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Water industry competition

The Water Industry Competition Act 2006 (WIC Act) and the regulations supporting its implementation (the Water Industry Competition (General) Regulation 2008 and the Water Industry Competition (Access to Infrastructure Services) Regulation 2007 commenced on 8 August 2008.

The Act and regulations have been developed to encourage competition in the water industry and foster innovative recycling projects and dynamic efficiency in the provision of water and wastewater services. The provisions under the WIC Act include:

  • a new licensing regime for private sector providers of reticulated drinking water, recycled water and sewerage services
  • a third-party access regime for water and sewerage infrastructure
  • authorisation of the Independent Pricing and Regulatory Tribunal (IPART) to arbitrate certain sewer mining disputes.

The WIC Act encourages competition and investment by:

  • promoting new water recycling businesses
  • establishing a comprehensive access regime to help new suppliers negotiate arrangements for the transportation and storage of water and sewerage using existing water networks
  • ensuring private schemes and the public water utilities face similar obligations, where like services are provided
  • providing equality between private and public water utilities for activities such as laying pipes in public roads and reading meters.

In addition, the regulations set out strict licensing rules to ensure that drinking water meets Australian standards, that recycled water is ‘fit for purpose’, and that all services are delivered in a safe, reliable manner with minimal environmental impacts. It also includes provisions for customer protection and the implementation of NSW Government social policies.

Licensing regime 

The licensing regime under the WIC Act enables the private sector to enter the industry while ensuring water quality, and protecting public health and the environment.

The construction, maintenance or operation of any water industry infrastructure, or supply of water (potable or non-potable) or sewerage services by means of any water industry infrastructure is only permitted under the authority of the WIC Act.

There are two categories of licences that can be granted.

  • Network operator’s licence — authorising the licence holder to construct, maintain and operate specified water industry infrastructure for the purposes identified in the licence
  • Retail supplier’s licence — authorising the licence holder to supply water or provide sewerage services by means of water industry infrastructure.

IPART administers the licensing regime and their functions include considering licence applications, recommending the terms or conditions of a licence to the Minister, auditing and enforcing licences, and arbitrating third-party access agreements.

Since its introduction, a number of companies have been licensed under the WIC Act. Details regarding the licensing process, current licence holders, licence applications and exemptions to requiring a licence can be found on the IPART website.

Third party access regime 

The WIC Act provides for the following mechanisms to seek access to water infrastructure services.

  • Coverage declaration — an applicant may be granted a coverage declaration which establishes the right to negotiate terms and conditions of access with a service provider. If negotiations fail, coverage declaration gives an access seeker the right to apply to IPART for the dispute to be determined through arbitration.
  • Voluntary access undertaking — an applicant may seek access to water infrastructure services under terms and conditions set out in a voluntary access undertaking approved by IPART.

For further information on third party access go to the IPART website.

Exemptions to the WIC Act

Certain businesses that operate water industry infrastructure are exempt from requiring a licence under the WIC Act. The licence regime does not apply to a number of existing water supply and sewerage service activities including:

  • a public water utility that operates water infrastructure situated within the area of operation of Sydney Water, Hunter Water, Sydney Catchment Authority and State Water Corporation
  • certain activities under the Water Management Act 2000 and Water Act 1912
  • any council or county council exercising water and sewerage functions
  • any water infrastructure work for stormwater drainage purposes
  • some low risk private water and sewerage activities.

For further information on exemptions go to the IPART website.

In late 2008, it was identified that a specific exemption clause was not being consistently applied to some private water industry infrastructure. The Metropolitan Water Directorate undertook a review to find out whether the exemption clause was operating as intended.

For further information on the revised exemptions clauses, go to Review of exemption regime.

Industry codes

In July 2012, the Minister gazetted a Marketing Code of Conduct and a Transfer Code of Conduct for WIC licensees and public water utilities. 

For further information go to Codes of conduct.

Last resort arrangements

Along with measures to protect public health and the environment, there are provisions under the WIC Act that seek to protect customers in the event that a licensed retail supplier becomes unviable.

Although last resort arrangements have previously been used in the retail electricity market, they have never been used in the water market. The Metropolitan Water Directorate is currently reviewing last resort arrangements under the WIC Act.

For further information go to review of last resort arrangements.

Amendments to the WIC Act

In early 2012, amendments were made to the WIC Act to strengthen and streamline the regulation of licensees and provide greater protection for customers and the community.  These amendments include the creation of three new licensing principles that need to be considered by the Minister when determining a licence application, new provisions to help licensees access their infrastructure on private land, greater clarity regarding the process for pricing determinations for certain licensees as well as a number of minor amendments to rectify anomalies in the WIC legislation.

For further information go to Amendments to improve the regulation of WIC licensees.

Role of local government  

Prior to the introduction of the WIC Act, approval for private water and sewerage infrastructure was granted predominantly under the Local Government Act 1993. Some water and sewerage activities may require council approval if they are exempt from requiring a licence under the WIC Act.

Guidelines exist for drinking water and recycled water and should be consulted to ensure that relevant requirements are met. More information on these and other relevant NSW recycled water guidelines go to Recycling

The NSW Government amended the Local Government (General) Regulation 2005 to streamline the approval process between the WIC Act and Local Government Act 1993. A WIC licensee no longer requires approval under section 68 of the Local Government Act 1993 for that infrastructure.