EXPLANATORY STATEMENT
Issued by the Authority of the Murray-Darling Basin Authority
Water Act 2007
Murray-Darling Basin Agreement (Schedule D – Tagging Entitlements for Extraction in another State) Protocol 2010
The Murray-Darling Basin Agreement (Agreement) is Schedule 1 to the Water Act 2007 (Act). The Agreement allows for the Murray-Darling Basin Authority (Authority) to make protocols in respect of certain matters.
The instrument to which this explanatory statement relates, the Murray-Darling Basin Agreement (Schedule D – Tagging Entitlements for Extraction in another State) Protocol 2010 (Protocol), is made under clause 6 of Schedule D to the Agreement and section 18E of the Act. The Protocol is a legislative instrument: see section 18D of the Act.
The purpose of the Protocol is to specify processes and principles to be followed by the Authority, retailers and licensing authorities to make arrangements for tagging an entitlement so that any allocation made to that entitlement may be extracted in a State other than the State in which the allocation is made.
Paragraph 3(1)(a) of Schedule D to the Agreement relevantly provides that:
…
“allocation” means the volume of water allocated for use under an entitlement in any year (as defined in clause 2 of Schedule E) pursuant to the law of a State;
“entitlement” means:
(i) an entitlement to a particular share of water within the upper River Murray, the River Murray in South Australia or regulated reaches of the Goulburn, Campaspe, Loddon and Murrumbidgee river systems or a source referred to in paragraph 2(c) [of Schedule D to the Agreement] pursuant to the law of a State; or
(ii) any other entitlement to divert water or to receive water diverted by another from those sources,
but does not include a State entitlement;
…
“interstate transfer” means a transfer of an entitlement or allocation made between States in accordance with [Schedule D to the Agreement];
…
“licensing authority” means the authority within a State with power to make a final decision whether a transfer may be made into or out of that State;
…
“Transfer Register” means the register referred to in clause 16 [of Schedule D to the Agreement];
….
“valley” means a river valley defined in a protocol made under paragraph 6(1)(b) [of Schedule D to the Agreement];
“valley account” has the meaning set out in sub‑clause 11(3) [of Schedule D to the Agreement];
…
Details of the Protocol are set out in the Attachment.
The Protocol commences on the day after it is registered on the Federal Register of Legislative Instruments.
The Protocol is not subject to disallowance by Parliament nor the sunsetting rules in Part 6 of the Legislative Instruments Act 2003: see section 18D of the Act.
Consultation
The Contracting Governments to the Agreement have been consulted in the development of this Protocol.
The Office of Best Practice Regulation has also been consulted on this Protocol and has determined that regulatory impact statements will not be required for this Protocol.
ATTACHMENT
Details of the Murray-Darling Basin Agreement (Schedule D - Tagging Entitlements for Extraction in another State) Protocol 2010
Section 1 – Name of Protocol
Section 1 provides that the name of this Protocol is the Murray-Darling Basin Agreement (Schedule D - Tagging Entitlements for Extraction in another State) Protocol 2010.
Section 2 – Commencement
Section 2 provides that the Protocol commences on the day after it is registered.
Section 3 – Revocation
Section 3 provides that all previous Protocols made under clause 6(1)(f) of Schedule D to the Agreement, that apply only to interstate tagged trade of entitlements, are revoked.
Subsection 3(2) of the Protocol provides that where an existing Protocol deals with interstate tagged trade of entitlements and other matters, it has no application to the extent that it deals with interstate tagged trade of entitlements.
Section 4 - Application
Section 4 of the Protocol provides that the Protocol applies to interstate tagged trade of entitlements.
Section 5 – Definitions
Section 5 defines certain terms used in the Protocol. Some terms used in the Protocol will take the meanings they have in the Act (including the Agreement and Schedule D): see section 13 of the Legislative Instruments Act 2003.
Section 6 – Notices
Subsection 6(1) provides that a notice under the Protocol must be given in writing.
Subsection 6(2) provides that the Authority must, in consultation with each State Contracting Government and, where appropriate, any relevant licensing authority and any relevant retailer, determine the form and content of a notice required to be given to or by the Authority under the Protocol.
Section 7 – Processes and principles
Section 7 provides that each SOD retailer, SOO retailer and licensing authority must follow the processes in the steps set out in Schedule 1 of the Protocol.
Section 7 also provides that State of Origin wholesalers should adopt the principle that bulk water charges be billed in the same way as State entitlement holder are charged, that is, directly to the interstate owner of the share as at the date of billing.
Section 5 of the Protocol defines retailer, SOD retailer, and SOO retailer.
Section 8 – Accounting for use of tagged allocations
Section 8 provides that after tagging has occurred, the Authority and each SOD retailer, SOO retailer and licensing authority must, in relation to each allocation, follow the processes in the Steps set out in Schedule 2 of the Protocol.
Section 9 - Review of Protocol
Subsection 9(1) provides that an independent auditor appointed under subclause 16(5) of Schedule D to the Agreement may consider the operation of the Protocol and, if the auditor considers it appropriate, recommend that the Authority review the Protocol.
Subsection 9(2) also provides that the Authority must review, and if appropriate, consider amending the Protocol in certain specified circumstances.
Schedule 1 - Processes and principles
Schedule 1 sets outs the steps that SOO retailers, SOD retailers and licensing authority must follow: see section 7 of the Protocol.
Step 1 Lodging applications
Clause (1) of Step 1 provides that an application (being an application to tag an entitlement or to alter or remove a tag) must be lodged with the SOO retailer.
Section 5 of the Protocol relevantly provides that application means:
(a) an application to tag an entitlement so that allocations made under that entitlement may be extracted in a State other than the State in which the allocation is made; or
(b) an application to alter or remove a tag.
Clause (2) of Step 1 provides that an SOO retailer that receives a duly completed application form must immediately take a number of specified actions.
Step 2 Consideration of application by SOO retailer
Clause (1) of Step 2 provides that after completing Step 1, the SOO retailer must promptly conduct a number of other verifications and, in view of paragraphs (1)(a) to (1)(d) of Step 2 and any other matters that the SOO retailer is required to consider, determine whether the application may be approved, if Steps 3 and 4 are also satisfied.
Clause (2) of Step 2 provides that the SOO retailer must promptly notify the SOD retailer and the applicant if it determines that the application may not be approved.
Clause (3) of Step 2 provides that the SOO retailer must promptly notify the SOD retailer and the applicant if it determines that the application may be approved.
Step 3 Consideration of application by SOD retailer
Step 3 provides that where an SOD retailer receives notification from an SOO retailer that an application may be approved, the SOD retailer must promptly:
(a) if appropriate - determine whether the SOD retailer can deliver the water comprised in the relevant allocation; and,
(b) in view of any other matters it is required to consider, determine whether or not the application will be approved if Step 4 is also satisfied.
Step 4 Finalisation of tagging and advising the Authority
Clause (1) of Step 4 provides that when an SOD retailer determines that an application will be approved, it must:
(a) notify the SOO retailer and the Authority that the application will be approved; and
(b) notify the applicant of any conditions which the SOD retailer will attach to the delivery of water pursuant to the relevant allocation.
Clause (2) of Step 4 sets out what the SOO retailer must do when it receives notification that the SOD retailer has determined that an application will be approved.
Clause (3) of Step 4 sets out what the Authority must do when it receives notification that the SOD retailer has determined that an application will be approved.
Step 5 Reconciling records
Clause (1) of Step 5 provides that each licensing authority within a State must, within 7 days of after the end of a month, send to the Authority a copy of all records relating to the interstate tagging of entitlements for the preceding months.
Clause (2) of Step 5 provides that the Authority must examine whether there are any discrepancies between the information provided by the licensing authority in respect of a month and:
(a) similar records provided by the licensing authority in any preceding month of that year; and
(b) information recorded in the Transfer Register.
Clause (3) of Step 5 imposes recording and reporting obligations on the Authority with respect to discrepancies other than allowable discrepancies after the Authority receives the records referred to in clause (1) of Step 5.
Clause (4) of Step 5 defines allowable discrepancy.
Clause (5) of Step 5 sets out what a licensing authority must do when the licensing authority receives a report mentioned in paragraph (3)(b) of Step 5 (being a report provided by the Authority on discrepancies other than allowable discrepancies).
Clause (6) of Step 5 sets out what the Authority must do if a discrepancy is not resolved within the same month in which a licensing authority receives a report mentioned in paragraph (3) (b) of Step 5.
Step 6 Preparation of interstate transfer report
Clause (1) of Step 6 provides that the Authority must, within 30 days after the end of each quarter, prepare and give to each Contracting Government and every licensing authority within each State, an interstate transfer report with respect to the preceding quarter.
Clause (2) of Step 6 describes the type of information that the report referred to in clause (1) of Step 6 must contain with respect to each valley for which a valley account is kept under clause 11 of Schedule D to the Agreement.
Schedule 2 – Processes – accounting for tagged allocations
Schedule 2 sets out the Steps that the Authority, each SOO retailer, each SOD retailer and each licensing authority must follow in relation to each allocation after tagging has occurred: see section 8 of the Protocol.
Step 1 Making an allocation
Step 1 sets out how an allocation is made.
Clause (1) of Step 1 provides that an SOO retailer must make the allocation into the relevant SOO allocation account for the entitlement.
Clause (2) of Step 1 provides that the SOO retailer must promptly advise the relevant SOD retailer of the consequent credit available in the SOO allocation account; and
Clause (3) of Step 1 provides that the SOD retailer must establish an allocation account in the State of Destination for the person entitled to receive the allocation in the State of Destination.
Step 2 Ordering from an allocation
Clause (1) of Step 2 provides that the person entitled to extract an allocation in the State of Destination must place an order with the relevant SOD retailer.
Clause (2) of Step 2 requires the SOD retailer to determine whether the credit available in the SOO allocation account is sufficient to meet the volume ordered.
Clause (3) of Step 2 provides that an SOD retailer must not deliver water pursuant to an order placed by a person under clause (1) of Step 2, unless the credit available in the SOO allocation account is sufficient to meet the volume ordered.
Step 3 Keeping relevant accounts
Clause (1) of Step 3 provides that where an SOD retailer determines that the credit is sufficient under clause (2) of Step 2, the SOD retailer must:
(a) record an order made under clause (1) of Step 2 as a first estimate of use; and
(b) adjust the SOD allocation account accordingly.
Clause (2) of Step 3 also requires the SOD retailer to promptly notify the SOO retailer of any order referred to clause (1) of Step 3.
Step 4 Recording use of allocations
Clause (1) of Step 4 provides that the processes in Step 4 must be applied if:
(a) a person entitled to receive an allocation in a State of Destination alters an order placed under step 2 before it has been delivered; or
(b) a reading of that person’s meter indicates that water has been used in the State of Destination which ought to have been attributed to a tagged allocation.
Clause (2) of Step 4 provides that the SOD retailer must revise any first estimate of use made under clause (1) of Step 3 and alter the SOD allocation account accordingly.
Clause (3) of Step 4 also provides that the SOD retailer must promptly advise the SOO retailer of the alteration made under clause (2) of Step 4.
Clause (4) of Step 4 provides that the delivery of water pursuant to the tagged allocation must be adjusted accordingly.
Clause (5) of Step 4 provides that the SOO retailer must adjust the SOO allocation accordingly.
Step 5 Transfers
Clause (1) of Step 5 provides that an application to transfer an allocation from a tagged entitlement to another person or an application to transfer an allocation under another entitlement to a tagged entitlement must be made to the relevant SOO retailer.
Clause (2) of Step 5 provides that an SOO retailer that receives such an application must determine the application in accordance with the law of the State of Origin, and make any necessary consequential adjustment to the SOO allocation account.
Clause (3) of Step 5 requires the SOO retailer to promptly notify the SOD retailer of any consequential adjustment made to the SOO allocation account where the SOO retailer approves an application received by the SOO retailer under clause (1) of Step 5.
Clause (4) of Step 5 requires an SOD retailer who receives a notice given under clause (3) of Step 5 to make any necessary consequential adjustment to the SOD allocation account.
Step 6 Reporting
Clause (1) of Step 6 provides that within 7 days after the end of a month, an SOD retailer must, in relation to each State of Origin, notify the Authority of the volume of water delivered pursuant to all tagged allocations from the State in the preceding month.
Clause (2) of Step 6 provides that after receiving each report referred to in clause (1) of Step 6, the Authority must make any appropriate adjustments to the cap, valley accounts and salinity registers.
Step 7 Recovering charges
Clause (1) of Step 7 provides that an SOO retailer must keep the relevant wholesaler informed about the approval or delivery of tagged allocations which may have an effect on the amount of any charges which the wholesaler is entitled to recover from the holder of the relevant entitlement. Section 5 of the Protocol relevantly provides that wholesaler means an authority responsible for recovering costs associated with operating headworks from which allocations are supplied within a State of Origin.
Clause (2) of Step 7 provides that an SOD retailer may impose and recover such charges as it is entitled to recover from the person entitled to receive a tagged allocation under the law of the State of Destination.
Appendices to this Attachment
Appendix 1 contains a flow chart setting out the Tagged Transfers Approval Process in Schedule 1 of the Protocol.
Appendix 2 contains a flow chart setting out how SOO retailers and SOD retailers account for use of tagged allocations. These processes are set out in Schedule 2 to the Protocol.