Federal Register of Legislation - Australian Government

Primary content

Other as made
This Protocol establishes the operational process by which water trade between valleys and between states is supported by bulk transfers of water between valleys and states.
Administered by: Sustainability, Environment, Water, Population and Communities
General Comments: The protocol known as the Schedule E Protocol – Adjusting Valley Accounts and State Transfer Accounts, made on 24 April 2007, is revoked. Subsection (1) does not affect anything done, or any right privilege obligation or liability acquired accrued or incurred, under the protocol mentioned in that subsection.
Exempt from sunsetting by the Water Act 2007 s 18D
Registered 25 Jan 2010
Tabling HistoryDate
Tabled HR02-Feb-2010
Tabled Senate02-Feb-2010
Date of repeal 15 Sep 2010
Repealed by Murray-Darling Basin Agreement (Schedule D - Adjusting Valley Accounts and State Transfer Accounts) Protocol 2010

Murray-Darling Basin Agreement (Adjusting Valley Accounts and State Transfer Accounts) Protocol 20101

The Murray-Darling Basin Authority, in consultation with the Basin Officials Committee and having considered the advice, if any, given by each person nominated by a Contracting Government under subclause 6 (3) of Schedule D to the Murray-Darling Basin Agreement, makes the following Protocol under paragraphs 6 (1) (c) and (f) of Schedule D to that Agreement and section 18E of the Water Act 2007.

Dated 25 January 2010

 

ROB FREEMAN

Chief Executive


1              Name of Protocol

                This Protocol is the Murray-Darling Basin Agreement (Adjusting Valley Accounts and State Transfer Accounts) Protocol 2010.

2              Commencement

                This Protocol commences on the day after it is registered.

3              Revocation

         (1)   The protocol known as the Schedule E Protocol – Adjusting Valley Accounts and State Transfer Accounts, made on 24 April 2007, is revoked.

         (2)   Subsection (1) does not affect anything done, or any right privilege obligation or liability acquired accrued or incurred, under the protocol mentioned in that subsection.

4              Effect of Schedule 1

                Schedule 1 has effect.


Schedule 1        Adjusting valley accounts and state transfer accounts

(section 4)

 

 

1.                  AUTHORISING PROVISIONS

This protocol is made under paragraph 6(1)(c) and paragraph 6(1)(f) of Schedule D.

2.                  PURPOSES

To establish the operational process by which water trade between valleys and between States is supported by bulk transfers of water between valleys and States.

3.                  APPLICATION

This protocol applies to:

(a)    inter-valley and interstate trade in the southern connected Murray-Darling Basin; and

(b)   transfers of allocation (temporary trade); and

(c)    transfers of entitlement (permanent trade) through:

                                          (i)      an exchange rate trade; or

                                        (ii)      a tagged trade.

4.                  DEFINITIONS

Expressions defined in the Murray-Darling Basin Agreement and Schedule D (including its appendices) have the same meaning in this protocol.

In this Schedule:

designated reservoir” means a reservoir referred to in column 4 of Table 2.

designated site” means a site referred to in column 3 of Table 2.

valley account” in Schedule D “has the meaning set out in sub-clause 11(2)” of that Schedule.  It is an account recording the volume of water in the valley that, as a result of trade, is available for delivery to the Murray.

“Schedule”, when followed by a capital letter, means that Schedule of the Agreement.

State transfer account” is

·        an account recording the adjustment to be made to water deliveries to SA as a result of transfers of entitlement or allocation between an upper State and SA; or

·        an account recording the adjustment made to the volume of water in Hume Reservoir that may be delivered to NSW or Victoria as a result of transfers of entitlement or allocation between NSW and Victoria.

tagged trade” is defined in Schedule D as “an arrangement under which every allocation made under an entitlement in a State of origin is made available for use in State of destination, either permanently or for a fixed term.”

Note: Of relevance to this protocol is the method by which the allocations are made available under tagged trade.  Two possible methods are –

(i) “make available as allocated, reduce later by unused”

(ii) “make available as ordered, adjust later to actual use.”

Method (ii) has been adopted.  It makes the allocations from the State/valley of origin available to the State/valley of destination only as they are used, while allowing some or all of the unused allocations to be traded in the State/valley of origin.

5.                  OPERATIONAL PROTOCOL OVERVIEW

The “valley accounts” and “transfer accounts” are shown in schematic form below.

 

With expanded trade, it is possible for a trade to take place between two zones separated by one or more intermediate zones. For such trades it is necessary to adjust two or more accounts. For example a transfer of entitlement (permanent trade) from the Goulburn to SA will require water to be put in the Goulburn valley account each year, and an identical volume to be put in the Vic Murray to SA transfer account each year.

In addition to accounts needed for both environmental and non-environmental trade, two accounts (one for Vic and one for NSW) are needed for environmental trades only. These account for transfer of water recovered under the Snowy initiative from the Murray or its tributaries to the Snowy. Refer to sub-clause 9.3.5 of this protocol.

Table 1 illustrates the accounts that need to be adjusted for trades between various zones:

Table 1 – Valley Accounts and State Transfer Accounts

 

To

From

Goulb

Camp-aspe

Loddn

Vic M

NSW M

Bidgee

SA

Snowy

Lwr D

Goulb

 

-

C

L

G

G, H

G, H, B

G, V

G, Sv

G, H, D

Camp-aspe

 

-

C, L

(not G)

C, G

C, G, H

C, G, H, B

C, G, V

C, G, Sv

C, G,  H, D

Loddon

 

 

 

-

L, G

L, G, H

L, G, H, B

L, G, V

L, G, Sv

L, G,  H, D

Vic M

 

 

 

 

-

H

H, B

V

Sv

H, D

NSW M

 

 

 

 

 

-

B

N

Sn

D

Bidgee

 

 

 

 

mirror

 

-

B, N

B, Sn

B, D

SA

 

 

 

 

 

image

 

-

V(orN), Sv or Sn

D, N

Snowy

 

 

 

 

 

 

 

 

-

D, Sn

Lwr D

 

 

 

 

 

 

 

 

 

-

 

Key to accounts

 

G          Goulburn valley account

C          Campaspe valley account

L          Loddon valley account

B          Murrumbidgee valley account

D          Lower Darling valley account

H          Vic/NSW transfer account in Hume

V          Vic / SA transfer account

N         NSW /SA transfer account

Sn        Snowy environmental transfer account (NSW)

Sv        Snowy environmental transfer account (Vic)

 

Note: Sub-clause 13(3) of Schedule D prohibits transfers of entitlement (permanent trade) into or out of the Lower Darling until the Ministerial Council resolves otherwise.

6.                  GENERAL RULES FOR VALLEY ACCOUNTS

(1)   Trade of allocation (temporary trade). In accordance with clause 11 of Schedule D the Authority must promptly upon receiving a report from the relevant State summarising transfers of entitlement and allocation in each month, adjust a valley account by a volume equal to the net volume of transfers of allocation out of or into that valley.
NOTE: This clause applies irrespective of whether trade of entitlements is by exchange rate trade or by tagged trade. There is no adjustment for unused water – under-use benefits the SOD.

(2)   Trade of entitlement (permanent trade).

(a)    In the case of exchange rate trade, at any time that allocations to entitlements in a valley are increased, the Authority must increase the valley account by a volume equal to the increase in allocation made to the net volume of transfers of entitlement out of the valley. Note: Clause 1(2) of Appendix 2 of Schedule D requires that when the entitlement transferred was a lower reliability entitlement in the valley, the lower reliability entitlement must first be converted to a high reliability entitlement in the valley prior to calculating the allocation or increase in allocation.  The conversion factor to be used is the relevant factor in Table 1 of the “Conversion Factors and Exchange Rates” protocol that was applicable at the date of the transfer of the entitlement.  

(b)   In the case of tagged trade, for each entitlement for which allocations are tagged for delivery outside the source valley of the entitlement, the Authority –

6.2.b.1        must increase the valley account by the amount that is extracted outside the source valley in the current water year; and

6.2.b.2        may use an estimate of the amount extracted but then must adjust the account based on the volume actually used when that becomes known; and

6.2.b.3        must update the account at least monthly; and

6.2.b.4        may, in making an estimate, consider

·        allocations made to the entitlement,

·        trading of allocations to and from the retail account associated with the relevant entitlement,

·        orders placed for use,

·        the pattern of usage of similar entitlements in similar seasons,

·        any information on expected usage provided by a  State Contracting Government, and

·        whatever other matters it thinks fit.

Note: Clause 1 of Appendix 2 of Schedule D says that the size of the adjustment will be equal to, in the case of tagged trade, the volume of water used by the transferee in each year.  The “increase as ordered, adjust later to actual use” method has been adopted for determining the volume used, recognising that estimates will be required.  The amount in the account should, in principle, represent history as best as it is known.  It should not aim to forecast to the end of the season, for instance.

Higher accuracy and update frequency for the estimates are important, at least in critical years, to increase the certainty of messages to the marketplace (and avoid sudden ‘administrative’ changes to volumes available for back-trade or RMW call-out) and to reduce the chance of an account becoming overdrawn (which could, at the extreme, lead to the need to clawback allocations).

Note: In the case of tagged trade from below the Barmah Choke to above the Barmah Choke, the rules set out in the “Restriction of Transfers” protocol should be applied when calculating the amount of any valley account.

(c)    If the estimates and updates described in sub-clause 6.2.b result in the valley account being overdrawn at the end of the water year, the overdraw must be carried forward to the next water year.

(3)   The Authority may direct the use of water in a valley account in accordance with sub-clause 11(4) of Schedule D and in accordance with an annual operating plan agreed with the relevant State Contracting Government.  The annual operating plan may reserve an amount in a valley account for back-trade.

(4)   A State Contracting Government must comply with any direction given under sub‑clause 6.3 by supplying water at the relevant designated site (refer to Table 2) for that valley, at a rate of flow greater than the rate of flow forecast by that State at the designated site at the time the direction was given, but must not increase the priority of delivering the volume represented by any transfer.

Table 2 - Valley Accounts Referred to in this Protocol

Column 1

Column 2

Column 3

Column 4

River Valley

Account Required?

Designated Site

Designated Reservoir

Kiewa

-

-

-

Ovens

-

-

-

Goulburn/Broken

Yes

McCoys Bridge (on Goulburn)

Rices Weir (on Broken Ck)

Rochester (on Campaspe)

Lake Eildon

Campaspe

Yes

Rochester (or via Goulburn)

Lake Eppalock

Loddon

Yes

Loddon Weir (or via Goulburn)

Laanecoorie

Lower Darling

Yes

Weir 32

Menindee Lakes

Murrumbidgee/
Yanco/Billabong

Yes

Balranald (on M’bidgee)

Darlot (on Billabong Ck)

Burrinjuck, Blowering

Note: Where more than one site is designated for a valley, a supply made under this sub-clause may be at any site designated for that valley, subject to agreement by the Authority if a State wishes to deliver the water at a site other than the first site listed.

(5)   The Authority must, subject to any agreed annual operating plan, whenever possible obtain water for any purpose referred to via sub-clause 6.3 by giving a direction under that sub-clause, rather than by directing that water be released from Hume Reservoir, unless the State Contracting Government whose entitlement would be affected by the direction agrees otherwise.

(6)   The Authority must reduce any valley account by a volume equal to the volume of water supplied by a State Contracting Government at the relevant designated site (refer to table 2) in accordance with sub-clause 6.4 whether or not the relevant direction of the Authority has been amended or cancelled.

(7)   In accordance with clause 11 of Schedule D the Authority may, with the prior consent of the relevant State Contracting Government, give a direction under sub-clause 6.3 which would result in a valley account being overdrawn.

(8)   The sum of the balances carried over into the current year in the valley account for each valley within a State will be reduced by the volume of spill and pre-release from the designated reservoirs (refer to Table 2)  in that valley. The Authority must reduce each of those valley accounts proportionately to ensure that the reductions to the balances carried over in those accounts does not exceed the total volume of spill and pre-release.

(9)   With the prior consent of the Authority, New South Wales may reduce the balance in the valley account for the Murrumbidgee / Yanco / Billabong valley by transferring water out of that valley into the River Murray via the Snowy Mountains Scheme.

(10)           Unless the Government of New South Wales agrees otherwise, whenever any valley account maintained for the Lower Darling valley has a negative balance and the Authority would , in other circumstances, give a direction under clause 98 of the Agreement that a certain volume of water be released from Menindee Lakes, it:

(a)    must not give such a direction; but

(b)   must instead give a direction that the same volume of water be released from Euston Weir on the River Murray; and

(c)    must credit the valley account for the Lower Darling valley with the volume of water released.

7.                  GENERAL RULES FOR STATE TRANSFER ACCOUNTS

(1)   The rules for determining adjustments to -

·        water deliveries to SA from an upper State, as a result of transfers of entitlement or allocation between SA and the upper State, and

·        the volume of water in Hume that may be delivered to NSW or Victoria, as a result of transfers of entitlement or allocation between NSW and Victoria are as set out in Appendix 2 of Schedule D.

Note: Clause 1 of Appendix 2 says that the size of the adjustment will be equal to:

·        in the case of exchange rate trade, the volume of the allocations which would have been made to the transferred entitlement in the State of origin in every year; and

·        in the case of tagged trade, the volume of water used by the transferee in each year; and

·        in the case of trade of allocations, the volume of transferred allocation (as adjusted if any exchange rate is applied).

Note: Clause 7.2 (below) describes how “the volume of water used by the transferee in each year” (for tagged trade) is to be determined.

(2)   In the case of tagged trade, for each entitlement for which allocations are tagged for delivery outside the State of the entitlement, the Authority –

7.2.a.1         must calculate the adjustment as the amount that is extracted outside the State in the current water year; and

7.2.a.2         may use an estimate of the amount extracted but then must adjust the amount based on the volume actually used when that becomes known; and

7.2.a.3         must update the amount at least monthly; and

7.2.a.4         may, in making its estimate, consider the matters outlined in clause 6.2.b.4.

Note: In the case of tagged trade from below the Barmah Choke to above the Barmah Choke, the rules set out in the “Restriction of Transfers” protocol should be applied when calculating the amount of any adjustment.

(3)   If the estimates and updates described in sub-clause 7.2 result in an account being overdrawn, the overdraw must be carried forward to the next water year.

8.                  DELIVERING WATER TO STATES USING TRANSFER ACCOUNTS

(1)   The Authority must alter its procedures for delivering State entitlements to reflect any adjustments made under clause 7.1 and 7.2 in the manner set out in the following clauses, and must record the adjustments in State transfer accounts.

Note: The following (sub-clauses (2) to (5)) mostly deals with the timing of adjustments to water deliveries to SA and to the water in Lake Hume that may be delivered to NSW or Victoria.

The timing is important for water deliveries to SA because if it isn’t properly managed SA could receive water in months when it isn’t needed and not when it is needed.  The timing is important for the water in Lake Hume that belongs to NSW and Victoria, e.g. because if all the adjustment was made in spring it is more likely to spill internally than if it is made later in the season, when some of the water will have been used.

Adjusting deliveries to SA is done by changing the volumes to be delivered each month.  In this case, the State transfer accounts record the change to the volume to be delivered each month from each upper State.  The adjusted volume to be delivered then becomes the target to which River Murray Water manages for that month.

Adjusting the water in Lake Hume that may be delivered to NSW or Victoria is an immediate adjustment to these States’ entitlements.  In this case, changing the State transfer accounts is giving effect to and recording changes made to NSW and Victoria’s entitlements.  There is no monthly account, so the changes to the accounts have to be spread out between months.

Deliveries adjusted for interstate transfers of entitlement (permanent interstate transfers)

(2)   In the case of exchange rate trade, the required adjustments to delivery of State entitlements must be made during each month from September (or the current month, whichever is later) to April inclusive, in the same proportion for each of those months which the quantity set out in paragraph 88(a) of the Agreement for the relevant month bears to the total of the monthly quantities between the current month and April, inclusive, set out in that paragraph.

(3)   In the case of tagged trade, the required adjustments to delivery of State entitlements must be made during each month from September (or the current month, whichever is later) to April inclusive, in a proportion for each of those months that is consistent with the basis of its estimate.

Deliveries adjusted for interstate transfers of allocation (temporary interstate transfers)

(4)   In the case of interstate transfers of allocation notified between 1 July and the following 31 March, the required adjustments to delivery of State entitlements must be made during each month from September (or the current month, whichever is later) to April inclusive, in the same proportion for each of those months which the quantity set out in paragraph 88(a) of the Agreement for the relevant month bears to the total of the monthly quantities between the current month and April, inclusive, set out in that paragraph.

(5)   In the case of transfers of allocation notified between 1 April and 30 June, the required adjustments to delivery of State entitlements must be made as follows:

(a)    For alterations required by Rules 5 and 6 of Appendix 2 of Schedule D (temporary trade with SA), during each month between the following September and April inclusive, in the same proportion which the quantity set out in paragraph 88(a) of the Agreement for that month bears to the total of the monthly quantities set out in that paragraph;

(b)   For alterations required by Rules 7 and 8 of Appendix 2 of Schedule D (temporary trade between NSW and Vic), in the current month.

9.                  OPERATIONAL PROTOCOL DETAIL FOR EACH ACCOUNT

Note: Clause 9 applies the general clauses (6) - (8) to individual valleys, in simpler language.

Net trades out of Goulburn Valley

(1)   Trade of allocation (temporary trade). At the end of each month, Victoria must inform the Authority of the net volume of trade of allocation out of the Goulburn Valley to each other trading zone. The Goulburn valley account is adjusted, as set out in sub-clause 6.1 of this protocol, by the full value of the sum of the trades.

NOTE: This clause applies irrespective of whether trade of entitlements is by exchange rate trade or by tagged trade.

(2)   Trade of entitlement (Permanent trade) – Exchange rate trade.  The account is adjusted for allocations to progressive net trade of entitlement out of the Goulburn as at the previous 1 July, plus increases in allocation after the date of permanent trade to entitlements traded in the current year, in accordance with the Goulburn allocation, and at the time the allocation is made. The account is adjusted for the full net value of the trade, as set out in sub-clause 6.2.a Note that if “unused” allocation is traded with a permanent trade, this is in principle a separate transaction on the temporary market.

(3)   Trade of entitlement (permanent trade) – Tagged trade.

There are two possible methods for adjusting the Goulburn IVT account for tagged trades.  Method 1 (presently used for exchange rate trade) would be to adjust the account based on allocations, and correct when actual use becomes known.  Method 2 is to adjust the IVT account as each retail order is made on allocations arising from the traded entitlements, and make a further adjustment as soon as the individual retail usage is known. While the result of each method would in theory be the same at the end of the season, there are differences during the season.

Clause 6.2.b and 7.2 aim to implement method 2 (to be more consistent with the requirement of Appendix 2 that the adjustment be on the basis of use), while allowing for the use of estimates instead of orders where more practical.

Note that:

·        In principle, under tagged trade the net trade in or out of each entitlement product and the usage of allocations from each entitlement product must be considered, and the result amalgamated into an aggregate net use.

·        However it has been agreed that Goulburn irrigators will have access only to Goulburn entitlement, whether the entitlement is located on the Goulburn or tagged elsewhere.  This is the only entitlement that can be guaranteed to be able to be delivered from Eildon.  Thus there will be no Murray (or any other) entitlement allowed to trade into the Goulburn as back trade. This makes the accounting for permanent trade out of tagged entitlement simpler – the whole of the net trade out is relatively simple to identify.

·        An additional complication is the legacy of exchange rated trade out. There is no way to identify all of the specific individuals who hold this entitlement so actual use cannot be recorded. It is intended that:

o       Clause 9.2 is still applicable as the method of accounting for legacy ER trade. As most of the exchange rated trade has been to Sunraysia and sales have been removed, Clause 9.2 should use allocations made to high reliability water shares only.

o       It could be decided to allow both tagged trade out of the valley (and reversal of such trade) and exchange rated trade into the valley simultaneously until all (or some agreed portion) of the legacy exchange rated trade out has been back-traded, and then move to fully tagged trade. Such exchange rate trade is expected to include only high reliability products.  Note: This is a matter for Victoria to resolve.

(4)   As per Table 1, other accounts may need to be adjusted by the same volume, depending on the location of purchasers.

(5)   River Murray Water may call the water out of the Goulburn valley account (effectively from Eildon Reservoir or by reducing diversions to Waranga Basin) based on system demands in the Murray (including allocations to the purchased entitlements). Subject to agreement by River Murray Water, the water may be delivered from the Broken Creek or from the Campaspe rather than directly down the Goulburn. It is envisaged that the timing of call-outs will increasingly be specified in agreed annual operating plans.

(6)   If releases from the Goulburn valley are restricted by channel capacity in the Goulburn River, the available channel capacity must be apportioned between rights to water remaining in the Goulburn valley and rights to water traded downstream, in proportion to those rights.

(7)   The volume of water delivered in response to a call-out is verified through discussions between Victoria and RMW, and the agreed volume is applied to reduce the volume in the account. The principle is that the volume that would have passed in the absence of the call-out is estimated, and the volume called out is recorded as the actual less the estimated with no call-out. That process takes care of lags between changes of call-out order (because of rain events for example) and delivery of water.

(8)   The mechanism for spill (see sub-clause 6.8) is that:

(a)    Water carried over in the valley account is reduced by the volume of spill and pre-release from Eildon,

(b)   Water added to the account in the current year is not reduced because of spill or pre-release.

Net trades out of Murrumbidgee Valley

(9)   Trade of allocation (temporary trade). At the end of each month, NSW informs RMW of the net volume of trade of allocation out of the Murrumbidgee Valley to each other trading zone. The Murrumbidgee valley account is adjusted, as set out in sub-clause 6.1, by the full net value of the sum of the trades.  NOTE: This clause applies irrespective of whether trade of entitlements is by exchange rate trade or by tagged trade.

(10)           Trade of entitlement (permanent trade) – Exchange rate trade. The account would be adjusted for progressive net trade of entitlement out of the Murrumbidgee as at the previous 1 July, plus increases in allocation after the date of permanent trade to entitlements traded in the current year, in accordance with the Murrumbidgee allocation, and at the time the allocation is made. Alternatively the adjustments could be made as water is ordered and delivered. Either way, the account is adjusted for the full net value of the trade, as set out in clause 6.2.a. (Note that the adjustment would be at the reliability of Murrumbidgee high security; i.e. if the sale was of Murrumbidgee general security entitlement, it is converted to Murrumbidgee high security before leaving the valley, and the allocations and adjustments to the valley account calculated accordingly). Note: this paragraph is somewhat redundant, as no ER permanent trades have taken place, and under present intentions none will take place in the future.

(11)           Trade of entitlement (permanent trade) – Tagged trade. As described in clause 9.3 there are two possible ways of adjusting the valley account – the “increase when allocated – adjust for under-use” method and the “increase when ordered – adjust for actual use” method.  Method 2 has been chosen.

Note that:

·        In principle, under tagged trade the net trade in or out of each entitlement product and the usage of allocations from each entitlement product must be considered, and the result amalgamated into an aggregate net use.

·        However it has been agreed that, initially at least, Murrumbidgee irrigators will have access only to Murrumbidgee entitlement, whether located on the Murrumbidgee or elsewhere. Thus there will be no Murray (or any other) entitlement allowed to trade into the Murrumbidgee as back trade. This makes the accounting for permanent trade out of tagged entitlement simpler – the whole of the net trade out at the end of any year is relatively simple to identify.

·        Unlike the Goulburn, there is no legacy of permanent trade our using exchange rates, because NSW has never allowed permanent inter-valley trade.

(12)           As per Table 1, other accounts may need to be adjusted by the same volume, depending on the location of purchasers.

(13)           River Murray Water may call the water out of the Murrumbidgee valley account (effectively from Burrinjuck or Blowering Reservoir) based on system demands in the Murray (including allocations to the purchased entitlements). Subject to agreement by River Murray Water, the water may be delivered from the Murrumbidgee or from Billabong Creek, or by transfer of Snowy releases from the Murrumbidgee to the Murray. It is envisaged that the timing of call-outs will increasingly be specified in agreed annual operating plans.

(14)           If releases of water from the Murrumbidgee Valley are restricted by channel capacity in the Murrumbidgee River, the available channel capacity must be apportioned between rights to water remaining in the Murrumbidgee Valley and rights to water traded downstream, in proportion to those rights.

(15)           The volume of water delivered in response to a call-out is verified through discussions between NSW and RMW, and the agreed volume is applied to reduce the volume in the account. The mechanism is the same as for the Goulburn.

(16)           The mechanism for spill (see sub-clause 6.8) is that:

(a)    Water carried over in the valley account is reduced by the volume of spill and pre-release from Burrinjuck and Blowering,

(b)   Water added to the account in the current year is not reduced because of spill or pre-release.

Trades between Victorian Murray and NSW Murray

(17)           A State transfer account is kept at Hume Reservoir to track net transfers of allocation and transfers of entitlement between NSW Murray and Victorian Murray.

(18)           The account is kept by RMW. It is based on figures for net transfers of allocation (temporary trade) provided monthly by NSW and Victoria, and on figures for increases of allocation to transferred entitlements (permanent trade) provided as they occur.

(19)           The account is adjusted for net transfers of allocation (temporary trade) between NSW and Victoria by the full value of the trade.

(20)           In the case of exchange rate trade, each year the account is adjusted for progressive transfers of entitlement (permanent trade) by the increase in allocations made to the high reliability product in the selling valley (see clause 1, Appendix 2 of Schedule D – i.e. a lower reliability product is first converted to high reliability in the selling valley)

(21)           In the case of tagged trade, the adjustments are calculated as described in clause 7.2, and applied with the timing described in clause 8.3.  

Note that:

·        In principle, under tagged trade the net trade in or out of each entitlement product and the usage of each product must be considered and the result amalgamated into an aggregate net use. This means that the net use of each Victorian product traded to NSW must be calculated and subtracted from the net use of each NSW product traded to Victoria.

·        There is a small legacy (about 3.6 GL as at May 2006) of exchange rated trade from Victoria to NSW resulting from the Pilot Scheme. There is no way to identify all of the specific individuals who hold this entitlement so actual use cannot be recorded. This will be accounted for in the future as it has been in the past – transfer of the allocations made to the nominal High Reliability volume traded.

(22)           The water is delivered by adjusting the water allocated to NSW and Victoria in Lake Hume by the volume remaining in the transfer account on a monthly basis from September to April in proportion to the SA entitlement flow from September to April. Any amounts added to the transfer account in May and June are delivered in those months. The transfer account is reduced by the amounts delivered.

Trades between South Australia and the upper States

(23)           A State transfer account is kept between each upper State and South Australia at the South Australian border. It acts to pass to South Australia a volume equivalent to any net trade between that State and South Australia.

(24)           The accounts are adjusted for transfers of allocation (temporary trades) between each upper State and South Australia, by the full value of the trade.

(25)           In the case of exchange rate trade, the accounts are adjusted for progressive net transfers of entitlement (permanent trades) between each upper State and South Australia, by a volume equal to the corresponding allocations in the various valleys in the upper States; i.e. the volumes transferred are at the reliability of the high reliability entitlement in each upper State valley. Transfers into the accounts take place as allocations are announced.

(26)           In the case of tagged trade, the adjustments are calculated as described in clause 7.2, and applied with the timing described in clause 8.3.   Any overdraw is carried forward to the following year and offset against allocations in that year.

Note that:

·        In principle, under tagged trade the net trade in or out of each entitlement product and the usage of each product must be considered and the result amalgamated into an aggregate net use. This means that the net use of each Victorian product traded to SA must be calculated and subtracted from the net use of each SA product traded to Victoria.  A similar calculation is required for NSW/SA trades.

·        There is a legacy of exchange rated trade from Victoria and NSW to SA resulting from the Pilot Scheme. There is no way to identify all of the specific individuals who hold this entitlement so actual use cannot be recorded. This will be accounted for in the future as it has been in the past – transfer of the allocations made to the nominal High Reliability volume traded.

(27)           If the flow in a month is above entitlement and trade adjustments, the extra water is deemed to have been delivered in that month.

(28)           No “callout” by South Australia is involved. Transfers out of the accounts take place each year by delivery of the appropriate volumes over 8 months.

(29)           The volume to be delivered will be rationed if necessary in accordance with any rationing of delivery rates imposed in the source valley.

Note: The accounting for achieving debits to the SA account should be treated in the same way as the accounting for delivery of SA entitlement flows.

Net trades out of the lower Darling Valley

(30)           No permanent transfers of entitlement are permitted into or from the Lower Darling.

(31)           (a)        At times when the Menindee Lakes Storage is under Authority control (clause 99 of the Agreement) transfers of allocation         may be facilitated into and out of the Lower Darling.

(b)        When Menindee Lakes Storage is below 480/640 GL and under           NSW control, transfers of allocation are not to be approved,         except for, the period between 19 January 2010 to 30 June 2010             when transfers of allocation may be approved on the basis that there would be no:

(i)                  significant impacts on third parties; and

(ii)                adverse impacts on State entitlements under the Agreement.

(32)           In order not to impact on third parties within the Lower Darling, transfers in can only be approved when the water in storage is sufficiently greater than 480 GL to satisfy the transfer within the time remaining before the storage drops to 480 GL.  The 480 GL trigger should be raised by the amount equivalent to the remaining transferred water not yet taken.  Evaporative losses for any carryover water not taken must be born by the transferee.

(33)           Transfers out can only be approved when the water in storage is sufficiently greater than 480 GL to satisfy the transfer within the time remaining before the storage drops to 480 GL.

(34)           In order to clear net transfers out, water should be called from Menindee as soon as possible. In the case where water is not called out from Menindee to effect the clearance, the 480 GL trigger should be lowered by the amount equivalent to the remaining water not yet cleared.

Murray (and Tributaries) to Snowy transfers

(35)           This section is not a formal protocol, but more a note on the present status of these accounts and the need for integration with other water accounting arrangements in the connected lower Murray-Murrumbidgee-Goulburn basin.

These transfer accounts deal with transfers to the Snowy pursuant to the  Snowy Water Inquiry Outcomes Implementation Deed 2002 (SWIOID) initiative of the Joint government Enterprise. They relate to transfers of environmental water only – no private transfers are permitted from the Murray to the Snowy. Transfers are of allocation only – no permanent transfers are permitted.

The SWIOID required both NSW and Victoria to undertake water efficiency savings projects and, if needed, acquire water from irrigators, to enable 282 GL/year of water to be dedicated as environmental flow for the Snowy and Murray rivers within 10 years. Of the first 210 GL recovered, one third will go to the Murray (70 GL) and two thirds to the Snowy (140GL). The remaining 72 GL will go to the Snowy.

For some projects the volume of water saved can vary from year to year and will not be known till the end of the irrigation season. Consequently the total savings are to be identified at the end of the season and will remain in the relevant storages to be “available” for the following season. Any environmental water allocated to the Murray River is to be put aside by Snowy Hydro for release at its discretion as above target water.

A number of water savings projects were implemented during 2003/04 and 2004/05, resulting in a total of approximately 56.9 GL of water being “made available” as at 1 July 2005. This is the first time water savings have been made available for transfer to the Snowy Scheme.

The water available for transfer was held as at 1/7/05 in various storages as indicated in the following table

System

Project

Volume of water (GL)

Storage(s)

Murrumbidgee

Forest Ck Water Mgt Plan

11.3

Burrinjuck, Blowering

NSW Murray

Edward R regulators (interim assessment)

19.0

Dartmouth

Vic Murray

Woorinen pipeline (2 years x 1.5 GL)

GMID (Murray) D&S metering

3.0

5.5

Dartmouth

Total

8.5

Goulburn

Normanville pipeline (2 years x 3.6 GL)

GMID (Goulburn) D&S metering

Campaspe (transferred to Goulb)

7.2

 

10.8

0.1

Eildon

Total

18.1

Total

 

56.9

 

It is intended that water made available as at 1/7/2005 will be “delivered” to the Snowy Scheme in 2005/06. Two thirds of it will then be made available to the Snowy River in a process outside the ambit of this protocol. The River Murray’s share (a third of the total or approximately 19 GL) will eventually be delivered to the Murray at the discretion of Snowy Hydro as an “above target” release, and will need to be accounted at that time within this protocol.

To account for the transfer of the 56.9 GL from the Murrumbidgee, Murray and Goulburn storages to the Snowy Scheme in 2005/06, the following transactions will be needed:

(a)     The 18.1 GL held on the Goulburn will be called upon by RMW for delivery at McCoy’s Bridge as a Victorian Murray allocatable resource. The BE actually requires this to be done each year, but the Eildon Storage operator cannot be expected to know that.  In the language of this protocol, the Minister responsible for those allocations is choosing not to use any of it, but is temporarily trading it to his own Snowy Environmental Reserve entitlement on the Murray;

(b)     The volume available to the Vic Murray from the Snowy Scheme will be reduced by 18.1 + 8.5 = 26.6 GL. In the language of this protocol, that amounts to a temporary trade of 26.6 GL from the Vic Murray to the Snowy;

(c)     The volume available to the NSW Murray from the Snowy Scheme will be reduced by 19.0 GL. In the language of this protocol, that amounts to a temporary trade of 19.0 GL from the NSW Murray to the Snowy Scheme;

(d)     The volume available to the Murrumbidgee from the Snowy Scheme will be reduced by 11.3 GL. In the language of this protocol that amounts to a temporary trade of 11.3 GL direct from the NSW Murrumbidgee to the Snowy Scheme. In principle the trade could be made via the NSW Murray, which might relieve any Barmah Choke problem by 11.3 GL, but it is understood that the whole transfer is being made, this year at least, direct from the Murrumbidgee to the Tumut development of the Snowy Scheme;

The accounting moves appear to be correct, but it is of concern if there is to be a separate process for making them. That could lead to loss of opportunity such as making the Murrumbidgee transfer via the NSW Murray, and in general setting up an agreed system operating plan that would include releases of all water available from  valley accounts at times that best suit both environmental and other operational needs.

The need for a single and integrated accounting process will become more acute as the environment’s suite of entitlements becomes more complex. For example from 2007/08 the environment will hold a significant parcel (estimated average allocations of 120 GL but varying quite widely) of extractive Vic lower reliability water in various trading zones.

Note

1.       All legislative instruments and compilations are registered on the Federal Register of Legislative Instruments kept under the Legislative Instruments Act 2003. See http://www.frli.gov.au.