Murray-Darling Basin Agreement (Schedule D — 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 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 Part 1 Preliminary 1 Name of Protocol 2 Commencement 3 Application 4 Revocation 5 Definitions Part 2 Rules for adjusting valley accounts 6 Transfers of allocation Table 1 – Valley accounts and state transfer accounts 7 Transfers of entitlement 8 Operating rules Table 2 – Valley accounts Part 3 Rules for adjusting state transfer accounts 9 Determining the volume of water used by a tagged trade 10 Altering deliveries of water Part 1 Preliminary 1 Name of Protocol This Protocol is the Murray-Darling Basin Agreement (Schedule D — Adjusting Valley Accounts and State Transfer Accounts) Protocol 2010. Note This Protocol deals with matters referred to in paragraphs 6 (1) (c) and (f) of Schedule D to the Agreement. 2 Commencement This Protocol commences on the day after it is registered. 3 Application This Protocol applies to: (a) transfers of allocations and entitlements between valleys and States in the southern connected Murray-Darling Basin; and (b) in the case of entitlements – to both exchange rate trade and tagged trade. 4 Revocation The Murray-Darling Basin Agreement (Adjusting Valley Accounts and State Transfer Accounts) Protocol 2010 is revoked. Note The Murray-Darling Basin Agreement (Adjusting Valley Accounts and State Transfer Accounts) Protocol 2010 was made and registered on the Federal Register of Legislative Instruments on 25 January 2010. 5 Definitions In this Protocol: Act means the Water Act 2007. back trade means a transfer from one trading zone to another trading zone, which is no greater in volume than the lesser of the net volume of preceding transfers between the same trading zones in the opposite direction and the volume available in the relevant valley account. designated reservoir means a reservoir mentioned in column 4 of Table 2. designated site means a site mentioned in column 3 of Table 2. State transfer account means either or both of the accounts maintained by the Authority to record adjustments made to the volume of: (a) water delivered to South Australia as a result of transfers of entitlements or allocations from the Australian Capital Territory, New South Wales or Victoria to South Australia; and (b) water held in Hume Reservoir that may be delivered to New South Wales or Victoria respectively, as a result of transfers of entitlements or allocations between New South Wales and Victoria. valley account means an account maintained by the Authority under subclause 11 (3) of Schedule D to the Agreement. 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  tagged trade  water year. Part 2 Rules for adjusting valley accounts 6 Transfers of allocation (1) Promptly upon receiving copies of records relating to interstate transfers of allocations for any month from each of the three State licensing authorities, the Authority must adjust any relevant valley account, determined by reference to Table 1, by a volume equivalent to the net volume of transfers into and out of that valley during the relevant month. (2) Where different advice is received from State licensing authorities in regard to the volume of interstate trade in a month due to differences in the timing of approvals within State Licensing Authorities the Authority may estimate the appropriate volume. (3) The Authority may combine the accounts for the Goulburn, Campaspe and Loddon valleys. Table 1 – Valley accounts and state transfer accounts To Goulb Camp-aspe Loddon Vic M NSW M Bidgee SA Snowy Lwr D From Goulb - C L G G, H G, H, B G, V G, Sv G, H, D Camp-aspe - C, L C, G C, G, H C, G, H, B C, G, V C, G, Sv C, G, H, D (not G) 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 - (4) In Table 1: B means the Murrumbidgee valley account. C means the Campaspe valley account. D means the Lower Darling valley account. G means the Goulburn valley account. H means the Vic/NSW transfer account in Hume. L means the Loddon valley account. N means the NSW/SA transfer account. Sn means the Snowy environmental transfer account (NSW). Sv means the Snowy environmental transfer account (Vic). V means the Vic/SA transfer account. 7 Transfers of entitlement (1) Where any entitlement has been transferred out of a valley by exchange rate trade, if the allocations to entitlements in that valley are increased, the Authority must increase any relevant valley account, determined by reference to Table 1, by a volume equivalent to that increase in allocations applicable to the net volume of transfers of entitlement out of that valley, after applying any conversion factor specified by a Protocol made under paragraph 6 (1) (d) of Schedule D to the Agreement. (2) Where an entitlement has been transferred out of a source valley by tagged trade, if there is usage against the tagged entitlement, thus requiring allocations to be delivered in another valley, the Authority must increase any relevant valley account, determined by reference to Table 1, by a volume equivalent to the volume used. (3) In complying with subsection (2), the Authority: (a) may estimate the volume used, taking into account the following matters: (i) the volume of allocations made to the entitlement in that year; (ii) any transfer of allocations to or from the retail account associated with the relevant entitlement in that year; (iii) orders placed to extract water delivered under such allocations during the year; (iv) the pattern of usage of similar entitlements in similar seasons; (v) any information on expected usage provided by a State Contracting Government; (vi) any other relevant matter; and (b) must review any estimate and make any consequential adjustments to the valley account; and (c) must increase the valley account to record the volume of allocations actually used outside the source valley pursuant to the entitlement in that year, promptly after that value is determined, in accordance with paragraph 1 (1) (b) of Appendix 2 of Schedule D to the Agreement. (4) If an adjustment made under subsection (3) results in a deficit in a valley account at the end of any water year, the Authority must carry forward that deficit to the following water year. 8 Operating rules (1) The Authority and a State Contracting Government may agree on an operating plan for accounting for, and delivering, bulk water transfers to any valley within that State, based on predictions about climatic conditions and the availability of water. (2) An operating plan may provide for a volume held in a valley account to be reserved for back trade. (3) The Authority may, in accordance with any operating plan, direct that water standing to the credit of a valley account be used for a purpose referred to in paragraph 11 (4) (a) of Schedule D to the Agreement. (4) Subject to subsections (5) and (6), the relevant State Contracting Government must comply with any direction given under subsection (3) by supplying water from the relevant designated reservoir at the relevant designated site, referred to in Table 2. (5) In the case of the Lower Darling Valley Account, any water held in the Lower Darling Accounts is deemed to be the first water released under clause 120 (1) (d) of the Agreement assigned to NSW under clause 120 (3) (c) of the Agreement. Table 2 – Valley accounts 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) Lake Eildon Rices Weir (on Broken Ck) Rochester (on Campaspe) Campaspe Yes Rochester (or via Goulburn) Lake Eppalock Loddon Yes Loddon Weir (or via Goulburn) Laanecoorie Lower Darling Yes Weir 32 Menindee Lakes* Murrumbidgee/ Yes Balranald (on M'bidgee) Burrinjuck, Blowering Yanco/Billabong Darlot (on Billabong Ck) * The Lower Darling Valley Account is held in NSW's share of Menindee Lakes. (6) With the prior agreement of the Authority, a State Contracting Government may comply with a direction given under subsection (3) by supplying water to a designated site for a valley referred to in Table 2, other than the designated site referred to in the direction. (7) With the prior agreement of the Authority, New South Wales may comply with a direction given under subsection (3) by supplying water from the Murrumbidgee/Yanco/Billabong valley into the River Murray via the Snowy Mountains Scheme. (8) A State Contracting Government must supply water referred to in subsection (4) or (6): (a) at a rate of flow greater than the rate of flow forecast by that State Contracting Government for the relevant designated site, at the time when the relevant direction is given under subsection (3); and (b) in a way that does not increase the priority of delivering the volume represented by the transfer. (9) The Authority must reduce the relevant valley account by a volume equal to the volume of water supplied at a designated site pursuant to subsection (4) or (6), whether or not the Authority has subsequently amended or cancelled that direction pursuant to paragraph 11 (4) (b) of Schedule D to the Agreement. Note Pursuant to su-clause 11 (6) of Schedule D to the Agreement, the Authority can give a direction under subsection 8 (3) of this Protocol which results in a valley account being overdrawn, if the relevant State Contracting Government agrees. (10) The Authority must reduce the balance of a valley account by the volume of water spilled from the valley account as advised by the relevant State Contracting Government subject to subsections (11), (12) and (13). (11) When a volume of water is released in advance of an anticipated spill (pre-released) the volume released may be included as part of the volume spilled for the purposes of subsection (10). (12) Water added to the account in the current year must not be included as part of the volume spilled for the purposes of subsection (10). (13) The reduction of the balance of a valley account advised by a State Contracting Government under subsection (10) must not be greater than the lesser of the volume spilled from designated reservoirs in that valley and the balance of the account carried over from a previous water year minus any deliveries made against the valley account for that valley prior to the time of spill. (14) Unless the Government of New South Wales agrees otherwise, whenever a valley account maintained for the Lower Darling valley has a negative balance, unless the Committee requires the Authority to direct that water be released from Menindee Lakes Storage under subclause 99 (2) of the Agreement, the Authority: (a) may direct that an appropriate volume of water be substituted from another source in preference to a release that would otherwise have been made from the Menindee Lakes Storage; and (b) must credit the valley account for the Lower Darling valley with any volume of water so substituted. Part 3 Rules for adjusting state transfer accounts Note Appendix 2 of Schedule D to the Agreement sets out rules for delivering adjustments to: (a) water deliveries to SA from an upstream State, resulting from transfers of entitlements or allocations between them; and (b) the volume of water in Hume Reservoir that may be delivered to either NSW or Victoria resulting from transfers of entitlements or allocations between them. Clause 1 of Appendix 2 provides that the volume of the relevant adjustment must be equal to: (a) in the case of exchange rate trade, the volume of the allocations which would have been to the transferred entitlements in the State of Origin in every year; and (b) in the case of tagged trade, the volume of water used by the transferee in each year. Clause 2 provides that the volume of the relevant adjustment for a transferred allocation is the volume of that allocation, adjusted by any relevant exchange rate. 9 Determining the volume of water used by a tagged trade (1) This clause provides how the volume of water used by a transferee is to be determined in the case of tagged trade, for the purpose of adjusting the delivery of a State entitlement pursuant to paragraph 1 (1) (b) of Appendix 2 to Schedule D to the Agreement. (2) Where an entitlement has been transferred out of a source valley, thus requiring allocations to be delivered in a valley in another State, the Authority: (a) may estimate the volume used pursuant to that entitlement, taking into account the matters specified in paragraph 7 (3) (a); and (b) must review any estimate and make consequential adjustments to the estimated volume; and (c) must adjust the delivery of the relevant State entitlement by the volume of allocations actually used pursuant to the entitlement in that year, in accordance with paragraph 1 (1) (b) of Appendix 2 to Schedule D. (3) If an adjustment made under subsection (2) results in a deficit in a State transfer account at the end of any water year, the Authority must carry forward that deficit to the following water year. 10 Altering deliveries of water (1) The Authority must: (a) alter deliveries of State entitlements to reflect adjustments made under section 9, in accordance with this clause; and (b) record any such alterations in each relevant State transfer account. Interstate transfers of entitlements (2) The Authority must: (a) alter the delivery of State entitlements arising from interstate exchange rate trade of entitlements during each month between: (i) the later of September and the month in which the alteration is to commence; and (ii) the following 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 quantity set out in that paragraph between the month in which the alteration commences and the following April, inclusive; and (b) alter the delivery of State entitlements arising from interstate tagged trade of entitlements during each month between: (i) the later of September and the month in which the alteration is to commence; and (ii) the following April; inclusive, in a proportion for each of those months that is consistent with the basis of its estimate or of actual use. Interstate transfers of allocations (3) The Authority must: (a) alter the delivery of State entitlements arising from interstate transfers of allocations of which it is notified between 1 July and the following 31 March, during each month between: (i) the later of September and the month in which the alteration is to commence; and (ii) the following 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 months bears to the total of the monthly quantity set out in that paragraph between: (iii) the month in which the alteration commences; and (iv) the following April, inclusive; unless otherwise determined by the Authority to more accurately match the delivery of entitlements with expected demands; and (b) alter the delivery of State entitlements arising from interstate transfers of allocations of which it is notified between 1 April and the following 30 June as follows: (i) in the case of alterations relating to South Australia pursuant to Rule 5 or 6 set out in Appendix 2 to Schedule D to the Agreement, during each month between the following September and 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 month in which the Authority is notified and the following April, inclusive, unless otherwise determined by the Authority to more accurately match the delivery of entitlements with expected demands; and (ii) in the case of alterations relating to New South Wales or Victoria pursuant to Rule 7 or 8 of Appendix 2 to Schedule D to the Agreement, during the month in which the Authority is notified. Supply from the Snowy Mountains Scheme (4) The Authority must: (a) alter the delivery of State entitlements arising from transfers made under subsection 8 (7) such that the volume supplied is delivered in equal monthly volumes between: (i) the month in which the supply is announced; and (ii) the following 30 April, inclusive. 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.