For applications where transformation and terminations occur together, in almost all transactions an equivalent proportion (or volume) of water delivery rights is terminated as the volume of irrigation rights transformed.
As shown in Table 6.4, in 2014−15 terminating customers were much more likely to terminate a greater proportion of WDR (over 75 per cent) compared to the proportion of IR transformed. In contrast, transforming customers were more varied in the proportion of IR transformed, with over one third transforming less than 25 per cent of their IR volume.
Table 6.4: Terminations and transformations by proportion of WDR terminated or IR transformed, 2014−15
Proportion of WDR terminated or IR transformed, as applicable
Proportion of terminating customers*
Proportion of transforming customers
0%<25% 8% 37%
25%<50% 8% 18%
50%<75% 11% 19%
75%<100% 73% 26%
Source: ACCC from data provided and published by reporting operators.
* Termination proportions calculated across all operators, not only operators who can give effect to transformation.
6.3.2 Water allocation and ‘temporary’ trade
Most reporting entities had some water allocation trade during 2014−15. Table 6.5 sets out the volume of water allocation that was traded into, out of and within each Off-river IO’s area during 2014−15. Reported volumes include ‘temporary trade’ of water held under irrigation rights (including leases for up to 12 months).
Table 6.5: All Off-river IOs—water allocation (‘temporary’) trade, 2014−15
Operator Water allocation traded in (ML)
Water allocation traded out (ML)
Water allocation traded within (ML)
SA CIT 4 296 29 496 16 579
RIT 132 12 376 2 023
Vic GMW 250 530 663 766 1 404 466
LMW 9 451 28 641 10 364
NSW West Corurgan 674 7 274 18 841
Moira 2 060 0 1 057
MIL 136 380 132 489 173 681
Eagle Creek 853 1 299 1 433
WMI 2 566 20 998 4 013
Coleambally 17 355 39 157 100 662
MI 65 027 78 554 215 983
Hay 0 2 452 414
Jemalong 2 341 2 448 1 964
Narromine 0 0 0
Buddah Lake 0 0 0
Trangie-Nevertire
134 390 145
Tenandra 3 100 0 194
Marthaguy 821 0 862
Qld SunWater 1 398 4 200 2 826
Source: ACCC from data provided and published by reporting operators.
There is a large variation in the volume of water allocation (‘temporary’) trade within reporting operators. GMW’s irrigation network customers traded the vast majority of water allocation within or between GMW’s irrigation networks, which is unsurprising given its scale.
For smaller operators such as Hay, Jemalong and Eagle Creek, the majority of all water allocation traded in 2014−15 was traded out of the operator’s network. In contrast, no water allocation was traded out of Moira or Marthaguy, despite water being traded into and within these networks.
Customers in the northern MDB traded more water allocation into, rather than out of, Off-river IOs’ networks. In the southern MDB, the situation was reversed, with more water likely to be traded out of Off-river IO networks. This could have been influenced by the relatively dry conditions in the northern MDB.
The ability to undertake water allocation (‘temporary’) trades into, out of and within a network may impact on irrigators’ decisions on whether to transform or terminate. On the one hand, if an operator facilitates trade into its network, customers may be more inclined to maintain their irrigation right and right of access (i.e. not transform or terminate). On the other hand, if there are restrictions on trading water allocation out of a network, an irrigator may be more inclined to consider transformation as a means of gaining control over their water allocation trade decisions. This is particularly likely to be the case if there are strong incentives to trade externally (for example, because of price differentials across operators and/or valleys). However, transformation also involves costs for a customer, as noted in section 6.1.2. A preferable outcome would be for unnecessary operator restrictions on trade to be removed, to facilitate the operation of efficient water markets and customers’ opportunities for trading.
To give an indication of operators’ openness to water allocation (‘temporary’) trade, chart 6.23 shows the volume of water allocation trade into, out of and within Off-river IO networks as a proportion of the total volume of water delivered in 2014−15.
Chart 6.23: Select operators—volume of water allocation traded into, out of and within an operator’s network as a proportion of the total volume of water delivered, 2014−15
Source: ACCC from data provided and published by reporting operators.
Because of the different factors affecting the relative benefits of transformation and trade, the degree to which transformation and trade flows are correlated is an empirical question. Chart 6.24 shows the correlation between the volume of irrigation right transformed and the annual allocation trade into and out of operators’ networks.
Chart 6.24: Operators who can give effect to transformation—correlation between proportion of irrigation right transformed since 1 July 2009 and water allocation traded into and out of network as a proportion of total water delivered in 2014−15
Source: ACCC from data provided and published by reporting operators.
* Narromine reported zero volume delivered and traded for 2014−15.
The chart above shows a positive relationship between the proportion of irrigation rights transformed and the volume of water allocation trade into and out of operators’ networks relative to water delivered in 2014−15. This relationship also held for 2013−14 (not shown). This data suggests that irrigators that wish to participate in external water markets are also more likely to transform their irrigation right.122 There are several possible factors which could explain this relationship. In particular:
Irrigators who wish to participate in external water allocation markets may also wish to participate in external water access entitlement markets, and therefore transform in order to be able to sell their water access entitlement and rely on water allocation trade in to supply their water needs.
Irrigators who wish to participate in external water allocation markets may encounter barriers to trade (particularly to trade out), and may transform their irrigation right in order to avoid these barriers.
The relationships shown in the above charts also hold for ‘trade out’ only, indicating that operators having a larger number of irrigators who sell water allocation (or sell water available under their irrigation right externally) are also more likely to have a larger number of customers undertake transformation.
6.3.3 Water delivery right trade
An irrigator may elect to trade, rather than terminate, their water delivery right. Such trades commonly occur in association with the trade of an irrigation right from one irrigator to another within the same irrigation network. Trades of water delivery right alone are less common.
The Basin Plan water trading rules, which commenced on 1 July 2014, prohibit an IIO from unreasonably restricting the trade of water delivery right. Markets to trade water delivery right are still emerging, although as noted in chapter 2 several large operators are leading the way in establishing them. Irrigators appear in many cases not to appreciate the value of water delivery right trade, for several reasons:
They are not aware that water delivery rights may be traded separately from IR or WAE.
122 Note, however, that these charts report data for the operator as a whole only, not for individual irrigators. As such, while these charts are useful to identify trends across operators, they do not necessarily indicate that the irrigators undertaking external trades are the same as those undertaking transformation. These results should be used as a guide only.
They do not contemplate trade occurring at a ‘negative price’ (that is, the ‘seller’ pays the ‘buyer’ to take on the WDR, thereby avoiding payment of a termination fee).
They consider that there is no demand for new WDR, for example, because:
– the operator’s network is not constrained
– there is already sufficient or over-allocation of WDR to existing customers
– WDR is not used to ration delivery in peak times; or
– casual use is available at an affordable price.123
In the ABARES survey of irrigators commissioned by the ACCC, results suggest that all of the above reasons apply to varying degrees across operators.124 Also, in reporting on the volume of WDR traded, LMW noted to the ACCC that in LMW networks, water access entitlements are more likely to be traded with annual use limit (AUL) rather than water delivery right and that, in LMW’s view, there is ‘currently no real active market exists for delivery share due to the availability of casual use’.125 These reports demonstrate that although there may be potential gains to participating irrigators from trade of WDR, in reality there are several challenges to establishing successful WDR markets.
Chart 6.25 shows the volume of water delivery right traded within an IIO’s irrigation network. Trades just involving water delivery right are reported separately from ‘bundled’ trades involving both water delivery right and either a water access entitlement or irrigation right.
123 Note, however, that the relationship between the availability of casual use and trade of WDR has several elements. On the one hand, ready availability of affordable casual use may decrease demand for WDR, but on the other hand it may increase the supply of WDR to trade in that irrigators who currently hold WDR do not necessarily need to hold WDR in order to ensure water delivery is available at a reasonable cost.
124 ABARES (2015) Water trading and water charge rules: A survey of irrigators in the Murray-Darling Basin, available at https://www.accc.gov.au/regulated-infrastructure/water/water-projects/review-of-the-water-charge-rules-advice-development/issues-paper/commissioned-reports. See also section 2.3.4.
125 LMW notes to ACCC in 2013−14 and 2014−15 Requests for Information.
Chart 6.25: Select operators—volume of water delivery right traded with and without water access entitlement or irrigation right, 2013−14 and 2014−15126
Source: ACCC from data provided and published by reporting operators.
Note: Trade of WAE also includes trade of IR. *GMW: WDR units are ML/day. **LMW: WDR units are ML/14 days.
126 This graph has been produced only for operators who provided WDR trade data to the ACCC.
It is clear from the chart above that the only operator in which substantial WDR trade occurred in 2014−15 without a simultaneous trade of WAE/IR is MIL. For other operators, WDR trade occurred almost exclusively in conjunction with WAE/IR trade.
Another factor which may limit the volume of WDR traded independently of WAE/IR is the extent to which the operator informs its customers of potential WDR trade opportunities. One key example of where an opportunity for trade may exist is where an existing or prospective customer wishes to take on new or additional WDR. Where there is one customer who wishes to reduce their WDR and they hold the same type of WDR as the kind that another customer wishes to take on, there is a clear opportunity to trade. In this case, the customer who wishes to reduce their WDR holdings could sell their WDR to the other customer at a negotiated price, which could be negative if the value of the termination fee avoided is greater than the benefit for the ‘buyer’ taking on the WDR. However, customers may not be aware of when these opportunities arise.
Charts 6.26 and 6.27 provide data reported by selected operators on the volumes of water delivery right terminated and surrendered, new WDR issued and WDR traded within the operator’s network for 2012−13 to 2014−15.
Chart 6.26: Large operators—total volume of water delivery right terminated, surrendered, issued and traded, 2012−13 to 2014−15127
Source: ACCC from data provided and published by reporting operators.
Note: WDR traded includes where trade of WDR occurs together with trade of WAE/IR.
Chart 6.27: LMW and CIT—total volume of water delivery right terminated, surrendered, issued and traded, 2012−13 to 2014−15128
Source: ACCC from data provided and published by reporting operators.
Note: WDR traded includes where trade of WDR occurs together with trade of WAE/IR.
127 Not all IIOs provided water delivery right trade data to the ACCC.128 Not all IIOs provided water delivery right trade data to the ACCC.
The charts above show that Coleambally, MI and LMW have issued a significant volume of new WDR in some years, with other operators also issuing a small volume of new WDR. In several instances, terminations or surrenders of WDR have also occurred in the same years that new WDR has been issued. These instances indicate possible opportunities for WDR trade between customers. Beyond this, wherever there is new WDR issued there may be opportunities for trade with customers wish to decrease their WDR holdings but do not apply to terminate because the level of termination fees are prohibitive.
6.4 Charges levied on tradeWater markets, and the trade of water, are an efficient mechanism for water to flow to its highest value and to ensure the efficient use of MDB water resources. However, the way in which charges are applied in relation to trade can affect the efficiency and effectiveness of water markets.
Water trade covers a wide range of activities. Broadly, water trade relates to a change in ownership and/or location of:
water access entitlements
water allocation
irrigation rights
water delivery rights.
Water trade can occur within an infrastructure operator network or system (intra-network), within a specific valley (intra-valley), within a Basin State (intra-state) or between Basin States (interstate).
Basin State departments, water authorities and infrastructure operators impose charges in relation to water trade. The sections below set out the charges associated with water trade and the impact they can have on the effectiveness of the water markets and water users.
6.4.1 Basin State water trade application charges
Water access entitlements and water allocations are rights by or under the law of a Basin State. As such, a trade of water access right generally requires approval (or at least registration) according to the law of the Basin State(s) relevant to the trade.
Water trade applications are processed differently in different Basin States. In SA and the ACT, all trade applications are processed by the Basin State department or water registrar. In NSW and Victoria certain trade approval and registration functions have been delegated to the relevant On-river infrastructure operators (WaterNSW in NSW and GMW and LMW in Victoria).
Generally speaking, water allocation trades are relatively straight forward and simple to process. Water access entitlement trades are generally more complex and can be compared to the process of transferring real property. As such, water access entitlement trade application charges are generally higher than those for water allocation trade, reflecting the higher administration costs.
Table 6.6 sets out water trade application charges for all Basin States in 2014−15. It shows charges for inter-valley, intra-state and interstate transfers. These figures are based on a proposed trade of 50 ML involving both a change in ownership and a change in location of the right.
The data in the table does not cover any further administrative charges that might be applied by Off-river infrastructure operators (see section 6.4.2).
The assumptions behind the trades presented and the charges applied are set out in 2014–15 Water Monitoring Report—monitoring approach and assumptions, available on the ACCC website.
Source: ACCC from data provided and published by Basin State departments and water authorities.
As shown above, trade application costs vary significantly between Basin States. For example, the cost of a water trade application in SA is over five times the amount of an online trade application in Victoria. The significant difference in trade fees reflects, in part, the administrative requirements of each Basin State.
In Victoria, both water access entitlement and water allocation trades occur through the Victorian Water Register. The Victorian Water Register is an online public register of all water-related entitlements in Victoria. This means that trading rules for certain trades can be ‘hard-coded’ into the system, reducing the need for more costly individual assessment. In comparison, trading applications in relation to SA are still completed in paper form and require significantly more administration activity to process, for both water allocation and water access entitlement.
Water trade application charges can influence decisions to enter particular water markets, the volume they elect to trade or whether they trade at all. For example in NSW, the application charge for a water access entitlement intra-state or inter-state trade is more than double the charge for an intra-valley trade in NSW. Such differences can discourage users from trading to or from other areas.
Similarly, the relevant interstate trade application charges must be paid in both the state of origin and the state of destination of a trade. This can have further implications for interstate trades where there are significant cost differences in Basin State trade fees. For example, for an interstate water allocation trade from Victoria to SA, the water market participant in Victoria will be paying significantly less than the SA water market participant (between $158 and $195.60 per application).129
129 Although the buyer and seller may separately come to an agreement to share the cost of these charges, the overall cost to trading parties will still be higher with interstate trades.
This section will discuss the different types of trade application charges imposed by Off-river infrastructure operators and their impact on the efficient functioning of water markets and water market participants.
The trade fees discussed in this section only relate to infrastructure operator charges. Where a trade is into or out of an Off-river IO’s network, Basin State trade application charges (considered in the previous section) will still apply. In some cases, trading water users will also incur trade fees imposed by Basin State departments (see section 6.4.3).
As noted in section 5.1, significant proportions of water access entitlement on issue in SDL resource units is held within Off-river IOs.
The trade application charges determined by an Off-river IO will be affected by a range of factors, including:
the likely volume of trade applications
the feasibility of internal procedures to manage this task
the operator’s approach to cost recovery—that is, whether these costs should be:
– rolled into general infrastructure charges or
– recovered from traders only (and if so, at what rate(s)).
In order to facilitate the movement of water to its highest value use, and the efficiency of water markets more generally, the trade application charges applied by Off-river IOs should reflect their efficient costs in administering trades. Charging arrangements that deviate significantly from this may unduly affect water users’ decisions to trade water and prevailing water market prices.
Water trade application charges vary significantly across operators. As with Basin States, trade application charges are generally higher for ‘permanent’ trades than for ‘temporary’ trades.
These charges are set out in table 6.7.
Table 6.7: Select130 Off-river IO water trade application charges—internal and external and permanent and temporary water trades, 2014−15
130 Off-river IOs are only listed where a water trade fee is listed on their schedule of charges.
Hay $11 $11
Jemalong $5.62 per ML(trade ‘out’ only)
Narromine $77 $77 + any on-costs
Buddah Lake $10 per ML $10 per ML
Source: ACCC from data provided and published by reporting operators.
Most of the charges do not vary with the amount traded. While this may make smaller volume trades uneconomical for some users, this may nevertheless represent a reasonable basis for recovering the costs incurred (which would not be expected to vary with the volume being traded).
Some Off-river IOs also distinguish water trade fees depending on whether the water trade occurs internally within the network or externally either into or out of the network. This applies to both temporary and permanent water trade.
Higher trade application charges for external trades (compared to internal trades) will necessarily impact on a user’s trading decisions. However, as noted above, where such charges reasonably reflect the costs incurred by the Off-river IO, this is not necessarily a matter of concern.
It is reasonable to assume that the underlying cost of administering a trade into a network would be equivalent to the cost of administering a trade out of a network. Therefore, any discrepancies between IO charges applying to water traded ‘out’ versus water traded ‘in’ need to be considered carefully. Similarly, the imposition of charges upon trade from one type of user to another may also raise concerns. The next section considers these issues in more detail.
6.4.3 Infrastructure charges triggered by trade
In some cases, infrastructure operators may wish to impose an infrastructure charge (or a charge equivalent to another infrastructure charge) in relation to the trade of water between customers, or from one area to another.131
The most significant example is WaterNSW’s imposition of their valley-specific usage charge when a buyer does not have a NSW water access licence with associated water supply and complying metering by which the purchased water is to be taken. This effectively means that a person selling water allocation out of NSW will incur the usage charge that they would have paid had they used rather than traded the water.
SunWater applies a per ML charge where rural water designated for irrigation is temporarily transferred for non-irrigation usage. This per ML charge is associated with the difference between the usage charge for irrigation water and non-irrigation water usage. Water delivered for irrigation is subject to the Queensland State Government’s rural irrigation water pricing direction.
WaterNSW and SunWater’s charges are imposed in addition to the Basin State water trade application fees discussed in 6.4.1. In both cases, the charges are applied to address potential revenue risks arising from separate decisions regarding their tariff structure.
In SunWater’s case, the revenue risk would arise from ‘cheaper’ irrigation water being traded to users who otherwise face charges much closer to upper bound pricing.
131 Operators may also require the payment of any outstanding, previously incurred infrastructure charges before they provide their consent or approval to a trade. Such practices are not considered further here.
In WaterNSW’s case, this relates to the reliance on variable charges for a significant proportion of their revenue132 and otherwise limiting the application of the variable charge to when water was actually used (rather than, for example, when allocated/stored/carried over/forfeited or some combination of these).
JIL’s 2014−15 schedule of charges lists ‘temporary transfer exit charge’ of $5.62 per ML.133 The ACCC understands this charge to be levied on water allocation/temporary trade out of JIL’s network, but currently has no further information.
These circumstantial water trade fees can affect the efficient operation of water markets as discussed in box 6.1.
Box 6.1: Marsden Jacob Association: The impact of infrastructure charges on water trade in the Murray-Darling Basin.
The ACCC commissioned Marsden Jacob Associates (MJA) to:
identify circumstances under which the structure of regulated charges may distort trade decisions or act as a barrier to trade, and
suggest regulatory approaches to amend the water charge rules to ensure that charge structures do not have adverse impacts on trade.
Further, MJA investigated circumstances under which water charging arrangements, and differences in those arrangements, could act as a barrier to trade or impact on an irrigator’s decision to trade rather then use, carryover or forfeit their water.
MJA investigated the impacts of WaterNSW’s current water charging practice to impose its variable usage charge for all allocation assignments involving a buyer licence not linked to a NSW Works Approval. Essentially, the variable usage fee is imposed when water allocation is traded to a non-NSW buyer. The charge is to be included with the transfer fee on application.
MJA identified that this charge has led to dual pricing for NSW water allocation in the southern Murray-Darling Basin (MDB), with NSW sellers listing their (NSW) water allocations at a $5–$7 discount in Victorian and SA markets. MJA concluded that NSW sellers would be better off selling water within NSW where there is a relatively higher price on offer.
In its submission to the Water Act Review, WaterNSW stated that it imposes the variable usage charge on water allocations traded out of NSW due to its relatively higher proportion of variable to fixed charges, and therefore to avoid the financial risk associated with being unable to recover revenue when water allocations are traded interstate. 134
MJA noted that from its consultations with stakeholders, it was suggested that the impact was not material under current market conditions; however, MJA was of the view that it ‘leaves the pathway open for a clearly material impact to emerge’. 135
132 Generally, WaterNSW are required to recover 60 per cent of their revenue requirement through variable charges, and the remaining 40 per cent through fixed charges. This requirement—first applied by IPART, and continued by the ACCC in its 2014 Determination—enjoys a significant degree of support from WaterNSW customers. In 2014, WaterNSW had proposed reducing the reliance on variable charges from 60 per cent to 20 per cent.
133 See JIL’s 2014−15 Schedule of Charges, available in the ACCC’s 2014−15 Water Monitoring Report—monitoring approach and assumptions document, available on the ACCC’s website. See https://www.accc.gov.au/regulated-infrastructure/water/water-monitoring-reporting.
134 Murray-Darling Basin Authority, Submission to the ACCC water charge rules review issues paper, July 2015, p. 46.135 Marsden Jacob Associates, The impact of infrastructure charge structures on water trade in the Murray-Darling Basin,
7.Compliance with the rulesThis chapter provides an overview of the ACCC’s compliance and enforcement activities during 2014−15. In particular, the chapter discusses: the ACCC’s approach to compliance and observations about compliance compliance activities including complaints and enquiries, and the ACCC’s compliance agenda.
Key points The ACCC has seen a reduction in the number of complaints and enquiries from most
stakeholder groups since 2013−14.
The ACCC’s investigation and compliance activities during 2014−15 focused on pricing transparency including in relation to publication requirements and the transformation process.
Engagement with stakeholders on a range of compliance issues as part of the water charge rules review has provided valuable insights to inform the ACCC’s future compliance agenda.
7.1 IntroductionThe ACCC is responsible for enforcing the rules made under Part 4 of the Water Act. These are the Water Market Rules 2009 (WMR), Water Charge (Termination Fees) Rules 2009 (WCTFR), Water Charge (Infrastructure) Rules 2010 (WCIR), and Water Charge (Planning and Management Information) Rules 2010 (WCPMIR) (collectively, the Rules). The ACCC uses the information that it collects through routine monitoring, information requests and the complaints and enquiries it receives, to monitor compliance with the Rules.
The ACCC can also take action to enforce compliance with the fair trading requirements of the Competition and Consumer Act 2010 (Cth) (CCA) by infrastructure operators and water market intermediaries.
This chapter reports on the ACCC’s compliance and enforcement activities carried out in 2014−15 in relation to the Rules (and the CCA where applicable). It also includes observations about compliance with the Rules, based on the outcomes of investigations and the subject matter of complaints and enquiries received by the ACCC.
7.2 Approach to complianceThe ACCC’s approach to compliance and enforcement aims to foster a culture of compliance among regulated entities. The approach seeks to reduce the risk that IIOs’ policies or conduct may cause harm to water users through contraventions of the Rules or the CCA.
The ACCC undertakes targeted compliance and enforcement activities designed to:
ensure that regulated entities understand their obligations under the Rules and provide accurate and relevant information to their customers
encourage greater engagement by infrastructure operators with the ACCC, including by bringing to the ACCC’s attention any policies or plans that may place the operator at risk of breaching the Rules
provide assistance to comply with the Rules, particularly to smaller infrastructure operators
ensure that water users (and their advisors) understand their rights under the Rules and are encouraged to engage with the ACCC if they are concerned that their water supplier’s policies or practices may breach the Rules or the CCA
work in partnership with other agencies, including the MDBA, to improve the operation of water markets and outcomes for water users.136
Where the ACCC identifies practices that may breach the Rules or the CCA, the ACCC will focus on achieving positive compliance outcomes through cooperative stakeholder engagement.137
Consistent with the water charging and water market and trading objectives in the Water Act,138 the ACCC is committed to:
promoting the efficient operation of water markets and minimising transaction costs on water trades
ensuring that all water users have reasonable opportunities to access water markets and are not unreasonably restricted from trading their water rights
achieving pricing transparency, and
providing appropriate protection of third-party interests.
7.3 Compliance activities in 2014−15In 2014−15, the ACCC engaged in a number of activities to promote compliance with the Rules. These included activities to assess and ensure compliance with the Rules by regulated entities, and improve stakeholder awareness of the requirements and opportunities arising from the Rules. For example:
Review of information provided by regulated entities in response to the ACCC’s monitoring request for information—the ACCC conducted a review of responses to the ACCC’s 2013−14 requests for information to assess compliance with the Rules. ACCC staff followed up with individual entities where clarification or other information was required.
Targeted compliance reviews—the ACCC undertook a review of the transformation application fees charged by IIOs and the policies applied by them on the trading of irrigators’ water rights.
Meetings with infrastructure operators, to encourage compliance and transparency—ACCC staff met with infrastructure operators to discuss ACCC concerns about whether their policies and practices complied with the Rules, as well as to give guidance on the Rules and explain the role of the ACCC in the water industry.
Gathering industry information—the ACCC reviewed submissions to the review of the water charge rules to identify relevant compliance issues raised by stakeholders. Issues identified have been explored as part of preparing Draft Advice to the Minister.
7.4 Complaints and enquiries from water stakeholdersThe total number of complaints and enquiries received by the ACCC from water stakeholders has declined markedly in 2014−15 compared to 2013−14 and previous years (see table 7.1).
136 The Water Trading Rules, which are enforced by the MDBA, came into effect on 1 July 2014 and impose obligations on Basin states, approval authorities and infrastructure operators.
137 The principles adopted by the ACCC to achieve compliance, and tools available to it, are set out in the ACCC Enforcement Guide—Water Market and Water Charge Rules available on the ACCC website http://www.accc.gov.au/regulated-infrastructure/water/water-guides.
Table 7.1: Complaints and enquiries from water stakeholders, 2011−12 to 2014−15
Water Stakeholders 2011−12 2012−13 2013−14 2014−15
Irrigators 20 14 13 8
Infrastructure operators 7 17 13 8
Water specialists and interest groups 22 10 8 4
Other water stakeholders 22 5 14 16
Total 71 46 48 36
In 2014−15, the number of enquiries the ACCC received from both irrigators and infrastructure operators decreased compared to previous years. This pattern is consistent with our observations in previous Water Monitoring Reports, and demonstrates that the water industry is now familiar with the processes of transformation and termination. However, irrigators raised concerns about trading restrictions imposed by infrastructure operators on ‘temporary trade’ of water out an operator’s network (other than through transformation).
Most irrigator concerns raised with the ACCC related to operators’ fees and charges. Some of the enquiries by irrigators and infrastructure operators related to the water charge rules review (see box 1.2 in chapter 1).
Water specialists also contacted the ACCC for guidance on the operation of the Rules and to provide information on how specific aspects of the Rules are being implemented. There was a slight increase in the number of contacts from other water stakeholders seeking general guidance on the Rules and the ACCC’s roles.
7.5 InvestigationsIn 2014−15, the ACCC conducted eight initial investigations into suspected breaches of the Rules, arising out of compliance concerns identified through complaints or ACCC initiated compliance reviews. Three of these investigations are presented as case studies below.
Notably, two of these investigations (case studies 2 and 3) resulted in the ACCC identifying policies or practices of infrastructure operators that were likely to contravene the Rules. In both of these cases the ACCC resolved its compliance concerns without taking formal legal action. The ACCC considered this to be the appropriate response given the circumstances of the breaches and that the entities voluntarily addressed these concerns.
Case study 1: Water delivery contract for transformed customers must be substantially the same as that of non-transformed customers
Issue: An IIO’s policy contained clauses that may have led some customers to consider that irrigators who transformed and maintained their water delivery rights with the IIO would be offered a water delivery contract on less favourable conditions than non-transformed customers.
Rule application: Under the WMR, the terms and conditions of delivery after transformation must be substantially the same terms and conditions as those that applied to water delivery prior to transformation. The operator may change terms only if the variations are necessary as a consequence of transformation or are agreed between the operator and the irrigator in accordance with rule 8 of the WMR.
Resolution: ACCC staff contacted the operator to discuss the IIO’s potential non-compliance with rule 8 of the WMR. In response, the IIO voluntarily undertook a review of its water trading policies and made amendments to ensure compliance with the requirements of the WMR. As a result the ACCC closed its investigation.
Case study 2: Operators must not charge a transformation application fee that exceeds the recovery of the reasonable and efficient costs incurred in processing the application.
Issue: ACCC staff identified an IIO who levied transformation application fees in the range of $800 to $2700. This was intended to cover costs incurred for the provision of general customer service, general business expenses (e.g. stationery, overheads, mail) and liaising with third parties on behalf of the irrigator. Some of these costs did not appear to be in accordance with the relevant rule requirement139 and the ACCC’s guidelines. 140 Consistent with the ACCC’s guideline, the ACCC formed the view that some of the IIO’s costs were not sufficiently substantiated or directly related to costs for processing the particular transformation, in contravention of rule 13 of the WMR.
Rule application: Rule 13 of the WMR allows IIOs to charge a transforming irrigator an administrative fee for the processing of their transformation application. However, the WMR limit the scope of the costs the IIO can recover through the transformation application fee to the reasonable and efficient costs incurred, or likely to be incurred, by the operator in processing the application.
The ACCC has previously taken the view that the amount of reasonable and efficient costs incurred by a typical IIO to process a transformation application is unlikely to exceed approximately $350 ($2011−12, exclusive of GST).141 Consequently, operators that impose transformation application fees in excess of this amount may be required to provide evidence to substantiate a claim that their transformation application fees are compliant with the WMR.
Resolution: After ACCC staff raised the issue with the IIO, the operator voluntarily provided refunds to affected irrigators and reduced its transformation application fees.
139 Rule 13 of the WMR.140 ACCC, Guidelines on transformation application fees, 1 October 2012,
https://www.accc.gov.au/regulated-infrastructure/water/water-guides.141 ACCC, Guidelines on transformation application fees, 1 October 2012,
https://www.accc.gov.au/regulated-infrastructure/water/water-guides, p. 4
Case study 3: Disconnection fee must be separately labelled on an operators’ schedule of charges
Issue: An IIO was including in its transformation application fee, a charge for disconnecting an irrigator’s access to the operator’s irrigation network. This fee was not listed on its schedule of charges as required by the WCIR.
Rule application: Operators are not prohibited from levying a fee to recover the costs incurred in physically disconnecting an irrigator from the operator’s network. However, the WCTFR require such a fee to be identified as a ‘disconnection fee’ separately to any other fees142,such as a transformation application fee or termination fee. The WCIR prohibit operators from levying ‘regulated charges’ (which include disconnection fees) unless the levied fee is listed in the schedule of charges provided by the IIO to its customers.143 Further, a disconnection fee must only recover the reasonable costs incurred by the operator for removing or disabling a physical connection between its irrigation network and the irrigator’s own infrastructure.144
Resolution: After ACCC staff raised the issues of non-compliance with the IIO, the operator voluntarily reviewed its disconnection fee and amended its schedule of charges to comply with the WCTFR and the WCIR.
7.6 Compliance agenda for 2015−16Throughout 2014−15 the ACCC has, through its compliance and enforcement activities, raised awareness of the rights and obligations of water stakeholders under the Rules. The ACCC has seen some improvements in pricing transparency and the ability of water users to access water markets without unreasonable delay or cost. The ACCC will continue to adopt this approach for its compliance agenda.
Similarly, the ACCC will continue to work cooperatively with regulated entities to identify and remedy practices which restrict opportunities for water trade.
During consultations for the water charges rules review the ACCC is engaging with stakeholders on a broad range of compliance and policy issues, through written submissions to the review and a series of public meetings. The ACCC is receptive to the issues that are being raised regarding its role in enforcing the Rules and will consider how they might inform our future compliance approach.
Inquiries and consultation as part of the review indicate that more work can be done to improve compliance with the rules and the operation of water markets more generally. Looking forward, issues related to pricing transparency, such as:
accuracy of the schedule of charges (ensuring the inclusion of all infrastructure charges on bills)
timeliness of the schedule of charges, and
how operators pass through On-river infrastructure charges/WPM charges and represent this on the schedule of charges
will be an important part the compliance agenda.
142 Rule 10(2) of the WCTFR.143 Rule 7 of the WCIR.144 Rule 10(1) of the WCTFR.
![Page 1: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/1.jpg)
![Page 2: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/2.jpg)
![Page 3: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/3.jpg)
![Page 4: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/4.jpg)
![Page 5: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/5.jpg)
![Page 6: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/6.jpg)
![Page 7: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/7.jpg)
![Page 8: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/8.jpg)
![Page 9: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/9.jpg)
![Page 10: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/10.jpg)
![Page 11: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/11.jpg)
![Page 12: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/12.jpg)
![Page 13: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/13.jpg)
![Page 14: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/14.jpg)
![Page 15: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/15.jpg)
![Page 16: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/16.jpg)
![Page 17: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/17.jpg)
![Page 18: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/18.jpg)
![Page 19: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/19.jpg)
![Page 20: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/20.jpg)
![Page 21: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/21.jpg)
![Page 22: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/22.jpg)
![Page 23: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/23.jpg)
![Page 24: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/24.jpg)
![Page 25: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/25.jpg)
![Page 26: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/26.jpg)
![Page 27: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/27.jpg)
![Page 28: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/28.jpg)
![Page 29: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/29.jpg)
![Page 30: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/30.jpg)
![Page 31: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/31.jpg)
![Page 32: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/32.jpg)
![Page 33: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/33.jpg)
![Page 34: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/34.jpg)
![Page 35: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/35.jpg)
![Page 36: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/36.jpg)
![Page 37: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/37.jpg)
![Page 38: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/38.jpg)
![Page 39: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/39.jpg)
![Page 40: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/40.jpg)
![Page 41: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/41.jpg)
![Page 42: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/42.jpg)
![Page 43: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/43.jpg)
![Page 44: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/44.jpg)
![Page 45: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/45.jpg)
![Page 46: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/46.jpg)
![Page 47: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/47.jpg)
![Page 48: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/48.jpg)
![Page 49: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/49.jpg)
![Page 50: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/50.jpg)
![Page 51: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/51.jpg)
![Page 52: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/52.jpg)
![Page 53: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/53.jpg)
![Page 54: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/54.jpg)
![Page 55: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/55.jpg)
![Page 56: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/56.jpg)
![Page 57: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/57.jpg)
![Page 58: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/58.jpg)
![Page 59: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/59.jpg)
![Page 60: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/60.jpg)
![Page 61: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/61.jpg)
![Page 62: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/62.jpg)
![Page 63: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/63.jpg)
![Page 64: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/64.jpg)
![Page 65: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/65.jpg)
![Page 66: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/66.jpg)
![Page 67: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/67.jpg)
![Page 68: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/68.jpg)
![Page 69: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/69.jpg)
![Page 70: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/70.jpg)
![Page 71: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/71.jpg)
![Page 72: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/72.jpg)
![Page 73: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/73.jpg)
![Page 74: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/74.jpg)
![Page 75: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/75.jpg)
![Page 76: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/76.jpg)
![Page 77: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/77.jpg)
![Page 78: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/78.jpg)
![Page 79: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/79.jpg)
![Page 80: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/80.jpg)
![Page 81: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/81.jpg)
![Page 82: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/82.jpg)
![Page 83: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/83.jpg)
![Page 84: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/84.jpg)
![Page 85: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/85.jpg)
![Page 86: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/86.jpg)
![Page 87: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/87.jpg)
![Page 88: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/88.jpg)
![Page 89: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/89.jpg)
![Page 90: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/90.jpg)
![Page 91: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/91.jpg)
![Page 92: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/92.jpg)
![Page 93: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/93.jpg)
![Page 94: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/94.jpg)
![Page 95: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/95.jpg)
![Page 96: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/96.jpg)
![Page 97: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/97.jpg)
![Page 98: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/98.jpg)
![Page 99: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/99.jpg)
![Page 100: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/100.jpg)
![Page 101: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/101.jpg)
![Page 102: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/102.jpg)
![Page 103: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/103.jpg)
![Page 104: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/104.jpg)
![Page 105: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/105.jpg)
![Page 106: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/106.jpg)
![Page 107: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/107.jpg)
![Page 108: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/108.jpg)
![Page 109: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/109.jpg)
![Page 110: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/110.jpg)
![Page 111: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/111.jpg)
![Page 112: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/112.jpg)
![Page 113: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/113.jpg)
![Page 114: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/114.jpg)
![Page 115: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/115.jpg)
![Page 116: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/116.jpg)
![Page 117: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/117.jpg)
![Page 118: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/118.jpg)
![Page 119: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/119.jpg)
![Page 120: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/120.jpg)
![Page 121: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/121.jpg)
![Page 122: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/122.jpg)
![Page 123: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/123.jpg)
![Page 124: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/124.jpg)
![Page 125: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/125.jpg)
![Page 126: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/126.jpg)
![Page 127: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/127.jpg)
![Page 128: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/128.jpg)
![Page 129: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/129.jpg)
![Page 130: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/130.jpg)
![Page 131: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/131.jpg)
![Page 132: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/132.jpg)
![Page 133: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/133.jpg)
![Page 134: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/134.jpg)
![Page 135: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/135.jpg)
![Page 136: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/136.jpg)
![Page 137: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/137.jpg)
![Page 138: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/138.jpg)
![Page 139: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/139.jpg)
![Page 140: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/140.jpg)
![Page 141: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/141.jpg)
![Page 142: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/142.jpg)
![Page 143: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/143.jpg)
![Page 144: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/144.jpg)
![Page 145: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/145.jpg)
![Page 146: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/146.jpg)
![Page 147: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/147.jpg)
![Page 148: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/148.jpg)
![Page 149: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/149.jpg)
![Page 150: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/150.jpg)
![Page 151: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/151.jpg)
![Page 152: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/152.jpg)
![Page 153: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/153.jpg)
![Page 154: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/154.jpg)
![Page 155: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/155.jpg)
![Page 156: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/156.jpg)
![Page 157: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/157.jpg)
![Page 158: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/158.jpg)
![Page 159: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/159.jpg)
![Page 160: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/160.jpg)
![Page 161: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/161.jpg)
![Page 162: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/162.jpg)
![Page 163: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/163.jpg)
![Page 164: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/164.jpg)
![Page 165: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/165.jpg)
![Page 166: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/166.jpg)
![Page 167: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/167.jpg)
![Page 168: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/168.jpg)
![Page 169: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/169.jpg)
![Page 170: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/170.jpg)
![Page 171: [Document title] Water... · Web viewAlso, that single water right could generally only be bought and sold accompanying a sale of land. This meant that water use was largely tied](https://reader034.documents.pub/reader034/viewer/2022042321/5f0b7e467e708231d430ca8d/html5/thumbnails/171.jpg)
