ACCC takes first action to enforce termination fee rules

28 July 2010

The Australian Competition and Consumer Commission has taken its first action to protect water trade markets, accepting court enforceable undertakings from Murray Irrigation Limited (MIL) for multiple breaches of the Water Charge (Termination Fees) Rules 2009.

MIL, an irrigation infrastructure operator that owns and operates water service infrastructure servicing more than 2,400 farms in southern New South Wales, was found to have breached the termination fee rules on multiple occasions by charging more than the legally permissible fees.

"The water rules the ACCC enforces are an important tool in achieving the Murray-Darling Basin objectives of freeing up trade and improving resource allocation to ensure water moves to its highest value use," ACCC chairman Graeme Samuel said today.

"The termination fee rules have been developed to balance the interests of irrigators who are exiting an irrigation district and irrigators who wish to remain."

Under the Rules, which became effective from 1 September 2009, Irrigation Infrastructure Operators may impose termination fees up to a maximum of ten times the amount of the total network access charge payable by customers for the year in which the customer gives notice of termination.

In or about September 2009, MIL offered a 10 per cent discount to customers who paid their quarterly tax invoice on time and offered the discount again when issuing a second quarterly invoice in or about December 2009.

In addition, MIL imposed a $220 fee for the processing of an application for termination or surrender of delivery entitlements.

MIL breached the Rules when it failed to have regard to a discount it offered to customers in calculating the appropriate termination fee on 64 occasions and when it imposed an additional $220 fee for the surrender of delivery entitlements in 112 instances.

The undertaking given by MIL provides, among other things, that MIL will refrain, for a period of three years, from imposing termination fees that have not been appropriately calculated having regard to any discounts or concessions for which terminating customers have qualified. MIL has also ceased imposing the fee for the surrender of delivery entitlements.

MIL has issued refunds of over $115,000 to affected customers and proposes to issue further refunds for the $220 fee for the surrender of delivery entitlements.

"The ACCC is now actively monitoring compliance with these Rules and the Water Market Rules 2009. We will continue to take enforcement action where appropriate," Mr Samuel said.

A copy of the undertaking is available on the public register page of the ACCC's website .


  • Murray Irrigation Limited (link removed as item has been retired)
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