Northern Victorian dairy farmers have criticised Goulburn-Murray Water's decision to charge a $1260 fee as part of the DSE's dairy shed water licence transition program.

The program includes an amnesty for farmers to apply to license water used in their dairy sheds without penalty, which ends on February 26.

Goulburn-Murray Water claims the expense is justified, however northern Victorian dairy farmers are angry they are being slugged such a fee to update an existing licence, when southern dairy farmers can do so for free.

VFF water council member Jim McKeown said the fee seemed unfair for northern farmers.

Mr McKeown said he had no problem with a fee applying to a new licence, but couldn't find a reason to charge $1260 to upgrade an existing one.

"I would have thought if someone wants to change the volume of an existing licence, the fee would be minimal because all the work has already been done - they just have to change some figures."

Mr McKeown is seeking a step up on his current licence and said he was being charged the same as he would be if he was applying for a new one.

"In my situation, I have an existing, current, legal licence for 1.3 Ml to use in my dairy which I want to change to 10.1 Ml - they say it's going to cost me $1260," Mr McKeown said.

The Yarroweyah dairy farmer said Southern Rural Water, the water manager for the south of the state, is charging their dairy farmers no fee for an alteration of an existing licence.

"They've indicated they will alter existing licences at no cost," Mr McKeown said.

"If I was in the same situation down there, I would not pay a cent for altering my existing licence under the amnesty."

When asked if he would pay the fee, Mr McKeown was cryptic in his response.

"I would find it very hard to justify the expense if southern dairy farmers can do it at no cost."

UDV president Chris Griffin said G-MW's licence fees were a "major issue of concern".

"While G-MW customers with a groundwater or surface water licence face an additional $1200 fee to register their dairy wash-down water, farmers within other jurisdictions do not attract additional fees," he said.

"The UDV would like to see G-MW fall in line with the other major water corporations."

G-MW general manager operations Kevin Preece said the $1260 was a "standard fee" based on costs incurred to undertake technical assessments, which applies to new licences and upgrading existing licences.

"Fundamentally, any change of licence in a groundwater or unregulated surface water (bundled) system involves cancelling the old one and issuing a new one," he said.

Mr Preece said he suspected Southern Rural Water would pass on extra costs to cover the cost of upgrading an existing licence without charge.

"With SRW, I would envisage the costs of making the licence free would be passed on to all of their customers," he said.

"G-MW consulted with its customers and decided that only those benefiting from the licences should pay for them.

"We are also required to assess whether a dairy farmer's request for increased entitlement will impact on other users of that same resource so it is much more than simply changing numbers on the paperwork."

For more information regarding the Dairy Shed Water Licence Transition Program, visit www.ourwater.vic.gov.au/saving/farms/dairy-wash-licensing or phone DSE's customer service centre on 136 186.