Murray-Darling Basin Agreement (Schedule D — Conversion Factors and Exchange Rates) 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 clause 6 of Schedule D to that Agreement and section 18E of the Water Act 2007. I, ROB FREEMAN, Chief Executive of the MURRAY-DARLING BASIN AUTHORITY, authenticate that the Authority validly made the following Protocol on 30 August 2010. ROB FREEMAN Chief Executive 7 September 2010 Contents 1 Name of Protocol 2 Commencement 3 Revocation 4 Application 5 Definitions 6 Conversion factors 7 Application of conversion factors 8 Applications to convert lower reliability entitlements 9 Suspension of conversion 10 Exchange rates 11 Application of exchange rates 12 Reviews of exchange rates and conversion factors 1 Name of Protocol This Protocol is the Murray-Darling Basin Agreement (Schedule D — Conversion Factors and Exchange Rates) Protocol 2010. Note This Protocol deals with matters referred to in paragraph 6 (1) (d) of Schedule D to the Agreement. 2 Commencement This Protocol commences on the day after it is registered. 3 Revocation All protocols made under paragraph 6 (1) (d) of Schedule D to the Agreement before 1 December 2009, and all provisions of any such protocol, that apply to exchange rate trade are revoked. 4 Application This Protocol applies to conversion of entitlements and exchange rate trade. 5 Definitions In this Protocol: Act means the Water Act 2007. GSEC means a New South Wales General Security Access Licence. HR means a Victorian High-Reliability Water Share. HSEC means a New South Wales High Security Access Licence. LR means a Victorian Low-Reliability Water Share. SA LIC means a South Australian water licence. Note Several other words and expressions used in this Protocol have the meaning given by the Act (including the Agreement), for example:  Authority  exchange rate trade. 6 Conversion factors To convert entitlements to which Table 1 applies, the conversion factor to be used is determined in accordance with Table 1. Table 1 Item Column 1 Column 2 Column 3 Column 4 For this valley… for a conversion between … the conversion factor … for a conversion from a lower reliability to a higher reliability entitlement is … for a conversion from a higher reliability to a lower reliability entitlement is … 1 Murray New South Wales a High Security and a General Security entitlement 0.6 1.6667 2 Murrumbidgee a High Security and a General Security entitlement 0.55 1.8182 7 Application of conversion factors (1) Conversion factors determined by this Protocol are to be applied in accordance with this section. (2) To convert an entitlement of one type (initial entitlement) into and entitlement of another type, the volume of the initial entitlement must be multiplied by the relevant conversion factor (if a conversion factor applies to the transfer). 8 Applications to convert lower reliability entitlements A State must approve an application to convert a lower reliability entitlement to a higher reliability entitlement in any year when: (a) the allocation under the lower reliability entitlement is 100% and none of the water allocated has been used or transferred; or (b) the allocation is less than 100% by a certain volume (the gap) and: (i) the applicant, at the time of making the application, has acquired an additional volume at least equal to the gap; and (ii) none of the water allocated has been used or transferred. 9 Suspension of conversion (1) If a State Contracting Government, under a law of the State, decides to suspend the conversion of one type of entitlement into an entitlement of another type, within 1 or more valleys in the State, the State Contracting Government must notify the Authority in writing of the suspension. The notice must be given at the same time as the State Contracting Government notifies the suspension as required by the law of the State. (2) If a State Contracting Government, under a law of the State, decides to end the suspension of the conversion of one type of entitlement into an entitlement of another type, within one or more valleys in the State, the State Contracting Government must promptly notify the Authority in writing that the suspension has ended. The notice must be given at the same time as the State Contracting Government notifies the end of the suspension as required by the law of the State. (3) A notice under subsection (1) or (2) must set out the reasons for the decision. (4) If the Authority receives a notice under subsection (1) or (2), the Authority must inform the other State Contracting Governments of the decision. 10 Exchange rates The exchange rate to be applied to a transfer of an entitlement is the rate determined in accordance with Table 2. Table 2 From New South Wales Murray Victoria Murray SA LIC Goulburn Murrumbidgee To HSEC HR HR HSEC New South Wales Murray HSEC 1.0000 N/A N/A N/A N/A Victoria Murray HR N/A 1.0000 N/A N/A N/A SA LIC N/A N/A 1.0000 N/A N/A Goulburn HR N/A 1.0000 1.0000 1.0000 N/A Murrumbidgee HSEC* N/A N/A N/A N/A 1.0000 Note: N/A means not applicable. For these cases, exchange rate trade is not available. 11 Application of exchange rates (1) Exchange rates determined by this Protocol are to be applied in accordance with this section. (2) To calculate the volume of an entitlement of a particular type to be created in a State of destination, the volume of the entitlement to be cancelled, extinguished or suspended in the State of origin must be multiplied by the relevant exchange rate. 12 Reviews of exchange rates and conversion factors A State Contracting Government may ask the Authority to review a conversion factor or exchange rate if: (a) the total volume of a particular type of entitlement in a valley changes by at least 8%: (i) from 19 May 2006; or (ii) from the time a conversion factor or exchange rate is determined or altered by amendment to this Protocol; for any reason (including because of the conversion of entitlements within the valley); or (b) any substantial change is made to a relevant existing best practice hydrological model (including any re-calibration or major improvement to a feature of the model); or (c) a new type of water entitlement is created in a State; or (d) an amendment is made to legislation or a statutory plan within a State that may affect exchange rates or interstate transfers of entitlements under Schedule D to the Agreement. Notes 1. All legislative instruments and compilations are registered on the Federal Register of Legislative Instruments kept under the Legislative Instruments Act 2003. See www.frli.gov.au.