Controlled allocation FAQs

1. What is a controlled allocation order?

A controlled allocation order is a mechanism for creating the right to apply for an access licence. This right can be acquired through an auction, tender or as otherwise specified in the order. The Minister or delegate can make a controlled allocation order at any time under section 65 of the Water Management Act 2000. A person can apply for a water access licence if they are successful in acquiring that right under a controlled allocation order.

The order made on 4 March 2022 is the first controlled allocation order made in 2022. It applies to different categories of access licences in a number of specific regulated river, unregulated river and groundwater water sources across NSW. These access licences are equivalent to some of the access licences that have been surrendered to the Minister over time and that he has decided to make available through this order.

The controlled allocation process arising from the order made on 4 March 2022 will commence on 18 March 2022 and conclude on 18 April 2022.  During this time, a right to apply for an access licence will be made available and parties may register their interest.  Detailed information about the controlled allocation process is available in the ‘Terms and Conditions’ in the order. Please ensure you read and understand the order and the Terms and Conditions before making an application.

The last order, made on 15 October 2021, applies to aquifer access licences in a number of specific groundwater sources across NSW. The registration of interest period for that order closed on 30 November 2021.

2. Why have licences been surrendered to the Minister? 

A licence holder can ask to surrender their licence to the Minister for any reason. If the Minister accepts the surrender of a licence, the licence may be cancelled or be held by the Minister.

The Minister can decide what to do with the licences that they hold. After assessing some risks and high priority needs, the 4 March 2022 controlled allocation order creates a right to apply for categories of access licence equivalent to certain surrendered access licences.

3. This controlled allocation order includes some water sources not included in previous controlled allocation orders. Will another controlled allocation be made in the future for those water sources? 

This water has become available through the voluntary surrender of licences. Because the surrender is voluntary the Minister does not know which water sources will have surrendered licences in the future. A decision has not yet been made about whether any surrendered shares will be released in future controlled allocation orders.

4. How do I know if shares under certain categories of access licences are available in my water source under a controlled allocation?

The controlled allocation order specifies the water sources and the management zones that shares under certain categories of access licences are made available in. It is important to check the order to understand which water sources are included.

Parties wishing to apply for an access licence for a specific property are strongly encouraged to contact WaterNSW (1300 662 077) to confirm which water source(s) apply to that property unless they are able to confirm this through other means.

Parties only interested in acquiring shares under a certain category of access licence for an existing water supply work can find out which water source applies by referring to the water source specified on an existing water access licence. WaterNSW should still be contacted if a party wishes to find out if there are water sources that apply to their property in addition to the water source specified on an existing water access licence.

5. How can I acquire the right to apply for a category of access licence through the controlled allocation process? 

Under a controlled allocation order a person (a legal entity) can register their interest to acquire the right to apply for a specified number of shares in a category of access licence in a particular water source and management zone (if applicable).

The right to apply for a licence can be acquired by the tender process specified in the controlled allocation order. The right to apply for a licence of a particular category is offered to tenderers who bid the highest price per unit share for that particular category of licence in the water source and management zone (if applicable).

More detail on how to register your interest in a licence under this process is in the ‘Terms and Conditions for the Controlled Allocation Process' in Schedule 2 of the Controlled Allocation Order (Various Water Sources) 2022.

6. Do I have to apply for another access licence if I already have one?

Yes, those who acquire the right to apply for an access licence under a controlled allocation must apply for an access licence in addition to any existing licence they hold. After it is acquired, an access licence can be merged with other licences of the same category through a dealing. Contact WaterNSW on 1300 662 077 for more information on dealings.

7. Can I trade the access licence I have acquired the right to under a controlled allocation process if I am successful in my application for the access licence?

Yes, the access licence can be traded if:

  • you have acquired the right to apply for an access licence under a controlled allocation process and
  • the Minister has determined the application for an access licence by granting the access licence to you, and
  • trade is allowed under the rules of the relevant water sharing plan and the Access Licence Dealing Principles Order 2004.

8. Is there a limit to the number of shares I can bid? 

Yes, each controlled allocation order specifies the number of shares available under each category of licence in each water source and management zone (if applicable). You can register interest for any amount of shares in a specific category of licence within a water source and management zone (if applicable) up to the total number of shares made available for that category of access licence within a water source and management zone (if applicable).

9. What if I want more shares than are offered through the controlled allocation process? 

Shares and temporary allocation can be acquired through the trading market. There may also be opportunities to acquire shares in other controlled allocations.

10. If I receive a Successful Notice can I buy less than the number of the shares offered in that Notice?

No, you cannot ask to buy less than the number of shares offered in the Successful Notice. You can either withdraw and apply again under another controlled allocation, or pay the total purchase price with a view to selling your unwanted shares on the market.

11. How much is a unit share? 

One unit share of entitlement = one megalitre (ML) of water when an available water determination (or allocation announcement) is 1 ML per share. It is also expressed as 100% of entitlement.

Water entitlement is the right to receive a share of the water in a water source. An available water determination is a calculation performed regularly (and each water year) to determine if recent rainfall and runoff has produced more available water that can be distributed to entitlement holders. The entitlement or shares are sometimes thought of as the 'bucket' (a constant asset of fixed size) and the available water determination is the water placed in the bucket (variable with seasons). For example, a licence holder with 1 unit share of water entitlement in a water source where the available water determination is 0.5 ML per unit share (also known as 50% allocation) will have their water account credited with 0.5 ML. Similarly a licence holder in that water source with 20 shares will have their water account credited with 10 ML.

12. How much water will I receive and when can I start taking my water?

The amount of water credited to your account will be on a pro-rata basis depending on when in the water year the access licence is granted. This amount will also depend on the available water determination at that point in time.

You can start taking water once you have:

  • registered your licence with NSW Land Registry Services and have been advised by the issuing Agency of your new access licence number
  • nominated the work or extraction point you will use to take water on your licence.

You can view your new account balance via the Online Water Accounting System – iWAS, available to all access licence holders on the WaterNSW website.

13. Why are minimum prices set?

Minimum prices per share aim to ensure that water is sold at prices that reflect the value of water resources to the people of NSW and support efficient operation of water markets. The minimum prices are set based on prices paid for water in the same, or similar water sources through previous controlled allocations, water trading and other current market indicators. The registration of interest process will determine the final price to be paid.

14. How do water sharing plan rules apply to access licences and shares obtained through the controlled allocation? 

All water sources across NSW and access licences within those water sources are captured by a water sharing plan made under the Water Management Act 2000. Water sharing plans set rules and mandatory conditions on access licences that are specific to each water source.

Water sharing plans also set limits on water extraction (the long-term average annual extraction limit) in a water source, including saline or contaminated water. These legally binding Minister’s plans include rules for water trading, water accounts and how water is shared between different users and the environment. The plans also set out the mandatory approval conditions that apply to water supply work approvals, including rules to minimise impacts on other water users, dependent ecosystems, water quality and water sources.

You can find out more by visiting water sharing plans.

15. What approvals do I need before I can take water? 

In most cases you will need to hold one or more approvals under the Water Management Act 2000 before you can use a water supply work to take and use water from a water source. You may also need to apply to amend your water access licence under section 71W of the Act to nominate a specified water supply work or extraction point under your licence.

Under the Environmental Planning and Assessment Act 1979, you may be exempt from the need to hold an approval under the Water Management Act 2000 for State significant development that is authorised by a development consent or the carrying out of a State significant infrastructure if it has been approved by the Minister (or delegate).

In determining an approval application under the Water Management Act 2000, WaterNSW or NRAR will undertake an environmental assessment. This involves assessing the likely impacts on the water source, connected water sources, the users of these water sources and dependent ecosystems. An approval application may be refused, regardless of the (related) licence being granted. If an approval is required but has been refused, and you proceed to take water under your licence, you may be in breach of the Water Management Act 2000 in relation to your use of the water, or construction and use of the work, or your carrying out of the controlled activity (as applicable).

Contact WaterNSW (1300 662 077) for more information about approvals and dealings under the Water Management Act 2000.

Contact the Department of Planning and Environment (1300420 596) for more information about the Environmental Planning and Assessment Act 1979.

16. Can I combine my surface water with my groundwater?

No, water access licences cannot be combined if they are different categories of licences.

Contact WaterNSW (1300 662 077) to discuss your options

17. How does a controlled allocation order relate to the Murray Darling Basin Plan?

In 2014 NSW signed up to implement the Murray Darling Basin Plan. This Plan sets sustainable diversion limits for water resources in the Murray Darling Basin. These limits equate to the long-term average extraction limits in water sharing plans which manage all water sources and access licences within those water sources.

18. What happens if I don’t find suitable groundwater when I drill a bore at my location? (NOTE: relevant to parties interested in aquifer access licences only)

If this happens, you may be able to sell some or all of your shares on the water market – either permanently or annually through an assignment of allocation.

19. How does a controlled allocation order relate to the NSW Aquifer Interference Policy? (NOTE: relevant to parties interested in aquifer access licences only)

The NSW Aquifer Interference Policy (PDF, 505.49 KB) covers aquifer interference activities including dewatering for mining, exploration, quarrying and construction.

This Policy sets out the water licensing requirements for aquifer interference activities to ensure the water taken by them is properly licensed and accounted for in all affected water sources. Anyone who takes water through carrying out an aquifer interference activity must hold a water access licence unless an exemption applies. The water that is required to be held can be purchased on the market or obtained through a controlled allocation order.

The NSW Aquifer Interference Policy also explains approval requirements for the activity/development and defines minimal considerations that must be taken into account when assessing the impacts associated with aquifer interference activities.

The minimal impact considerations are also used to assess the impacts of State significant development and State significant infrastructure proposals that are aquifer interference activities and form the basis for the advice that is provided to the relevant approval body – generally the Planning and Assessment Division of the Department of Planning and Environment.

20. If I acquire the right to apply for an aquifer access licence how can I tell if the groundwater at my location is of suitable yield or quality for my needs? (NOTE: relevant to parties interested in aquifer access licences only)

Acquiring the right to apply for an aquifer licence through the controlled allocation process does not guarantee that groundwater of a particular yield of quality will be able to be accessed by the successful applicant.

If you want more information about the potential depth to groundwater, water quality or yield in your area, you may be able to get information about existing bores from the Government’s groundwater database. Contact WaterNSW (1300 662 077) or send a request for bore details in your area to waterdataservices@waternsw.com.au.

WaterNSW can also advise you about the licensing and approval requirements if you want to drill a bore (test bore) to investigate the groundwater prospects in your area.