Goulburn IVT update
22 February 2018
The Victorian Water Register (VWR) released a statement on 21 February 2018 regarding the Goulburn Inter-Valley Trade (IVT) account. In addition to the statement, DELWP held a teleconference for water market intermediaries on the afternoon of 21 February and information from that forum has also been included below.
While the majority of information was of a general nature, there are several important statements/issues which need to be highlighted.
Firstly, there is mention that Victoria “may” reconsider the use of tagged accounts as water use trends indicate an increasing volume of allocation moving through them and, in many instances, inconsistent with the trading rules for tagged accounts specified under section 12.23 of the Basin Plan.
H2OX is in favour of ensuring that all irrigators have fair and equitable access to allocation water in accordance with the Basin Plan trading rules. The has been inconsistencies in the water that various Victorian water authorities have been handling tagged accounts which has now lead to issues (see below).
DELWP (Victorian State Government) need to ensure that all water authorities abide by the Basin Plan and clearly articulate to Victorian irrigators the timeline to implementing the required changes. H2OX recognise there are complexities however, the rules have been known for many years and it is time to work through and resolve the complexities to ensure equity for all in the water market. During the teleconference H2OX clearly expressed that any changes to current “business as usual” need sufficient lead time to ensure market certainty especially because the changes may change the way participants view risk in securing their business.
Secondly, the media statement clearly specifies the frequency that IVT transfers are updated in the water register. For the remainder of the 2017-18 season they have stated that “…the Resource Manager will be accounting for this on Tuesdays and Thursdays, with updated balances made public at 10 am on Wednesdays and Fridays.” This will happen through to the end of the current season. H2OX believes that up until now, these balances were only being updated weekly, on a Tuesday and therefore visible at 10am Wednesday’s.
Given the VWR clearly acknowledges that “Victoria needs to make sure water markets continue to develop to match the level of demand and sophistication in the market”, H2OX is surprised that more frequent updates to the IVT balances haven’t been made before now. During the teleconference there was no indication of whether the bi-weekly updates would continue at the beginning of the next season. While some will argue it would have been of little consequence due to the large negative IVT balance, there may have been instances in recent weeks when the IVT may have opened if the the IVT balances were updated more frequently.
The last thing to note in the statement at the bottom where it is stated that “Use from tagged accounts is typically loaded incrementally but a large volume will be added in one batch this week to update use for lower Murray account holders who requested to use their tagged accounts for the first time recently.”
H2OX posed several questions during the teleconference regarding the statement. It is H2OXs understanding the Lower Murray Water (LMW) had prevented their irrigators from ordering water from their Goulburn tagged accounts during the past few years, in accordance with 12.23 of the Basin Plan. Several LMW irrigators have been vocal about this limitation especially when Goulburn-Murray Water (GMW) has allowed such usage to occur. As a result, LMW have capitulated which has resulted in a bulk usage of
~32~48GL being recorded against Goulburn tagged accounts (and being credited back onto the irrigators Murray accounts) over two separate transactions on Tuesday 20th and Thursday 22nd February. This action pushed the IVT out to -36GL after physical transfers were accounted for.
The IVT ebbs and floes. But large “write-downs” damage the integrity of the market. Why was a decision on opening Goulburn tagged accounts for LMW customers not made earlier? Why did it have to coincide with when the Goulburn IVT was on the cusp of opening?
The market is increasingly sophisticated and water market participants are actively managing their water across systems from both a security and risk perspective. Large shocks as outlined above put a dent in the integrity of the water market and the reputation of the authorities managing it.
H2OX will continue to monitor and update the situation as required.