The ACCC is responsible for enforcing the water charge rules.
These rules provide charging transparency for customers of monopoly water infrastructure operators (IOs) in the Murray-Darling Basin. This transparency is achieved by requiring monopoly water infrastructure operators to include most charges on their schedule or bill for water customers. The rules also set limits on termination fees that may apply to water customers’ exiting an irrigation network.
The following information explains the changes regarding the schedule of charges, and is relevant to both infrastructure operators and individual water users. This is the first of a series of guidance to be published.
The rules also contain certain requirements on how bulk water charges of bulk water infrastructure operators are determined. These bulk water charges may be determined by Basin states provided minimum requirements of the new rules are met. Guidance on these requirements will be published in 2020.
On 3 April 2019, the Minister for Agriculture and Water Resources amended the water charge rules. These amendments due to commence on 1 July 2020. The making of these new water charge rules (the Water Charge Rules 2010) was based on advice provided by the ACCC to the Minister on 21 September 2016. The advice followed a consultation process, including opportunities for stakeholder comment through forums and the release of an issues paper, draft and final decisions. The new Water Charge Rules provide for increased transparency, additional consumer protection and less onerous obligations on infrastructure operators.
The Water Charge Rules set rules on transparency of charging for schedules of charges, how bulk water charges are determined, limits the termination fees that infrastructure operators can charge, and requires IOs and those setting planning and management charges to be transparent in setting their charges. The current water charge rules have been in place since 2009 (Termination Fee rules) and 2010 (Infrastructure, and Planning and Management rules) respectively.
The rule reform consultation highlighted stakeholder concerns with the clarity of the schedule of charges requirements in the current rules. The new rules seek to improve clarity and transparency through a number of key changes.
Provide greater transparency in relation to each charge
For example, the Infrastructure operator must provide the name of each charge, the amount of the charge or any details required to determine this, any available discount or surcharge and the circumstance in which it applies, and the class of person required to pay the charge.
Allow IOs more flexibility in providing notice of a schedule of charges to their customers
Currently IOs cannot charge customers for infrastructure services unless the required notice period is given. However, under the new rules if the delay is due to a delay in the release of a pricing decision of the ACCC or a state agency, the IO can set their charges as applying from the date of the regulatory decision, provided it gives its customers an updated schedule of charges as soon as practicable.
Provide improved transparency with respect to the pass-throughs of charges
The new rules divide pass-through charges into network operation charges (mainly distribution loss charges from the bulk water operator to the irrigation infrastructure operators) and ancillary charges (mainly government charges). IOs do not have to levy a separate charge to recover network operation charges but if they do, they can recover no more than the charge they are passing through. To recover ancillary charges, IOs must levy one or more separate charges provided they only recover the same total amount of the ancillary charges. These pass-throughs of ancillary charges should be levied on a similar basis to the charge being recovered but not levied per unit of water delivery right/water drainage right.
Modify requirements for IOs in relation to seeking exemptions from the obligation to include a charge on a schedule of charges
Under the new rules either IOs or customers may apply for an exemption (under the current rules it needs to be both). Also, the publication of the charge needs to cause material financial loss or material detriment to the customer (under the current rules, this is material and adverse effect), However, even where the ACCC grants the IO or the customer an exemption from its schedule of charges publication requirements, it must publish certain information in relation to this exemption including: the name of the customer(s) and the infrastructure service to which the non-disclosure of the charge relates.
The current water charge rules restrict the maximum termination fee that an IO can charge a customer terminating their water delivery right or drainage right. The restriction, a maximum of ten times the fixed charges faced by that customer, is intended to strike a balance between allowing a customer to terminate, and providing for the ongoing costs of the infrastructure operator.
The new Water Charge Rules increase transparency by allowing the customer to more easily calculate and understand their termination fee through:
- restricting the maximum termination fee IOs can charge to ten times the volumetric fixed charges (i.e. based on the water delivery right or drainage right the customer is terminating)
- requiring the IO to charge the customer a lower termination fee where the IO has not permitted trade of the customers water delivery or drainage right being terminated
- requiring the IO to provide the customer with a termination information statement before the customer terminates.
Reforms to the water charge rules resulting from the ACCC review have already streamlined the obligations of IOs. Previously, certain IOs were required to produce network service plans, consultation plans and information statements relating to future plans for the IO’s network. The Minister has already abolished these requirements. The new water charge rules continue to streamline IOs obligations through returning the regulation of bulk water operators’ infrastructure charges back to Basin States (provided minimum standards are met), and removes any requirement for an IO to publish their schedule of charges in local newspapers or the Government Gazette.
The ACCC will be releasing guidance material in relation to termination fees soon. This will include information on how an infrastructure operator should calculate termination fees and what information the infrastructure operator should include on the termination information statements they give to customers.
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