Subsection 92(1) of the Water Act 2007 provides for the Minister for Sustainability, Environment, Water, Population and Communities to make and amend water charge rules. The Water Charge (Termination Fees) Amendment Rules 2011 amend the Water Charge (Termination Fees) Rules 2009, which relates to termination fees in the Murray-Darling Basin.

Part 1 – Preliminary

Rule 1 sets out the name of the amendments as the Water Charge (Termination Fees) Amendment Rules 2011.

Rule 2 specifies that the amendments commence on the day after they are registered on the Federal Register of Legislative Instruments.

Rule 3 sets out the schedule to amend the Water Charge (Termination Fees) Rules 2009.

Schedule – Amendments

Part 1, Rule 3 – The definition of total network access charge has been amended to explicitly exclude any amount of GST from the calculation of the charge.

Part 3, Rule 7 – The calculation of termination fee has been amended to provide that where GST is payable in respect of a taxable supply relating to the termination or surrender of the whole or part of a right of access, termination fees may be increased by an amount not exceeding the GST payable in respect of that taxable supply.

Subsection 97(1) of the Water Act 2007 provides for the Minister for Sustainability, Environment, Water, Population and Communities to make, including amend, water market rules to apply in the Murray-Darling Basin.

Rules 1, 2 and 3 – Name of rules, commencement and effect

Rule 1 sets out the name of the rules. Rule 2 specifies that the rules commence on the day after they are registered on the Federal Register of Legislative Instruments. Rule 3 provides that the Schedule amends the Water Market Rules 2009.

Schedule – Amendments

Items 1 and 2 amend subrules 7(1)(b) and 7(1)(c) to provide that when an operator provides, on the request of an irrigator, details of his or her irrigation right, this must include in addition to the number of units or volume of water to which the irrigator is entitled, the details necessary to confirm the accuracy of the operator's calculation.

Item 3 amends subrule 7(2)(a) by deleting the reference to the current financial year in the formula to calculate the number of units or volume of water by which the irrigator's entitlement may be reduced under rule 7. The reference to the current financial year has been removed because it might have suggested that operators were required to give details of the volume of water an irrigator is entitled to receive in annual allocations, rather than, as the rule requires, the volume of water that an irrigator is entitled to receive under an irrigation right against the operator.

Item 4 amends rule 10 by inserting new subrules 10(1A), 10(1B) and 10(1C). Subrule 10(1A) permits operators that have converted their volumetric delivery rights to delivery rights on the basis of flow rate or other basis to require security against payment of future access fees in certain circumstances if the holder of an irrigation right applies for transformation and continue to hold water delivery right. Subrule 10(1A) also provides that the operator will calculate the security threshold by using the appropriate conversion formula, adjusted for any changes to delivery rights that take place after the date of conversion of those delivery rights.

Subrule 10(1B) applies where operators define delivery rights on a non-volumetric basis and initially issued a number of units under a water delivery right either equal to the number of units under an irrigation right, or that reasonably represents the person's delivery right as agreed in writing. Subrule 10(1B) permits an operator to require security against payment of future access fees if the holder of an irrigation right applies for transformation and continue to hold a water delivery right, and either:

• transform the whole of their irrigation right; or
• subject to subrule 10(1C), the number of units under the delivery right is more than 5 times the number of units the person is entitled to under the irrigation right retained after transformation.

Subrule 10(1C) provides that subrule 10(1B)(ii) does not apply if delivery rights have been restructured after they were first issued in a way that has altered the number of units under the delivery right, other than as a result of the holder acquiring, transferring or terminating the delivery units.

Subsection 92(1) of the Water Act 2007 provides for the Minister for Sustainability, Environment, Water, Population and Communities to make, including amend, water charge rules to apply in the Murray-Darling Basin. The Water Charge (Termination Fees) Rules 2009 were made in accordance with subsection 92(1).

Rules 1, 2 and 3 – Name of rules, commencement and effect

Rule 1 sets out the name of the rules. Rule 2 specifies that the rules commence on the day after they are registered on the Federal Register of Legislative Instruments. Rule 3 provides that the Schedule amends the Water Charge (Termination Fees) Rules 2009.

Schedule – Amendments

Item 1 amends the definition of 'total network access charge' to mean the total amount that would have been payable to the operator in respect of a full financial year by a terminating irrigator, if termination or surrender had not occurred.

Item 2 amends rule 5 by inserting a new subrule 5(3). Subrule 5(3) prohibits operators from charging or receiving any fees that relate to the access (and services provided in relation to that access) that has been terminated or surrendered by an irrigator, in respect of a financial year commencing after the termination or surrender.

Subrule 5(3) is a civil penalty provision.

Item 2 amends paragraph 6(1)(b) to prohibit operators from imposing termination fees where the operator seeks to terminate access for breach of contractual obligations associated with the act of trading the whole or a part of a water access right.

Item 3 amends paragraph 7(a) to ensure that the maximum termination fee permitted under rule 7 is calculated based on the total network access charge applicable at the date the notice of termination is given, or the date specified in the notice for termination to take effect, whichever is later.