Insights / April 12th, 2016

Third party access to existing water and sewerage infrastructure: Get it while it's hot!

If your answer is “yes”, from 1 July 2016 you may have the chance to access SA Water’s infrastructure by virtue of the Water Industry (Third Party Access) Amendment Act 2015 (“Amendment Act”).

The Amendment Act amends the Water Industry Act 2010 by allowing third parties to access the existing water or sewerage infrastructure operated by entities regulated by that Act. These amendments are scheduled to commence on 1 July 2016.

The Amendment Act is part of a broader National Access Regime (the Regime). The Regime is established under Part IIIA of the Competition and Consumer Act 2010 (Cth) (“CCA”) and clause 6 of the Competition Principles Agreement (“CPA”).

The Regime facilitates third party access to services provided by significant infrastructure facilities. The purpose of the Regime is to promote the economically efficient operation of, use of and investment in the infrastructure by which services are provided, thereby promoting effective competition in upstream and downstream markets.

The South Australian Government intends to apply for CCA certification of the access regime established under the Amendment Act. Once certified, the water access regime will join the two other certified access regimes in South Australia, being the ports and rail.

The water access regime

The water access regime only applies to water or sewerage infrastructure proclaimed by the Governor. No proclamation has yet been made. It is anticipated that on 1 July 2016, the Governor will proclaim certain SA Water water pipelines and infrastructure.

How does the water access regime work?

Pricing, anti-discrimination and infrastructure capacity

The Amendment Act does not prescribe pricing principles that must be followed during the negotiation stage. However, if a matter reaches arbitration, the Amendment Act sets out pricing principles that are to be followed by the arbitrator. These principles reflect those set out in clause 6 of the CPA. South Australia’s ports and rail access regimes also incorporate these pricing principles as matters to be taken into account by an arbitrator.

Information about the price and costs of accessing infrastructure can be obtained from the operator during the initial information gathering stage. The operator must also provide information about the extent to which it would be necessary, and technically and economically feasible, to alter or add to the infrastructure to meet the requirements of an access proposal.

The applicant will likely bear the cost of any alteration or addition to infrastructure. To this end, an arbitrator cannot make an award that would have the effect of requiring the operator to bear any capital cost of an alteration of, or addition to, any infrastructure, unless the operator agrees.

When it comes to the access proposal, the operator must not unfairly discriminate between proponents in preferring one access proposal to another, and in the terms and conditions on which the operator provides access to the infrastructure. What is meant by “unfairly discriminate” is not without some doubt. However, it will not be considered discrimination if the operator declines access to its infrastructure on the basis that the infrastructure has reached its capacity.

If you are interested in accessing water infrastructure and are concerned with capacity constraints, we strongly suggest that a proposal to SA Water be made soon after 1 July 2016, while access is still hot. Any delay in seeking access could result in SA Water declining your proposal on the basis of infrastructure capacity.

We have comprehensive expertise in water law both in South Australia and nationally. We can assist you to prepare a proposal to SA Water and to negotiate a water access agreement. Please contact us if you would like more information about the water access regime or assistance in preparing your water access proposal.

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