On Wednesday 15 June, The Minister for Water Lisa Neville announced the new permanent trade and operating rules for the Goulburn to Murray. The goal is to keep flows lower over summer and autumn, while not increasing delivery risk for irrigators. These rules will come into effect from 1 July 2022.
Waterfind has summarised the rules below:
What are the new trade rules?
The Goulburn to Murray trade rule applies to allocation trade from the Goulburn, Loddon, Campaspe and Broken systems to the Victorian Murray and interstate. It resets each year – with trade announcements on:
- 1 July – approximately 85 GL of new trade opportunity
- This is on top of the 140GL of legacy entitlement commitments (100GL for Murray and 40GL for Snowy River – This 140GL is not available to market participants) and 15GL grandfather tags (available to select market participants with these pre-existing tags)
- 15 October – up to 30 GL more of seasonal trade opportunity
- This Depends on how people have been using water in the Murray in winter and early spring
- 15 December – up to 30 GL of further seasonal trade opportunity, and a bit more in dry years when seasonal determinations are low
- Depending on how people have continued to use water in the Murray through spring; if the pattern of spring water use means water use will likely not be as concentrated in summer and autumn, more trade can be made available and still be delivered over summer and autumn within the lower Goulburn operating rules.
- In a dry year, if Goulburn allocations are not projected to reach 100%, then some of the water set aside for legacy commitments and grandfathered tagged trade can instead be released as extra trade opportunity.
From 15 December to 30 June, further trade opportunity will only be created when there is back trade from the Murray to the Goulburn (i.e. water is traded by market participants into the Goulburn system). This ensures that the use of traded water over summer and autumn can be delivered within the operating limits.
Due to the seasonal opportunity (From 15 October onwards) being dependent on how much water is available in a given season and how much water irrigators have used. This should allow for higher-than-average net trade in drier years and lower than average in wet years. I.e. allowing for more trade into the Murray to occur in drier years when prices and demand is higher.
Comparison to Interim Trade Rules (Current 2021/22 Season)
Under the interim trade rules there was an average net trade of opportunity of 130GL across the entire season, this has now increased to 150GL under the new rules under average inflow conditions.
Impacts to the market
As there is not much of a difference from the interim trade rules and next year is looking to be another wetter-than-average season, the impacts of this rule change to the market should be minimal.
Once again, depending on weather conditions, water use etc., there could be minimal water deliveries as a result of low demand for IVT deliveries and high flows in the Murray River. However, the significant deliveries between October and December will still prove crucial to those market participants who desire to move their water out of the Goulburn system and were unsuccessful in doing so at the start of the season.
When we approach drier seasons like 2019/20, we should start to see greater volumes of water being able to be traded out of the Goulburn system which will create more pricing arbitrage opportunity for market participants, but also lower the price in the heavily used Murray ‘below the choke’ system.
If you would like to discuss the option of transferring your water out of the Goulburn system on 1 July or develop a water plan for the coming 2022/2023 season, please contact your local water account manager on 1800890285 or email us at firstname.lastname@example.org.
To read the full ministerial announcement click here.