Water Industry Competition Act 2006 (NSW)

Water Industry Competition Act 2006 No 104 An Act to facilitate and regulate the water industry excluding certain public water utilities; to make provision for the continuity of essential services provided by the industry; to establish an access regime for significant water industry infrastructure; and for other purposes. Part 1 Preliminary 1 Name of Act This Act is the Water Industry Competition Act 2006. 2 Commencement This Act commences on a day or days to be appointed by proclamation. 2A Objects of Act The objects of this Act are— (a) to protect public health and safety and the environment in connection with the water industry, including in the longer term, and (b) to protect the interests of consumers, particularly small retail customers, in the quality, reliability and price of water and sewerage services, including in the longer term, and (c) to facilitate the efficient, reliable and sustainable provision of water and sewerage services, having regard to financial, environmental and social considerations, and (d) to promote the sustainable use of resources in connection with the water industry, and (e) to facilitate competition in the water industry with a view to encouraging innovation and improved efficiency in the industry. 3 Definitions (1) Words and expressions that are defined in the Dictionary at the end of this Act have the meanings set out in that Dictionary. (2) Notes included in this Act do not form part of this Act. 3A Meaning of "classes" of water industry infrastructure The classes of water industry infrastructure are as follows— (a) infrastructure for the purpose of the production or supply of drinking water, (b) infrastructure for the purpose of the capture and treatment of stormwater for the production, supply and use of recycled water, (c) infrastructure for the purpose of the collection and treatment of sewage for the production, supply and use of recycled water, (d) infrastructure for the purpose of the collection and further treatment of recycled water for the supply and use of the further treated recycled water, (e) infrastructure for the purpose of the collection and treatment of sewage for disposal and the disposal of the treated sewage, (f) infrastructure for another purpose prescribed by the regulations. 4 Act binds Crown This Act binds the Crown in right of New South Wales and, in so far as the legislative power of Parliament permits, the Crown in all its other capacities. Part 2 Approvals and licences for certain water industry infrastructure Division 1 Preliminary 5 Water industry infrastructure to which Part applies (1) This Part applies to the following— (a) water industry infrastructure used or to be used for providing water or sewerage services to 30 or more small retail customer premises (a category A scheme), (b) water industry infrastructure used or to be used for the production of drinking water, including a filtration, treatment or desalination facility, that has a design capacity of more than 500 kilolitres each day, together with a reticulation network connected to the infrastructure and used to convey anything to or from the infrastructure, (c) water industry infrastructure used or to be used for the treatment of sewage, stormwater or recycled water that has a design capacity of more than 750 kilolitres each day, together with a reticulation network connected to the infrastructure and used to convey anything to or from the infrastructure, (d) water industry infrastructure declared by the regulations to be water industry infrastructure to which this Part applies. (2) However, this Part does not apply to the following— (a) water industry infrastructure within the area of operations of a public water utility and operated by or on behalf of the public water utility, other than as a last resort provider, (b) water industry infrastructure excluded from the application of this Part by the regulations. (3) For the purposes of determining whether this Part applies to water industry infrastructure by operation of subsection (1)— (a) initial and planned future stages of development of the infrastructure are to be taken into account, and (b) the design capacity of the infrastructure is to be determined in accordance with guidelines issued by IPART and published in the Gazette and on IPART's website. 5A Additional objects of Part In considering whether or not an approval or licence is to be granted or varied under this Part and what conditions are to be imposed on an approval or licence, regard is to be had to the objects of this Act and the following additional objects— (a) to promote the adoption of written policies concerning the use of water resources as prescribed by the regulations, if any, (b) to mitigate the potential for adverse financial implications for small retail customers generally arising from the activities proposed to be covered by the approval or licence, (c) to promote the equitable sharing among participants in the drinking water market of the costs of water industry infrastructure that significantly contributes to water security. Division 2 Requirements for approvals and licences 6 Requirements for construction of water industry infrastructure (1) A person must not construct water industry infrastructure to which this Part applies unless the construction— (a) is authorised by a scheme approval, and (b) is carried out by or on behalf of the registered operator for the scheme. Maximum penalty— (a) for a corporation—18,000 penalty units, or (b) for an individual—3,500 penalty units. (2) The regulations may prescribe exceptions to this section. 6A Requirements for operation of water industry infrastructure (1) A person must not operate water industry infrastructure to which this Part applies unless— (a) the infrastructure is substantially constructed as authorised by a scheme approval, and (b) the operation is authorised by an operational approval, and (c) the person is the registered operator for the infrastructure. Maximum penalty— (a) for a corporation—18,000 penalty units, or (b) for an individual—3,500 penalty units. (2) This section does not apply to the operation of water industry infrastructure in the course of commissioning the infrastructure. (3) The regulations may prescribe further exceptions to this section. 6B Requirements for sale of water and sewerage services from regulated schemes (1) A person must not sell water or sewerage services provided by means of a regulated scheme, including the service of connecting premises to the water or sewerage services, unless— (a) the person is the registered retailer for the infrastructure, and (b) the sale is authorised by the person's retailer licence. Maximum penalty— (a) for a corporation—18,000 penalty units, or (b) for an individual—3,500 penalty units. (2) In this section, sell water or sewerage services includes charging a fee or amount to connect premises to a water or sewerage service, including charging an infrastructure charge, developer charge or administration charge related to connecting premises to a service. (3) Subsection (1) does not apply to a council. (4) This section does not apply to the sale of the service of connecting premises to the water or sewerage services by a registered operator for a scheme if— (a) the scheme is under construction, and (b) no person has been registered as the registered retailer for the scheme. (5) The regulations may prescribe further exceptions to this section. Division 3 Approvals Note— A scheme approval authorises the construction of water industry infrastructure to which this Part applies as specified in the approval. Scheme approvals are granted by IPART. An operational approval authorises the operation of water industry infrastructure to which this Part applies as specified in the approval. Operational approvals are granted by IPART. 7 Application for approval (1) An application for a scheme approval or operational approval is to be made to IPART. Note— Section 12 imposes requirements for an application and allows an application to be rejected if the requirements are not complied with. (2) An application for a scheme approval for water industry infrastructure— (a) may be made by any person, and (b) must only be made with the consent of the owner of the land on which the infrastructure, other than pipelines within the reticulation network connected to the infrastructure, is or is to be located. (3) An application for an operational approval for water industry infrastructure— (a) may be made by any person, and (b) must specify the scheme and scheme approval to which it relates. 7A Process for dealing with an application for approval (1) For all applications for an approval, IPART must invite submissions— (a) from the Department of the Public Service responsible to the Minister administering this Part, and (b) from the Department of the Public Service responsible to the Minister administering the Public Health Act 2010, and (c) as otherwise required by the regulations. (2) In addition, if the application is for a scheme approval, IPART must also invite submissions from— (a) the public, by notice published on IPART's website and otherwise as considered appropriate by IPART, and (b) the council for the local government area within which the proposed area of operations of the scheme is located or to whose infrastructure the scheme is to be connected, and (c) the Department of the Public Service responsible to the Minister administering the Environmental Planning and Assessment Act 1979, and (d) if a licence under the Protection of the Environment Operations Act 1997 may also be required—the appropriate regulatory authority under that Act, and (e) if the infrastructure is or is proposed to be within the area of operations of a public water utility—the public water utility, and (f) if an authorisation, however described, under the Water Management Act 2000 may also be required—the Department of the Public Service responsible to the Minister administering that Act, Chapter 3. (3) An invitation to make submissions on an application must— (a) allow at least 28 days for submissions to be made, and (b) be accompanied by a copy of the application, other than material that IPART considers to be confidential, or set out how a copy of the application may be obtained. (4) IPART must not accept a variation of an application after an invitation to make submissions has been given unless satisfied that— (a) the application as varied will be substantially the same as the original application, and (b) no prejudice will be caused to a person who made a submission concerning the original application. (5) If a variation is not accepted, the applicant may withdraw the application and make a new application. 7B Determining an application for approval (1) IPART is to determine an application for an approval by granting the approval, either as applied for or with modifications IPART considers appropriate, or by refusing to grant the approval. (2) If IPART proposes to refuse to grant an approval or to grant an approval with modifications, IPART must— (a) give written notice of the proposed refusal or modifications to the applicant specifying the reasons for it, and (b) allow the applicant at least 14 days within which to make submissions to IPART about the proposed refusal or modifications. (3) On determining an application for an approval, IPART must ensure notice of the determination is given to the applicant and published on IPART's website. 7C Grant of scheme approval (1) A scheme approval must not be granted unless IPART is satisfied as to each of the following— (a) the infrastructure will, if constructed as authorised by the approval, be fit for purpose and capable of operating— (i) safely and reliably, and (ii) in a way consistent with the national safety guidelines for the control of public health risks, and (iii) in a way that does not present a significant risk of harm to the environment, (b) the applicant has established it is highly likely the proposed scheme will become financially viable to operate within a reasonable period of time and will then remain financially viable for the life of the scheme, (c) the applicant has established, for a regulated scheme, that it is not reasonably foreseeable that the operation of the scheme will have significant adverse financial implications for small retail customers, (d) the proposed registered operator of the scheme— (i) if the applicant is the proposed registered operator, holds an appropriate operator licence, and (ii) if the applicant is not the proposed registered operator, has entered into an agreement with the applicant for the operation of the scheme, (e) the applicant has established that the proposed area of operations of the scheme is appropriate, Note— IPART may consider a proposed area of operations is not appropriate if— (a) the scheme is unlikely to be capable of supplying water supply or sewerage services to all premises within the proposed area of operations within a reasonable period, or (b) the proposed area of operations excludes premises within the outermost boundary of, or near, the area of operations, including, for example, by excluded enclaves or unusual boundaries, unless the exclusion is reasonable, having regard to the characteristics of the proposed scheme, the characteristics of the premises or the services already available to the premises. (f) for a scheme proposed to be constructed in stages—the applicant has established that the group of premises proposed to be serviced by each stage is reasonable having regard to the orderly and economic use and development of land in the area, (g) matters prescribed by the regulations. (2) In determining an application for a scheme approval, IPART must have regard to the following— (a) whether disciplinary action against the proposed registered operator is pending or, as a result of disciplinary action against the proposed registered operator, the proposed registered operator is prohibited from being registered as the registered operator under a further scheme approval, (b) whether, in the reasonable suspicion of IPART, a statutory default within the meaning of Division 6 has occurred within 2 years before the determination is made, and the proposed registered operator, or a related corporation of the proposed registered operator, is the alleged defaulter, (c) the proposed registered operator, or a related corporation of the proposed registered operator, has failed to provide a service, or a connection to infrastructure, after granting a certificate of compliance relating to the service or infrastructure. Note— Section 5A also requires the decision-maker to have regard to the objects of this Act and other additional objects when considering whether or not an approval or licence is to be granted or varied under this Part and what conditions are to be imposed on an approval or licence. (3) On the grant of the scheme approval, IPART must— (a) register the proposed registered operator referred to in subsection (1)(d) as the registered operator for the scheme, and (b) consider whether to make a determination under section 54 that the scheme is essential infrastructure. (4) For the purposes of this section, disciplinary action is pending from the time when notice is given to the licensee requiring the licensee to show cause why disciplinary action should not be taken against the licensee until— (a) disciplinary action is taken against the licensee, or (b) the decision is made that disciplinary action will not be taken against the licensee. 7D Grant of operational approval (1) An operational approval must not be granted unless IPART is satisfied as to each of the following— (a) the infrastructure has been substantially constructed as authorised by a scheme approval for the infrastructure, (b) the infrastructure is fit for purpose and is capable of operating— (i) safely and reliably, and (ii) in a way consistent with the national safety guidelines for the control of public health risks, and (iii) in a way that does not present a significant risk of harm to the environment, (c) there are adequate plans and systems in place to ensure the infrastructure continues to be fit for purpose and operated— (i) safely and reliably, and (ii) in a way consistent with the national safety guidelines for the control of public health risks, and (iii) in a way that does not present a significant risk of harm to the environment, (d) the infrastructure is capable of operating in compliance with this Act and the regulations, the plans and systems referred to in paragraph (c) and the conditions of the registered operator's operator licence, (e) if the infrastructure is or is likely to be essential infrastructure—a last resort provider has been designated for each essential service provider, (f) the applicant is the registered operator or has entered into an agreement with the registered operator for the operation of the infrastructure, (g) in relation to a regulated scheme, the applicant— (i) holds a retailer licence or is a council, or (ii) has entered into an agreement with a public water utility or an appropriately authorised licensed retailer for the sale of the water or sewerage services provided by the infrastructure, (h) matters prescribed by the regulations. (2) In determining an application for an operational approval, IPART must have regard to the following— (a) whether disciplinary action against the proposed registered retailer is pending or, as a result of disciplinary action against the proposed registered retailer, the proposed registered retailer is prohibited from being registered as the registered retailer under a further operational approval, (b) whether, in the reasonable suspicion of IPART, a statutory default within the meaning of Division 6 has occurred within 2 years before the determination was made, and the proposed registered retailer, or a related corporation of the proposed registered retailer, is the alleged defaulter. Note— Section 5A also requires the decision-maker to have regard to the objects of this Act and other additional objects when considering whether or not an approval or licence is to be granted or varied under this Part and what conditions are to be imposed on an approval or licence. (3) On the grant of the operational approval, IPART must— (a) unless already registered, register the person referred to in subsection (1)(f) as the registered operator for the scheme, and (b) register the person referred to in subsection (1)(g) as the registered retailer for the scheme. (4) For the purposes of this section, disciplinary action is pending from the time when notice is given to the licensee requiring the licensee to show cause why disciplinary action should not be taken against the licensee until— (a) disciplinary action is taken against the licensee, or (b) the decision is made that disciplinary action will not be taken against the licensee. 7E Grant of approval—general (1) IPART may refuse to grant an approval if not satisfied— (a) the proposed registered operator of the infrastructure has the capacity to comply with the conditions of its operator licence, having regard to all the infrastructure it operates or will operate under the licence, or (b) for a regulated scheme—the proposed licensed retailer of water or sewerage services provided by means of the scheme has the capacity to comply with conditions of its retailer licence, having regard to all the water and sewerage services it sells or will sell under its licence, or (c) about other matters IPART considers relevant, having regard to the public interest. (2) Before determining an application, IPART may require an application audit to be undertaken. 7F Approval to specify certain matters (1) A scheme approval must specify the following— (a) the area (the area of operations) within which the water industry infrastructure, including a reticulation network connected to the infrastructure, is authorised to be constructed, (b) the location that the water industry infrastructure, other than pipelines within the reticulation network connected to the infrastructure, is authorised to be constructed, (c) the class or classes of water industry infrastructure authorised by the approval, (d) the design capacity of the water industry infrastructure, as expressed in kilolitres per day, authorised by the approval, (e) the purposes for which the water industry infrastructure is intended to be operated after its construction, (f) for a scheme to be constructed in stages— (i) the water industry infrastructure authorised to be constructed in each stage, and (ii) the part of the area of operations within which the infrastructure is authorised to be constructed in each stage. (2) An operational approval must specify the following— (a) the scheme and scheme approval to which it applies, (b) the purposes for which the water industry infrastructure is authorised to be operated, (c) for a scheme that is to be constructed in stages, the stage or stages to which the operational approval applies. (3) The same land may be within the area of operations of more than one approval. 7G Conditions of approval—imposition, variation and revocation (1) The authority conferred by an approval is subject to the following— (a) conditions imposed by this Act, (b) conditions imposed by the regulations, (c) conditions imposed by IPART on the grant of an approval or subsequently under this Act. (2) IPART may, on the application of the registered operator of water industry infrastructure to which an approval applies or on its own initiative, impose further conditions on the approval or vary or revoke conditions of the approval, other than conditions imposed by this Act or the regulations. (3) If IPART proposes to impose further conditions on, or vary or revoke conditions of, an approval on its own initiative, IPART must— (a) give written notice of the proposal to the registered operator of the infrastructure concerned specifying the reasons for it, and (b) allow the registered operator at least 14 days within which to make submissions to IPART about the proposal. (4) If IPART considers it appropriate to invite submissions on a proposal or application to impose further conditions on or vary or revoke conditions of an approval because of the importance or effect of the conditions, IPART may invite submissions on the proposal or application as if it were an application for an approval. (5) Before determining an application to impose further conditions on, or vary or revoke conditions of, an approval, IPART may require an application audit to be undertaken. (6) Subject to the expression of a contrary intention, the following regulations apply to approvals whether granted before or after the regulations are made— (a) regulations imposing conditions on an approval, (b) regulations varying or revoking conditions of an approval imposed by the regulations. Note— Section 5A also requires that the decision-maker have regard to the objects of this Act and other additional objects when considering whether or not an approval is to be granted or varied under this Part and what conditions are to be imposed on an approval. 7H Conditions of scheme approval (1) Without limiting section 7G, conditions of a scheme approval imposed by the regulations or by IPART may require the following— (a) completion of the construction of the infrastructure in accordance with specified plans and specifications, (b) the giving and maintaining of security, in an amount and form determined by IPART, for compliance with the conditions of approval and the completion of the construction of the infrastructure, (c) the maintaining of insurance of a type and at a level specified in the condition, (d) the completed infrastructure to meet specified criteria for safe and reliable operation and the protection of the environment and public health, (e) the installation of individual meters for each household or business, (f) the testing, certification or auditing of the infrastructure, (g) the submission to IPART of notifications relating to the infrastructure, (h) the preparation of plans or systems for operation of the scheme. (2) A registered operator constructing water industry infrastructure to which this Part applies must— (a) comply with the conditions of the relevant scheme approval, and (b) ensure compliance with the conditions by other persons who are engaged by or act on behalf of the registered operator or for whom the registered operator is otherwise responsible in connection with the construction of the infrastructure. Maximum penalty— (a) for a corporation—18,000 penalty units, or (b) for an individual—3,500 penalty units. 7I Conditions of operational approval (1) Without limiting section 7G, conditions of an operational approval imposed by the regulations or by IPART may require the following— (a) the operation of the infrastructure in accordance with specified plans and systems and other requirements, (b) the infrastructure to meet specified criteria for safe and reliable operation and the protection of the environment and public health. (2) A registered operator operating water industry infrastructure to which this Part applies must— (a) comply with the conditions of the relevant operational approval and the relevant scheme approval, and (b) ensure compliance with the conditions by other persons who are engaged by or act on behalf of the registered operator or for whom the registered operator is otherwise responsible in connection with the operation of the infrastructure. Maximum penalty— (a) for a corporation—18,000 penalty units, or (b) for an individual—3,500 penalty units. 7J Duration of approval An approval remains in force until it is cancelled or surrendered. 7K Variation of approval (1) An application may be made to IPART for the variation of an approval. Note— Section 12 imposes requirements for an application and allows an application to be rejected if the requirements are not complied with. (2) An application for the variation of an approval may be made only by the applicant for the approval or the registered operator of the scheme. (3) An application for the variation of an approval may relate to an aspect of the approval, including a matter required to be specified under section 7F. (4) IPART must invite submissions on a proposed variation from the registered operator of the infrastructure if the registered operator is not the applicant and may invite submissions from persons IPART considers appropriate. (5) An invitation to make submissions must allow at least 14 days for submissions to be made and must be accompanied by a copy of the application or indicate how a copy of the application may be obtained. (6) IPART is to determine an application for variation by approving the variation, either as applied for or with modifications IPART considers appropriate, or by refusing to approve the variation. (7) IPART must refuse to approve a variation of an approval if an application for the approval as proposed to be varied would be required to be refused under section 7C(1)(a) or 7D(1)(a)–(d). Note— Section 5A also requires that the decision-maker have regard to the objects of this Act and other additional objects when considering whether or not an approval is to be granted or varied under this Part and what conditions are to be imposed on an approval. (8) IPART may refuse to approve a variation on 1 or more grounds on which an application for the approval as proposed to be varied would be permitted to be refused. (9) IPART is not to approve a variation of an approval if in its opinion the proposed variation is so significant as to be better dealt with by a fresh application for the approval. Note— If IPART refuses to vary an approval, a new approval can be applied for. (10) If IPART proposes to refuse to approve the variation of an approval, IPART must— (a) give written notice of the proposed refusal to the applicant and, if the registered operator was not the applicant, to the registered operator of the infrastructure, specifying the reasons for the proposed refusal, and (b) allow each person given notice of the proposed refusal at least 14 days to make submissions to IPART about the proposed refusal. (11) If IPART approves a variation of an approval— (a) IPART is to give notice of the variation to the applicant and, if the registered operator was not the applicant, to the registered operator of the infrastructure, for the variation, and (b) the varied approval replaces the original approval as from the date determined by IPART to be the registration date of the variation. (12) Before determining an application to vary an approval, IPART may require an application audit to be undertaken. (13) To avoid doubt, a variation of an approval is not required for additional pipeline reticulation within a scheme's area of operations. (14) If IPART is satisfied an approval contains an obvious error or mis-description, IPART may grant a replacement approval to correct the error or mis-description. (15) On granting a replacement approval, IPART must ensure notice of the grant of the replacement approval is given to the applicant and published on IPART's website. 7L Staged approval (1) An approval may be granted— (a) for the activity or one or more of the activities for which the approval is sought, or (b) for an activity, except for a specified part or aspect of the activity, or (c) for a specified part or aspect of an activity. (2) An approval may be granted subject to a condition that an activity or a specified part or aspect of an activity, or a thing associated with the activity or the carrying out of the activity, must be the subject of either one or both of the following— (a) a further approval, (b) a variation of an existing approval. (3) In this section, activity means— (a) in relation to a scheme approval—the construction of water industry infrastructure to which this Part applies, and (b) in relation to an operational approval—the operation of water industry infrastructure to which this Part applies. Division 4 Licences 8 Operator licence An operator licence autho