1. The applicants also submitted that if there was any legitimate purpose for attempting to measure the insignificant water usage of unmetered D&S diversion customers, it can only be for the purpose of Victoria's national water accounting obligations. It has nothing to do with the management of irrigation use or protecting minimum flows, which is an environment issue. An error made by the Commission and the consultants was that GMW's policy provides two methods for estimating water use by domestic and stock diversion customers and neither method involves meter-based deeming. Appendix 1 to the policy provides that the method to be used for unregulated domestic and stock customers requires assuming usage equals entitlement volume. The applicants submitted that therefore costs for deeming by the method used by GMW are completely unjustified.
2. The Commission's submissions regarding the alleged deeming error were summarised in the written supplementary outline as follows:

1. The applicants allege that the Commission's Determination of the service point fee was based on another error of fact - that "deeming costs might be comparable across D&S and unmetered irrigation diverters on unregulated streams". As outlined below, the Commission did not make or rely on this finding.

1. One of the activities which GMW performs and recovers the costs of through the service point fee is 'deeming'. As stated in footnote 58 of the Decision, deeming is used by GMW to assess usage of low volume water users who do not have meters.
2. Specifically, GMW installs meters at certain representative sites within the unmetered customer class to assess water usage, which allows GMW to estimate usage across the broader customer class and "deem" usage volumes at unmetered sites generally. This approach of deeming use based on a representative sample is more efficient than recording actual use by unmetered D&S users, which would require meters to be installed at each service point, resulting in higher costs and a consequent likelihood of higher fees for this customer group.
3. GMW's Submissions further explain how deeming operates and the costs incurred in performing this activity.

Similarly to Alleged Error 1, Alleged Error 2 focuses on part of the Egis Report. The applicants cite a passage from that report stating that GMW provided insufficient evidence that deeming costs were based on assumptions that promote efficiency. Specifically, the applicants allege an error based on the Commission's "acceptance that deeming costs might be comparable across D&S and unmetered irrigation diverters on unregulated streams, when that is far from the case". The Final Application contends that "had [the Commission] recognised that deeming costs for D&S users are around one tenth that of irrigators it could hardly have approved a service point fee that entailed a trivial and diminishing adjustment over the first three years of the approval period so that by year 4 it is exactly as GMW proposed".

1. The Commission did not make or rely on any finding about whether deeming costs were comparable as between D&S and irrigation diversion customers. The applicants have not pointed to any part of the Determination or Decision where such a factual finding is apparent. Nor is it logical to suggest that any such finding was material, in circumstances where GMW's proposed service point fee was not approved by the Commission.
2. As with Egis' criticism of GMW highlighted by Alleged Error 1, Egis' critiques related to deeming for unmetered users contributed to the Commission refusing to approve the service point fee proposed by GMW and instead allowing a lower service point fee. As noted in the Egis Report, that report was "not a comprehensive review of GMW's Service Point Fee Calculation Model" rather it was "focused on addressing the issues raised by customers and if GMW met the Commission's guidance associated with diversion tariffs".
3. Alleged Error 2 reveals the applicants' disagreement with the manner in which fees are structured across the customer base - indeed, the applicants criticise GMW's decision not to create a separate tariff class for unmetered irrigators on unregulated streams on the basis that deeming is "relevant only to irrigators, not D&S users". This is a merits-based criticism which is also inconsistent with a statement in the Aither Report also cited in the Final Application: "some of the [deeming] activity is directed to deeming usage by D&S users". As discussed in GMW's Submissions at paragraph 29.6, the deeming mechanism has benefits for all customers.

1. On behalf of the Commission, it was also submitted that:
   1. The Commission did not rely upon any erroneous finding. It is not clear in the decision where the factual finding is. The decision does not discuss deeming;
   2. The applicants are dissatisfied that a separate tariff was not fixed for their cohort.
2. It was submitted on behalf of GMW that the Commission did not base the determination of the service point fee on the deeming costs being the same for both domestic and stock customers and irrigator customers. The Tribunal was referred to Table 1 of the appendix to GMW's letter, which indicates that entering usage/deeming are low activity costs for all diversion customers in unregulated streams. Table 3 to the same letter indicates that estimating use for unmetered service point activities accounts for 6 percent of the labour for diversion operations for unmetered service point activities.
3. The Tribunal was then referred to the Egis report at 20, which relevantly states that:

Insufficient evidence was provided by GMW that the deeming costs for each customer group are based on assumptions that promote efficiency. We would expect that the deeming activities and costs would vary depending on the deeming method applied which is influenced by the type of service, customer group, purpose, order requirements and meter status. The allocation of an average deeming cost per service point across all customer groups which are deemed does not adequately capture the expected variability in activities and costs associated with each of the six methods used by GMW (area and depth, flow rate and duration, property area and service level, representative sampling, entitlement volume and representative use.

Our expectation is that deeming based on entitlement volume for domestic and stock use would not have the same level of activity and cost as most of the other methods.

1. The following passage at 21 of the Aither report was then highlighted:

Deeming and meter validation

The costs used by GMW to determine the current $145 service point fee for D&S and Diversions unmetered irrigation service points include costs for both deeming unmetered usage and meter related costs which can seem counter intuitive as they are unmetered service points. These meter costs are related to deeming which is used by GMW to assess usage of low volume water users.

...

GMW did not provide any quantitative or qualitative information on the relative value that deeming provided the different customer groups. Deemed usage is for example variously used for managing take against available allocation on regulated streams and targeted assessments of use compared to licensed volume on unregulated streams. GMW also has a formal policy and procedure that guides staff in the estimation of use when a meter is not installed or an existing meter is not functioning accurately.

The cost component for deeming was based on an assessment by experienced staff of the portion of Diversion Inspectors' total work time that is involved in this activity. The total cost for this deeming activity was then apportioned across all unmetered service points. Some of the activity is directed to deeming usage by D&S users however much of the activity is directed to monitoring, assessing, and managing usage by unmetered irrigation users. The rationale used by GMW to justify apportioning this activity cost across all unmetered service points is that management of usage within individual water entitlements benefits all users by ensuring effective sharing of the resource, and D&S users were considered to receive significant protection through management of irrigation use to protect minimum flows and ensure availability of water for D&S use. The DGC project team considered this to be a reasonable position, and whilst individual water users may not receive a specific benefit in every year, over the longer term these benefits should accrue to the vast majority of users in some measure.

1. The Aither report therefore had not concluded that GMW provided any evidence as to the comparable value of the deeming undertaken in relation to different customer groups. The justification for GMW in averaging the cost of deeming across domestic and stock customers and irrigation customers was that all the customers may not receive a specific benefit every year, however there are long term benefits to the vast majority of users in the deeming activity.
2. Counsel for GMW then referred the Tribunal to the Commission's decision at 44, as follows:

Submissions argued that service point fees should not be paid by unregulated domestic and stock users on the basis that they do not receive any services for those fees. In its report, Egis found that costs recovered by the service point fee relate to services and activities associated with all diversion customers, including diverters on unregulated waterways. These activities include inspections associated with compliance, monitoring, measuring use and, where installed, maintaining meters at each diversion site.

However, Egis reviewed Goulburn-Murray Water's response to our draft decision and found that the additional information provided by Goulburn-Murray Water on its unmetered service point fee did not clearly justify maintaining the tariffs proposed by Goulburn-Murray Water in its price submission. Egis found that some of the costs covered by Goulburn-Murray Water's proposed unmetered service point fee could not be verified using the data provided by Goulburn-Murray Water. Egis recommended that going forward Goulburn-Murray Water should improve its data collection and cost allocation for service point fees. We have reviewed Egis' advice and do not consider that Goulburn-Murray Water's unmetered service point fee meets the requirements of our guidance.

1. The Commission then went on to not accept GMW's proposed tariff structure for the service point fees applying to unmetered diversion customers and decided to reduce unmetered service point fees by 12 per cent in 2024-25, to be equivalent to the price the business had proposed for the final year of the regulatory period.
2. It was submitted on behalf of GMW that the Commission had not based their decision on the conclusion that deeming costs were the same between domestic and stock customers and irrigator customers. To the contrary, the Commission had accepted the Egis report that stated the GMW proposal had not captured the expected variability between the cost of deeming between different types of customers. The Commission however was satisfied that the spreading of the deeming costs was reasonable. As the Commission was not satisfied with GMW's proposed costs for unmetered service point fee customers, the costs were reduced by 12 percent and therefore were not the fees proposed by GMW.
3. In written reply submissions, the applicants relevantly stated that:
   1. Counsel for GMW referred to the benefits that domestic and stock users receive from the activities performed by GMW but which may be performed primarily on account of irrigation customers. It was claimed these benefits justified the sharing of deeming/use estimation costs across all unmetered diverters and also justified levying the access fee on a service point rather than an entitlement volume basis.
   2. The applicants' presentation dealt with the falsity of this claim as to the purported benefits in relation to all GMW activities, in relation to service point inspections, in relation to deeming and in relation to the access fee.
   3. However, the applicants' presentation did not sufficiently emphasis that nowhere among the rules set by the Act, the Water Industry Regulatory Order or the Commission's Guidance Paper is there reference to the 'beneficiary-pays' principle which may justify making the beneficiaries of GMW's activities pay for the service. Table 3.5 of the Guidance Paper makes clear that GMW's tariffs should be 'cost-reflective', ie those to whom the service is provided, or those on account of whom the activity is conducted, must pay a tariff that reflects the cost of that service or activity.

1. As discussed above, for the applicant to succeed the Tribunal needs to be satisfied that the determination is based wholly or partly on an error of fact in a material respect. The Tribunal notes that the applicants point to apparent inconsistencies in the logic applied and the lack of information and evidence to support estimation conclusions (despite these matters being required by the Guidance and/or requested by the Commission). These include:
   1. The estimated deeming costs for different customers cohorts, not being provided to the Commission for the purpose of estimating the service point fee. Which meant that a proper estimate of the direct and indirect benefit of the deeming could not be assessed by the Commission;
   2. The averaging of deeming costs across customer cohorts, when such a decision would negatively impact domestic and stock customers' fees but in contrast the monitoring costs apparently only being applied to the unmetered customers. The metered customers only having two yearly inspection costs applied. In circumstances where monitoring would likely be of at least similar, if not much greater benefit, to metered customers and the unmetered irrigation customers. The applicants may argue that somewhat contradictory approaches have been used to spread some costs but not others across customer cohorts, and in each case the unmetered domestic and stock customers have been financially disadvantaged;
   3. The Commission did not accept GMW's proposed tariff structure for the service point fee applying to unmetered diversion customers but then used GMW proposed fee as a basis to apply a 12 percent discount when determining the service point fee. The Commission has used the fee structure it found to be unacceptable as the starting point in determining the amount of the final fee to be applied.
2. It is not before the Tribunal whether these criticisms of the decision are valid or not. The question for the purpose of the deeming error is whether the Commission assumed that the averaging across customer cohorts of the costs of deeming water usage, was appropriate as the activity and cost from unmetered domestic and stock diversion customers was comparable to unmetered irrigators and whether the deeming of use for unmetered domestic and stock diversion customers has little benefit or function in relation to such users.
3. The Tribunal is not satisfied that the applicants have established that in making the determination, the Commission assumed that averaging the costs of deeming water usage, was appropriate as the activity and cost from unmetered domestic and stock diversion customers was comparable to unmetered irrigators. This finding was not stated in the Commission's decision and was indicated to be unlikely in the Commission's consultant's report. The Commission decision stated that:
   1. Egis reviewed additional information provided by GMW on its unmetered service point fee and found that it did not clearly justify maintaining the tariffs proposed by GMW in its price submission;
   2. Egis found that some of the costs covered by GMW's proposed unmetered service point fee could not be verified using the data provided by GMW.
4. The Commission must have had some other basis to accept the proposed service point fee as a starting point to set an adjusted fee. As the applicants' have not made out that the Commission had relied upon the fact alleged as part of the deeming point error, they are unable to prove an error of fact in relation to that alleged fact.

Issue 3 - Is the determination based wholly or partly on an error of fact in a material respect in relation to the alleged access fee error

1. The Applicant's submission contained in the Presentation Notes regarding the access fee error, was as follows:

The third error concerns the Access Fee charged to all unregulated diverters.

Egis claimed that GMW had demonstrated that costs attributed to the Access Fee are 'driven by the number of service points rather than entitlement volume'. That claim was unsubstantiated by any data and we consider it to be unequivocally false. We say this because we sought the information supposedly 'demonstrating' this that GMW used to persuade Egis but received nothing.

The same consultant had made the same claim in 2016 under a different firm name - Indec - and even then admitted that GMW had provided no cost data to support it. Despite that, the assumption was carried forward into successive determinations, including 2024, under the guise of 'continuing existing arrangements'.

The Commission itself required GMW to 'improve its cost data ' - which is effectively an admission that it does not currently possess such evidence. Yet it still approved the Access Fee for another 4 years.

Most of the high-cost activities said to justify that fee - water ordering, rostering management, stream-flow assessment - simply do not apply to unregulated domestic and stock diverters.

Analysis of Water Register data (JTB 48) reinforces this by demonstrating that irrigators account for around 95% of all licensed water in unregulated streams. Domestic and stock users, with barely 5% of total volume, cannot possibly drive those system costs. Detailed analysis of Water Register data in conjunction with streamflow measures to be presented later, further confirms this.

This factually invalid basis for the Access Fee - treating domestic users as if they drive costs incurred because of irrigation - has significant adverse impact on us. If the Access Fee was based on entitlement volume D&S diverters would pay a small fraction of their current charge.

1. The applicants submitted that the Indec report, a consultants' report for the Commission for the 2016-2020 price review dated January 2016, provides no evidence that the number of service points drive the costs attributable to activities related to the access fee. They also stated that it is an absurd suggestion, that as GMW's diversion costs are fixed, then service points are an appropriate basis for charging. The activities funded by the access fee are only required due to the presence of irrigators and especially high-volume irrigators.
2. The applicants also submitted in relation to access fee activities:
   1. Water ordering is not relevant to diversion customers on unregulated water sources, whether domestic and stock or irrigation. To the extend that GMW does manage or plan activities the costliest activities relate to restrictions rosters and suspensions which affect irrigators, not domestic and stock diversion customers;
   2. In the absence of irrigators, there would be no need for a system of rosters and suspension as flow declines;
   3. Most domestic and stock customers are likely to be solely domestic users rather than customers with significant numbers of stock. They will rarely use their 2ML water entitlement, so they will have an insignificant effect on streamflows compared to irrigators;
   4. It is irrigation and irrigators and private rights holders who create a need for water rationing through rosters and restrictions, not 2 ML domestic and stock diversion customers;
   5. There is a logical connection between service points and only one of the nine activity types that GMW claim make up the access fee. There is no logical connection between service points and the other eight types of activities used to justify the access fee, particularly as activities related to rosters, suspension and restrictions, do not and should not relate to domestic and stock customers;
   6. Water trading applies almost exclusively to irrigators;
   7. Water ordering applies to gravity irrigation and irrigation from regulated sources;
   8. The applicants' argument is not that the access fee should be based on usage but on entitlement volume which like service points does not vary from year to year;
   9. The applicants provided a table in their presentation notes at 34, regarding the rosters, restrictions and suspension, which they state shows the following:

...by the time the Stage 3 restrictions threshold is reached, D&S requirements amount to only a tiny fraction of the flow. By the time Stage 5 is reached they still amount to a small proportion of the available water, but if irrigators were [drawing from] unrestricted streams [they] would all be dry! Irrigators are the major beneficiary of rosters and restrictions and the real reason they exist is to protect the instream habitat, not to protect D&S users.

If these data do not represent incontrovertible evidence that irrigation use, ie entitlement volumes, drives this element of costs funded by the Access Fee it is hard to see what would.

1. The 2014 Victorian Non-Urban Water Metering Policy makes clear that the reason unmetered domestic and stock diversion customers are not metered is because they do not have 'an adverse impact on the environment, water resources or other users'.

1. The Commission in its supplementary written outline relevantly states:

1. Alleged Error 3 relates to the access fee which GMW levies to recover the costs of various activities which protect the access rights of diversion customers and ensure that water sources are managed sustainably. This is explained at Part B of the Primary Submissions and in GMW's Submissions. 2. The Commission dealt with access fees in the Decision by stating (at pp 35-36):

(a) "Our consultant Egis has reviewed [GMW's] access fee and advises [GMW] has demonstrated that: > > * the costs associated with the diverters' access fee relate to services and activities associated with diversion customers > * the number of service points rather than water entitlements drives the costs as the greater the number of service points, the more involved the management, planning and water ordering systems and processes"; > > (b) "we have considered and agree with Egis's findings that it is appropriate to base access fees on the number of service points rather than water entitlements"; and > > "our final decision accepts [GMW's] proposed tariff structure for the access fee and resource management fee for diversion customers".

1. By Alleged Error 3, the applicants contend that the Determination had an erroneous basis because Egis made, and the Commission accepted, a finding that service points rather than entitlement volume drives the costs of GMW's activities which are recovered by the access fee.
2. By way of background, GMW first transitioned to a fixed cost access fee approach (based on service points rather than volume) in 2016. At this time, Indec (the Commission's consultant) concluded, and the Commission agreed, that the key driver of cost was number of service points, and that the cost base was fixed, not variable. Indec's report referred to in the Final Application and is at Tab 16 of the Tribunal Book (Indec Report).
3. The Indec Report notes that GMW had provided data which "verified that its operating costs do not vary with the volumes of water usage by diversion customers". Figure 3-6 in that report "shows that annual water usage by diversion customers over the period 2010-11 to 2014-15 [had increased] whilst operating costs for diversion services ha[d] not varied significantly from year to year with a declining trend over the same time period. This demonstrates that operating costs for diversion services are not directly linked to the volumes of water usage by diversion customers". The Commission ultimately approved the tariff structure based on number of service points in its 2016 decision and concluded that the proposed fixed access fees "more closely align[ed] tariffs with costs, leading to greater cost reflectivity and greater efficiency".
4. In relation to the access fee proposed by GMW in the current price review, the Egis Report stated that "the greater the number of service points, the more involved the management, planning and water ordering systems and processes". In Table 1 that was submitted to the Commission on 6 May in response to the ESC's Draft Decision, GMW set out which activities are referable to the access fee and unmetered customers. As explained in GMW's Submissions at paragraph 33, and as the ESC accepted, those activities are logically connected to the number of service points rather than volume of any water entitlement.
5. In its Decision, the Commission ultimately accepted that "[GMW's] access fee recovers costs associated with streamflow monitoring, rostering and restrictions, investigating sharing issues and developing water access policy". In the Commission's submission, Alleged Error 3 was not an error of fact. The Commission further adopts GMW's Submissions on this point (at paragraphs 30-35).
6. The applicants also allege that the activities underpinning the access fee cannot apply to D&S diverters. The Commission adopts GMW's Submissions at paragraphs 36-37 on this point.

1. The Commission also submitted that the determination was partly based on a relationship between the operating costs and the number of service points and there was ample evidence to support this relationship.
2. In the submissions of GMW, the Tribunal was referred to the aspect of the Commission's decision extracted at [46] in the supplementary written outline of the Commission above. The Tribunal's attention was also draw to the following passage at 35 of the Commission's decision:

Given the issues raised by customers and Egis' findings in its review, we agree with Egis that in the future it would be beneficial for Goulburn-Murray Water to improve its data collection on costs and cost allocation for all diversion tariffs, which will further increase the transparency of these costs in future price reviews.

Goulburn-Murray Water's access fee recovers costs associated with streamflow monitoring, rostering and restrictions, investigating sharing issues and developing water access policy.

1. The written submissions of GMW at 24, then referred the Tribunal to the Egis report, which relevantly states:

GMW has demonstrated that Service Points rather than water entitlements drive the costs as the greater the number of service points, the more involved the management, planning and water ordering systems and processes.

The basis of charging distinguishes between regulated, unregulated and groundwater to better reflect the services provided to each customer group.

GMW has demonstrated that the costs vary with the number of service points rather than volume of entitlements and therefore it is reasonable that the basis of charging is on a service point basis.

1. It was submitted that GMW's written outline contains the reasons why a conclusion was reached that the number of service points drives the amount of activity. The written submissions relevantly states:

1. Collectively, the activities referable to the access fee are logically connected to the number of service points, in that the scope and complexity of the activities, and thus their cost, increase with the number of service points rather than water entitlement volume. That logical connection is apparent from the description of the relevant activities at [24] above, and the following:

33.1 The costs of investigating and addressing unauthorised works, breaches of water use rights and sharing and interference issues (including customer complaints) depend primarily on the number of incidents/issues requiring a response and the complexity of the issues, which logically increases with the number of sites at which water can be taken (i.e. service points). > > 33.2 For example, in relation to unauthorised works investigations, the greater the number of installed service points, the more the potential for instances of interference with those service points. The extent of investigative activity required to be undertaken is unrelated to volume entitlements. Similarly, the potential instances of unlicenced works, or works undertaken in breach of a licence, logically correlate more closely to the number of service points and not to volume of entitlements. > > 33.3 The costs of developing water use policies, and representing customers in State-wide policy development, generally apply to all licences regardless of licenced volume entitlements or usage. Policy work is undertaken to facilitate GMW's water management and monitoring functions to ensure that, as a limited resource, water is used sustainably, fairly as between all users, and safely from an environmental perspective. For that reason, policy work, and thus its cost, benefits all diversion customers, regardless of their water volume entitlements. > > 33.4 Since water ordering occurs at a service point, the more service points are in existence, the greater the number of orders requiring management. As a result, the cost of scheduling orders, and administering the system needed to support water ordering, generally increases with the number of services points. By contrast, the costs are independent of the volume being requested by a customer for any particular order. > > 33.5 The costs associated with streamflow assessments, rosters, restrictions and suspensions (which include management, implementation, enforcement and compliance activities, and DEECA reporting obligations) varies depending on demand, climatic conditions and resource availability. The focus of this activity is on managing access to the stream so that flows are adequate at the service points where private rights and licence holders take the water. The cost of the work is therefore directly related to the number of service points where flow is sought to be preserved, which includes D&S service points.

2. It was also submitted that although the Indec report was not mentioned in the Determination, it was clearly in the Commission's possession from an earlier Determination and therefore the Tribunal can have regard to this report. The Tribunal was referred to the methodology of the Indec report, which relevantly states:

2.5 Indec's methodology involved gaining an understanding of G-MW's tariff reforms and the drivers behind the proposed changes. Our initial understanding was based on G-MW's 2016 Price Submission and accompanying information templates. > > As agreed with the Commission, the tariff review was based on a high-level assessment to identify any anomalies and inconsistencies with G-MW's statements and assumptions made in its 2016 Price Submission. > > ... > > 2.6 Indec requested G-MW to provide cost data and supporting analysis which identify what costs are fixed and variable in providing the diversions services and the key cost drivers associated with diversion services. > > ... > > G-MW indicated that its cost data and analysis are limited in identifying the key cost drivers and which costs are fixed or variable for the delivery of diversions services.

3. The Tribunal was referred to a graph in the Indec report charting the operating costs of diversion services for GMW against the water usage of diversion services of GMW for a five year period between 2010/11 to 2014/15. It was submitted that this graph is evidence that operating costs do not vary with volumes of water usage by diversion customers.
4. The report at 25 states that in response to the request for data, GMW responded as follows:

'As discussed today, the data being sought does not exist in any pure state historically.

The data that was used for further analysis during the Diverters' Tariff Strategy developments was the historic recurrent budget and expenditure (as well as budget/expenditure projections) for the Diversions business broken down by Operations, Maintenance and Management/Admin activity types (so activities 100, 140 and 160).

This data was used to inform discussion with Diversions managers also key staff, and later validation and discussion with the Working Group (which comprised Regional Water Service Committee chairs and a couple of GMW Board members), about the sorts of activities, functions and tasks that were included in each of the 3 'activity' types mentioned above.

This process required applying collective expert knowledge, judgement and assumptions about the mix of activities/tasks, how these could be better categorised or logically grouped to meet the tariff principles of cost reflectivity, simplicity, transparency etc...

From this process it was clear that service point related activities: metering reading, meter maintenance, compliance checks, rostering/ restriction management, water ordering and so on; comprised the single largest cost driver (~60%) of Diversions business recurrent costs in an average year.

In terms of capital costs, as stated previously, nearly all capital expenditure relates to service points (flow meters).

So when Site/Service Point and Access were determined as sensible and logical tariff categories it was clear that service point related activities, linked to each of these categories, were by far the largest single cost driver for the Diversion business (and would continue to be in the future).'

1. The Indec report, at 27, states that the qualitative data received from GMW to support its analysis of the key cost drivers associated with diversion services was as follows:

Service points are the key driver of costs in the diversion business as:

• Meters are really the only diversion-related asset
• Service points (whether metered/ non metered) are the key way of GMW ensuring water is taken in accordance with legal entitlements to water
• The main diversion costs are incurred in meter maintenance, replacement, compliance checks, meter reading (so proportionally a high labour cost involved)
• Diversion customers are located all over GMW's area of responsibility so the geographic spread and travel related costs to undertake service point/ site activities are a significant cost driver.

1. In relation to cost drivers, the Indec report stated:

G-MW did not provide cost data and analysis to support the key cost drivers identified for the major activities associated with diversion services. Indec did not identify any issues with the qualitative analysis provided by G-MW.

1. The report then found on the basis of a qualitative analysis that a causal relationship exists between the number of service points and access compliance costs for diversion services.
2. In reply written submissions, the applicants relevantly stated that:
   1. The applicants consider that their First Application of 31 March, their presentation on 27 November 2025, including the data in table on page 34, put beyond doubt the factual invalidity of levying the access fee on a service point basis.
   2. As GMW and the Commission did not address the applicants' arguments on this matter and did not attempt to deny the arguments around the table on page 34 of the Presentation Notes, this may be taken as strong evidence in support of the applicants' claims.
   3. The test required by section 55(2)(c)(ii) of the Act is that the decision be reliant wholly or in part on errors of fact. The applicants have proven at least partial reliance on errors of fact.

1. As discussed above, the Tribunal needs to be satisfied that the determination is based wholly or partly on an error of fact in a material respect. Unlike in relation to the annual inspection error and the deeming error, the Tribunal is satisfied that the fact alleged to be in error was a matter on which the determination was based. The Commission's determination was, in part, based on the assumption that the number of service points rather than the volume of water used drives the costs which relate to this fee for unmetered domestic and stock diversion customers. The next issue is whether it has been shown that this finding was an error of fact.
2. In making their submissions each of the three parties made assertions as to the cost drivers of the access fee. The submissions made by GMW were superficially more attractive then made by the applicants. This was no doubt due to the detail of these submissions. However, on closer examination of the activities causing costs to be incurred could have as easily been supportive of an argument that costs are not driven by the number of service points. There was a lack of quantitative data, as noted in the Indec report. GMW relied upon a graph charting water usage and operating costs for diversion services for a five year period. This graph was said to indicate that volume of water usage does not drive operating costs. This graph appeared to be a somewhat blunt instrument, in circumstances where there is no evidence of any other operational, management or reporting variations which could have impacted these figures.
3. The Commission's submissions were that Egis had advised that after reviewing GMW's proposed access fee, it was satisfied that the costs associated with the diverters' access fee relate to the services and activities associated with diversion customers and the number of service points rather that the water entitlement drives the costs, as the greater number of service points, the more involved the management, planning and water ordering systems and processes. The Commission's decision was that it agreed with Egis's finding that it was more appropriate to base the access fee on the number of service points rather than the water entitlements. The final decision accepted GMW's proposed access fee for diversion customers. The Commission, like GMW, relied upon the Indec report which it said showed that in the period from 2010-11 to 2014-15 the operating costs for diversion customers had not varied with annual water usage by diversion customers.
4. The applicants argue that the lack of evidence, including quantitative data, and that the Commission required GMW to improve its data, mean that the assumption that the costs attributed to the access fee are driven by the number of service points rather than the entitlement volume is false.
5. There is a fundamental difference between there being a lack of evidence to prove a fact or assumption and a finding that the fact or assumption is false. The Tribunal's task in this case is, in part, to decide whether the assumption relied upon by the Commission was false. A lack of evidence to support the Commission's assumption does not prove the assumption to be false. A lack of data supplied by GMW cannot be used to fill a gap in the case of the applicants, where the applicants do not have evidence to rely upon for a finding that there was an error of fact.
6. The Tribunal is satisfied that the evidence in support of the proposition that the costs attributed to the access fee are driven by the number of service points rather than the entitlement volume is thin, as GMW has not produced quantitative data to support this proposition. In their submissions, both the Commission and GMW rely upon a table contained in the Indec report which they state indicates that operating costs for diversion customers do not vary with entitlement volume. This table and the surrounding information make no attempt to grapple with any other factors which pay have affected operating costs during this period.
7. Further, the activities related to the access fee do not clearly support the level of access fee charged to unmetered domestic and stock diversion customers. However, the case of the applicants that the proposition is false is weak. In circumstances where there is a lack of evidence to support the competing factual propositions of the parties, the Tribunal is not able to conclude that there was an error of fact by the Commission in relation to the access fee cost drivers.

1. The Tribunal has reached the conclusion that it is not satisfied that any of the alleged errors of fact have been proven. The Tribunal will therefore affirm the decision under review pursuant to section 56 of the Essential Services Commission Act 2001 (Vic).