ACCC imposes penalties and secures compensation under water termination fees rules

9 September 2010

The ACCC has agreed to accept a court enforceable undertaking from Murrumbidgee Irrigation Limited (MI) and issued it with three infringement notice penalties, totalling $66,000, following multiple breaches of the Water Charge (Termination Fees) Rules 2009.

Following an investigation by the ACCC, MI has admitted that it breached the Rules by charging termination fees in 27 instances that exceeded the maximum amount permitted by the Rules. MI has also admitted that on 12 occasions it charged termination fees prior to, or in the absence of, written notice of termination having been given by the customers.

In response to ACCC concerns, MI has stopped imposing termination fees that do not comply with the Rules and has voluntarily refunded $640,000 in total to affected customers representing the amount of the overcharge and interest.

The ACCC's decision to give MI three infringement notices, the first notices issued under the Water Act, in addition to agreeing to accept an enforceable undertaking from MI, reflects the seriousness of MI's conduct.

"In reaching this outcome the ACCC took into account the newness of the Rules and that MI paid refunds to all affected customers, however all irrigation infrastructure operators are under warning that the ACCC will take strong enforcement action if we see continuing breaches of the rules," Mr Samuel said.

During the course of its investigation the ACCC was concerned about the number of separate breaches of the Rules, the size of the amounts MI overcharged its customers and MI's failure to address the ACCC's concerns when contacted by the ACCC.

Under the Rules irrigation infrastructure operators may charge termination fees where the customer or the irrigation infrastructure operator has given written notice of termination. The Rules cap termination fees at ten times the amount of the total network access charge payable by a customer for the year in which notice of termination is given. This provides a balance between the interests of those irrigators that wish to exit an irrigation district and those that wish to remain.

MI is one of the largest irrigation infrastructure operators in the Murray Darling Basin; owning and operating infrastructure servicing more than 3,200 properties in New South Wales.

The undertaking given by MI provides that it will implement a compliance program to ensure that termination fees charged do not exceed the maximum amount authorised by the Rules.

Copies of the infringement notices and the undertaking will soon be available on the public register page of the ACCC's website: www.accc.gov.au/content/index.phtml/itemId/3673

Release number: 
NR 185/10
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Mr Graeme Samuel - (03) 9290 1812
Mr Joe Dimasi - (03) 9290 1814
Ms Lin Enright - (02) 6243 1108