Approval of additional termination fees Rule 8 provides for an IIO to apply to the ACCC for approval of an additional termination fee (within three months of a contract for works being entered into between the irrigator and the IIO with respect to capital expenditure). The ACCC has only been approached once in relation to an additional termination fee, however the application was not valid (in part because the relevant capital works had commenced some years before the contract was entered into) and the infrastructure operator declined to the application. Are the application requirements for approval of an additional termination fee appropriate? Water Charge (Planning and Management Information) Rules 2010 Background The Minister made the Water Charge (Planning and Management Information) Rules 2010 (the WCPMIR) to advance the objective of pricing transparency by requiring persons determining charges for water planning and water management (WPM) activities to publish information about the charges. Pricing transparency was one of a number of objectives and principles for WPM that States and Territories had committed to implementing under the National Water Initiative (NWI) and that were incorporated into the Basin water charging objectives and principles (BWCOP) in Schedule 2 of the Act (which the water charge rules are required to contribute to achieving, and which are reproduced in Appendix B of this issues paper). Other BWCOP relevant to cost recovery for planning and management included giving effect to the principles of user pays, identifying and publishing information on the costs of WPM activities and linking charges to the costs of WPM activities or products. Different approaches by Basin State governments to cost recovery for WPM activities may, if significant, distort water markets. This can result in inefficient decisions regarding the use of water, water infrastructure and government resources allocated to managing water. This is because water users in some Basin States would not face the full cost of their water use decisions. Water charge rules for WPM charges were intended to assist Basin States to adopt more consistent approaches to cost recovery for WPM. At the time the WCPMIR were made (and still today), Basin States took different approaches to funding their WPM activities. Sometimes, these activities were funded out of general revenue and at other times by seeking to recover costs from water users. This took the form of applying charges ranging from broad-based levies to specific transaction fees. Some charges were subject to formal regulatory price-setting
Approval of additional termination fees Rule 8 provides for an IIO to apply to the ACCC for approval of an additional termination fee (within three months of a contract for works being entered into between the irrigator and the IIO with respect to capital expenditure). The ACCC has only been approached once in relation to an additional termination fee, however the application was not valid (in part because the relevant capital works had commenced some years before the contract was entered into) and the infrastructure operator declined to the application. Are the application requirements for approval of an additional termination fee appropriate? Water Charge (Planning and Management Information) Rules 2010 Background The Minister made the Water Charge (Planning and Management Information) Rules 2010 (the WCPMIR) to advance the objective of pricing transparency by requiring persons determining charges for water planning and water management (WPM) activities to publish information about the charges. Pricing transparency was one of a number of objectives and principles for WPM that States and Territories had committed to implementing under the National Water Initiative (NWI) and that were incorporated into the Basin water charging objectives and principles (BWCOP) in Schedule 2 of the Act (which the water charge rules are required to contribute to achieving, and which are reproduced in Appendix B of this issues paper). Other BWCOP relevant to cost recovery for planning and management included giving effect to the principles of user pays, identifying and publishing information on the costs of WPM activities and linking charges to the costs of WPM activities or products. Different approaches by Basin State governments to cost recovery for WPM activities may, if significant, distort water markets. This can result in inefficient decisions regarding the use of water, water infrastructure and government resources allocated to managing water. This is because water users in some Basin States would not face the full cost of their water use decisions. Water charge rules for WPM charges were intended to assist Basin States to adopt more consistent approaches to cost recovery for WPM. At the time the WCPMIR were made (and still today), Basin States took different approaches to funding their WPM activities. Sometimes, these activities were funded out of general revenue and at other times by seeking to recover costs from water users. This took the form of applying charges ranging from broad-based levies to specific transaction fees. Some charges were subject to formal regulatory price-setting
ACCC%20-%20Water%20Charge%20Rules%20Review%20-%20Issues%20Paper%20-%204%20May%202015_0.docx