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2008 - 2009 - 2010
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
Renewable Energy (Electricity) Amendment Bill 2010
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Climate Change, Energy
Efficiency and Water,
Senator the Honourable Penelope Ying Yen Wong)
Renewable Energy (Electricity) Amendment Bill 2010
GENERAL OUTLINE
Purpose
The purpose of the Renewable Energy (Electricity) Amendment Bill 2010 (the
Bill) is to separate the Renewable Energy Target (RET) scheme into two
parts - the Large-scale Renewable Energy Target (LRET) and the Small-scale
Renewable Energy Scheme (SRES). The changes will provide greater certainty
for households, large-scale renewable energy projects and installers of
small-scale renewable energy systems such as solar panels and solar water
heaters. The enhanced scheme will further strengthen the Government's
commitment that the equivalent of at least 20 per cent of Australia's
electricity will come from renewable sources by 2020.
In particular, the Bill will:
. create separate small-scale and large-scale obligations on liable
entities and two new categories of renewable energy certificates -
large-scale generation certificates and small-scale technology
certificates.
. require the Renewable Energy Regulator (the Regulator) to:
- establish an optional 'clearing house' to transfer certificates
from owners of small-scale installations to liable entities at $40;
- set a small-scale technology percentage annually, based on the
estimated amount of small-scale technology certificates expected to
be created in that year;
. require liable entities to surrender renewable energy certificates from
small-scale technologies (in line with a new annual small-scale
technology percentage) in quarterly increments throughout a compliance
year to encourage the frequent transfer of renewable energy
certificates;
. allow for the effective rate of assistance for emissions-intensive,
trade-exposed (EITE) activities to be preserved;
. adjust the profile of annual targets to be met by renewable energy
certificates from large-scale generation to take account of the
renewable energy certificates from small-scale technologies and to
remove the proportion of the annual targets for the inclusion of waste
coal mine gas until eligibility of that source is set in regulations;
. amend the provisions relating to waste coal mine gas eligibility to
allow for the commencement of eligibility of waste coal mine gas in the
RET to be determined by regulations; and
. make a number of technical amendments to:
- deliver the new small-scale scheme, including to enable regulations
to prescribe the small-scale technology percentage;
- establish transitional arrangements for the treatment of existing
banked renewable energy certificates and renewable energy
certificates from forward contracts;
- insert new provisions to strengthen the compliance and enforcement
regime, including establishing civil penalties.
Background
The legislation underpinning the scheme comprises the Renewable Energy
(Electricity) Act 2000 (the Act); the Renewable Energy (Electricity) Charge
Act 2000 (the Charge Act); and the Renewable Energy (Electricity)
Regulations 2001 (the Regulations).
Under the Act, wholesale purchasers of electricity ('liable entities') are
required to meet a share of the renewable energy target in proportion to
their share of the national wholesale electricity market. The Act provides
for the creation of renewable energy certificates by generators of
renewable energy. One renewable energy certificate generally represents one
megawatt-hour (MWh) of electricity from eligible renewable energy sources.
Installations of solar water heaters and small generation units (including
rooftop solar panels, small wind turbines and micro-hydro systems) are able
to create renewable energy certificates under deeming arrangements
prescribed in the Regulations. Once registered, the renewable energy
certificates are able to be traded and sold to liable entities who may
surrender them to the Regulator to demonstrate their compliance under the
scheme and avoid paying the shortfall charge. The Charge Act sets the
level of the shortfall charge for those liable entities who do not
surrender sufficient renewable energy certificates.
Details of the Bill are set out in the Attachment.
Financial Impact Statement
The Office of the Renewable Energy Regulator (ORER) will receive an
additional $6 million in 2010-11 to implement the changes outlined in this
Bill. This includes $4.5 million in capital funding to modify and expand
the existing information technology system to enable the ORER to implement
the clearing house functions.
The impact on Government revenue is dependent on any change in the number
of renewable energy certificates that are traded. Administered revenue is
received by the ORER from a number of statutory fees including fees for the
creation and surrender of renewable energy certificates.
Regulation impact statement
Assessing the problem
Electricity generation accounts for more than one-third of Australia's
current greenhouse gas emissions, so Australia's transition to a low
pollution future will require a significant transformation in this sector.
Renewable energy sources such as wind, solar and geothermal will be a key
part of the climate change solution, and Australia has vast potential in
these areas.
The Renewable Energy Target (RET) scheme has been designed to deliver on
the Commonwealth Government's commitment that 20 per cent of Australia's
electricity supply will come from renewable sources by 2020.
The RET scheme will help to transform the electricity sector and drive the
shift to low pollution electricity generation by accelerating the
deployment of a range of both small and large-scale renewable energy
technologies like wind, solar PV, biomass, geothermal power and solar hot
water over the next two decades. The RET scheme also brings all state and
territory renewable energy targets into a single national scheme.
There is concern that the inclusion of small-scale technologies and their
impact on the renewable energy certificate (REC) market is delaying
investment in large-scale renewable energy projects. The RET scheme annual
targets are set in section 40 of the Act and can be met through the
creation of RECs by either small- or large-scale generation. In the early
years of the scheme, the annual targets increase at a slower rate until
2015 then increase more rapidly to reach the 45,000 gigawatt-hours by 2020
target. This is to allow time for industry to develop its capacity in the
early years in order to meet the significantly higher later targets.
RET legislation and design
Amendments to implement the expanded national RET was passed by the
Commonwealth Parliament on 20 August 2009. Building on the existing
legislative framework, the RET creates a guaranteed market for additional
renewable energy deployment using a mechanism of tradeable RECs.
Demand for RECs is created by a legal obligation that is placed on parties
who buy wholesale electricity, that is, retailers and large users of
electricity. Liable entities are required to source an increasing
percentage of their electricity purchases from renewable energy to meet
annual targets which are legislated in terms of gigawatt-hours of renewable
energy. One REC is generally equivalent to one megawatt-hour (MWh) of
renewable energy. Liable parties can acquire and surrender RECs to
demonstrate compliance. Alternatively, they would be required to pay a
shortfall charge of $65/MWh from 2010.
The national expanded RET increases the previous Mandatory Renewable Energy
Target by more than four times from 9,500 gigawatt-hours to 45,000 gigawatt-
hours in 2020, with the target maintained at this level until 2030. The
annual targets under the expanded RET scheme commenced on 1 January 2010.
The supply of RECs is created by renewable energy power stations, as well
as small generation units including small-scale solar panels, small wind
turbines and micro hydro systems, and solar water heaters. RECs provide a
financial incentive to invest in renewable energy technologies. The RET
scheme includes Solar Credits which provide multiple RECs for each MWh of
energy produced by small generation units.
The Office of the Renewable Energy Regulator (ORER) oversees the
implementation of the RET scheme, including the accreditation of renewable
energy generators, overseeing the validation of RECs created by power
stations, solar water heaters and small generation units.
2 The COAG Review of Specific RET Issues
In designing the RET scheme through the Council of Australian Governments
(COAG), and during the passage of the RET legislation, some specific issues
were raised that required further analysis and consultation with
stakeholders. These issues were referred for inclusion in the COAG Review
of Specific RET Issues (the COAG Review), to be completed by end-2009.
In particular, the review considered:
. whether any new small-scale renewable technologies that are not
currently eligible should be included in the RET, as well as the
eligibility of heat pumps;
. whether changes should be made to the current provisions that allow for
exemption from liabilities based on 'self-generation', which mainly
affect off-grid remote resource projects;
. whether the Solar Credits or a similar mechanism under the RET should
be used to provide incentives for off-grid renewable generation; and
. factors that may be impacting upon the Renewable Energy Certificate
(REC) market in the short and long term.
Further to those issues, the Australian Government announced on 24 November
2009 that the current COAG Review would also consider whether new waste
coal mine gas projects should be eligible under the RET; and whether annual
targets under the RET should be increased to offset additional RECs not
backed by generation as part of the 'Solar Credits' mechanism.
The Communiqué from the most recent COAG meeting held on 19/20 April 2010
notes:
"the Commonwealth announcement of 26 February 2010 to make significant
changes to the Renewable Energy Target (RET) scheme, involving two
separate parts - the Small-scale Renewable Energy Scheme and the Large-
scale Renewable Energy Target. These changes are intended to address
concerns being considered by the COAG Review of Specific RET Issues
regarding Renewable Energy Certificate (REC) prices and additional RECs
not backed by generation as part of the Solar Credits mechanism. The
remaining matters within the scope of the review will be finalised for
consideration by COAG at its next meeting."
3 The issue
The Australian Government wants a well-functioning REC market that delivers
on the Government's commitment to ensure that 20 per cent of Australia's
electricity supply comes from renewable sources by 2020. The targets under
the RET are set to increase more than four times, to reach 45,000 gigawatt-
hours by 2020. These larger targets will significantly boost the demand for
RECs over the medium term and will place upward pressure on the REC price,
driving investment to the required level of renewable energy generation to
meet the Government's 20 per cent by 2020 commitment.
The total quantity of renewable energy generation that will be required
under the RET is significant as the annual targets increase in the period
to 2020. The COAG Review identified factors affecting REC prices,
including:
. the increase in the supply of RECs created by the higher uptake of
solar water heaters and heat pumps, driven by Commonwealth and state
subsidies, and the expectation that this trend may continue;
. domination of the spot market by small industry players, such as solar
water heater providers, who regularly sell RECs for liquidity reasons;
and
. the perception that there is a large quantity of banked RECs, and that
most liable entities will not need to purchase additional RECs to
satisfy their obligations for the 2009 calendar year.
There is concern that the inclusion of small-scale technologies and their
impact on the REC market is delaying investment in large scale renewable
energy projects.
Objectives of government action
The objective is to support a well-functioning REC market that incentivises
the deployment of large and small-scale renewable energy generation
projects to meet an overall target of 20 per cent renewable energy by 2020.
Options that may achieve the objectives
There are three broad options to amend the RET scheme to achieve the
objective and respond to the concerns outlined above.
Option 1 - status quo: maintain the current profile of annual targets
in the RET scheme that reach 45,000 GWh in 2020.
Option 2 - increase the annual targets under the RET to increase
support for renewable energy generation in the early years of the RET
but maintain an overall target of 20 per cent renewable energy by
2020.
Option 3 - make a structural change to the RET to separate large-scale
generation from small-scale generation[1]. Large-scale technology
would be supported by the RET through a separate, quarantined target
that takes account of the estimate of the deployment of small-scale
technologies, with the total large-scale target reaching 41 million
RECs (41,000 gigawatt-hours) by 2020. Small-scale generation would be
supported by receiving RECs at a fixed price, initially set at $40 in
nominal terms and then reviewed in 2014.
Impact analysis - costs, benefits and risks
1 Who is affected
For the purpose of this analysis, four broad categories of stakeholders
have been identified:
. Liable entities - wholesale purchasers of electricity that are required
to surrender RECs every year in order to meet the annual renewable
energy target. Liable entities are usually electricity retailers, and
in some cases are large organisations that use significant amounts of
electricity, and therefore make wholesale purchases directly from the
grid.
. REC creators - entities that generate RECs from eligible sources. REC
creators can range from organisations involved in running large-scale
renewable energy projects, to families installing solar panels on their
roofs.
. Electricity end users - retail purchasers and users of electricity.
Electricity end users range from households to big businesses.
. Technology manufacturers or installers - those entities involved in
manufacturing or installing the renewable energy technologies -
sometimes manufacturers also act as installers. Two examples are a
company that builds and installs wind turbines and a company that sells
solar water heaters.
2 Compliance costs
Two stakeholder groups incur compliance costs under the RET scheme:
. Liable entities - must comply with the registration, reporting, record
keeping and audit requirements of the Act.
. REC creators - if they choose to participate in the scheme, then they
must also comply with the requirements for the creation and transfer of
RECs.
There will be minimal additional compliance costs for liable entities as
the amendments will not significantly change:
. who is required to participate as a liable entity;
. record keeping requirements;
. compliance requirements such as audits; or
. procedural requirements such as registration and reporting to the
regulator.
Fees are collected by the Regulator for the creation and surrender of RECs
- of eight cents per transaction. Under Options 2 and 3, this cost would be
more than balanced for REC creators by the value of the RECs they receive;
historically this has been between $15 and $50. For liable entities that
have to surrender RECs each year, the eight cent fee would present a minor
additional compliance cost if the annual targets were increased as per
Option 2 or the scheme was separated under Option 3.
In addition, under Option 3 there may be a small increase in costs for
liable entities relating to the changed administrative arrangements for the
small-scale component of the scheme.
Economic impacts
1 Annual targets
Option 1 would maintain the status quo and not pursue any reform options
targeted at achieving a better functioning REC market.
Option 2 would significantly boost demand for RECs over the period to 2020
and thereby significantly increase renewable energy generation in the
period to 2020 providing an increased revenue stream for the renewable
energy sector.
While the targets would be increased, the competition between renewable
energy generators to create the RECs would continue unchanged.
Under Option 3, the Government would maintain its overall commitment to
achieve at least 45,000 gigawatt-hours (GWh), and therefore 20 per cent
renewable energy, in 2020. This would be through the combination of a
41,000 GWh large-scale target, plus the amount of small-scale generation
induced by the fixed price regime. The target for large-scale generation
would be adjusted downward by 4,000 GWh per year, to take account of the
separate support mechanism for small-scale technologies.
The rate of subsidy for the small-scale segment would be set with a REC
price of $40.
While the fixed-price segment would add some uncertainty about the quantum
of RECs (for liable entities), it would remove uncertainty about the price
of RECs payable in respect of small-scale systems. This would remove the
impact of the unanticipated uptake of small-scale technologies on the REC
market and increase certainty for large-scale technology developers.
4 Risks
A risk regarding Option 3 is the possibly open-ended commitment to small-
scale generation with cost impacts for the liable entities. The proposed
approach attempts to mitigate this risk by monitoring the uptake in the
market and reviewing the fixed price in 2014. In addition, annual targets
could be set with a 'true-up' in the following year.
Conclusion and recommended option
Option 3 is supported as it would provide legislative certainty to large-
scale renewable energy developers while still supporting the deployment of
small-scale renewable energy technologies.
The proposal maintains the Commonwealth's commitment to ensure 20 per cent
of Australia's electricity supply is from renewable sources by 2020.
Implementation and review
The proposals will require changes to the RET legislation. The changed
scheme could commence in January 2011.
A full statutory review of the RET scheme is planned for 2014. The
Government will also commission an independent review in 2012, which will
include participation by the energy market bodies, to provide
recommendations to the Government as to possible mechanisms for setting the
fixed price for small-scale RECs under the scheme that could apply from
1 January 2014. The review would consider:
. the development of a framework in which REC prices in the future are
set by an independent regulator;
. options to ensure consistent national assistance by incorporating
consideration of state and territory assistance in setting small-scale
REC prices;
. changes in the costs of the technologies; and
. the impact of the small-scale REC price and levels of small-scale
technology deployment on the electricity market, including electricity
prices.
The review would also consider a framework for determining eligibility
under the RET, particularly for small-scale technologies.
NOTES ON INDIVIDUAL CLAUSES
Clause 1 - Short Title
1. This clause is a formal provision specifying the title of the amendment
Act.
Clause 2 - Commencement
2. This clause sets out that sections 1 to 3 and anything in the Act not
elsewhere covered by this clause commence the day the Act receives the
Royal Assent. The clause further provides that Schedule 1, Part 1
commences on 1 January 2011; and Schedule 1, Part 2 and Schedule 2 both
commence the day after the Act receives the Royal Assent.
Clause 3 - Schedule(s)
3. This is a formal clause providing that each Act specified in the
Schedule is amended or repealed as set out in the applicable items in
the Schedule, and other items in the Schedule have effect according to
its terms.
SCHEDULE 1 - AMENDMENTS
PART 1 - MAIN AMENDMENTS
RENEWABLE ENERGY (ELECTRICITY) ACT 2000
Overview of Part 1, Schedule 1
4. The amendments to Part 1 of Schedule 1 have been developed to retain
many of the existing provisions and concepts as they apply equally to
the new large-scale and small-scale components of the Act. Often it has
been necessary to create parallel large-scale and small-scale
provisions to deal with the differences between the two components.
There are also some additional provisions necessary to deal with
elements of the small-scale component. Where multiple changes are
necessary to ensure an existing section picks up the new concepts, the
amendments generally replace that provision as a whole so that the
reader can see the effect of the amendments. Unless otherwise
indicated, this is not intended to change the interpretation of the
provision from the provision it replaces. The following table outlines
the key existing provisions of the Act which have been altered by the
split and maps them into general, large-scale and small-scale
provisions.
|Existing section |General |Large-scale |Small-scale |
| | |provisions |provisions |
|Division 4 of Part|Division 4 of Part|Subdivision A of |Subdivisions B and|
|2 allows for the |2 allows for the |Division 4 of Part|BA of Part 2 and |
|creation of |creation of |2 allows for the |Part 2A (clearing |
|renewable energy |renewable energy |creation of |house) allow for |
|certificates. |certificates as |large-scale |the creation of |
| |well as Part 2A |generation |small-scale |
| |(clearing house). |certificates. |technology |
| | | |certificates. |
|Section 36 sets |N/A |Section 36 sets |Section 38AB sets |
|out the charge | |out the |out the |
|payable by a | |large-scale |small-scale |
|liable entity. | |generation |generation |
| | |shortfall charge. |shortfall charge. |
|Section 37 sets |N/A |Section 37 sets |Section 38AC sets |
|out the amount of | |out the amount of |out the amount of |
|the charge. | |the large-scale |the small-scale |
| | |charge. |charge. |
|Section 38 sets |N/A |Section 38 |Section 38AE sets |
|out the | |determines a |out the |
|determination of a| |large-scale |determination of |
|renewable energy | |generation |quarterly |
|certificate | |shortfall. |shortfalls. |
|shortfall. | | |38AA provides |
| | | |definitional |
| | | |concepts and 38AF |
| | | |- 38AI allow for |
| | | |changes to be made|
| | | |to the basis of |
| | | |quarterly |
| | | |surrenders. |
|Sections 38A - 38C|Sections 38A - 38C|N/A |N/A |
|deal with partial |deal with partial | | |
|exemptions. |exemptions for | | |
| |both liabilities. | | |
|Section 39 sets | |Section 39 sets |Section 40A sets |
|the renewable | |the renewable |the small-scale |
|power percentage | |power percentage |technology |
|and section 40 | |and section 40 |percentage. |
|provides the | |provides the |Section 40B |
|targets. | |targets. |requires an |
| | | |estimate of the |
| | | |small-scale power |
| | | |percentage to be |
| | | |published for the |
| | | |next two years. |
| | | |Section 40C |
| | | |requires the |
| | | |Regulator to |
| | | |notify liable |
| | | |entities on |
| | | |quarterly |
| | | |liabilities. |
|Sections 41 - 43 |Sections 41 - 43 |N/A |N/A |
|relate to other |relate to other | | |
|charge issues. |charge issues. | | |
|Section 44 relates|Section 44 relates|Section 44A |Section 45 relates|
|to the lodgement |to the lodgement |relates to the |to the surrender |
|of an annual |of an annual |surrender of |of small-scale |
|energy acquisition|energy acquisition|large-scale |technology |
|statement. |statement. |generation |certificates on a |
| | |certificates in an|quarterly basis |
| | |energy acquisition|and in an energy |
| | |statement. |acquisition |
| | | |statement. |
|Subsection 44(5) |Section 45E allows|N/A |N/A |
|allows for fees to|for fees to be | | |
|be prescribed in |prescribed for the| | |
|relation to the |surrender of | | |
|surrender of |certificates. | | |
|certificates. | | | |
|Section 45 places |Section 45D places|N/A |N/A |
|restrictions on |restrictions on | | |
|which certificates|which certificates| | |
|may be |may be | | |
|surrendered. |surrendered. | | |
|Subsection 45A(1) |Section 45A |N/A |N/A |
|allows for a |provides for the | | |
|person to request |amendment of an | | |
|amendment of their|energy acquisition| | |
|statement. |statement at the | | |
| |request of a | | |
| |liable entity. | | |
|Subsection 45A(2) |Section 45B allows|N/A |N/A |
|allows for the |for the amendment | | |
|Regulator to amend|of a statement on | | |
|a statement on |the Regulator's | | |
|their own |initiative. | | |
|initiative. |Section 45C allows| | |
| |for an entity to | | |
| |surrender | | |
| |additional | | |
| |certificates in | | |
| |response to a | | |
| |Regulator | | |
| |initiated | | |
| |amendment. | | |
|Section 46 |Section 46 |N/A |N/A |
|provides for an |provides for two | | |
|annual renewable |types of shortfall| | |
|energy shortfall |statement. | | |
|statement. | | | |
|Sections 46A to |Sections 46A to |N/A |N/A |
|46C provide for |46C provide for | | |
|partial exemption |partial exemption | | |
|certificates. |certificates. | | |
|Section 47 turns a|N/A |Section 47 turns a|Section 48A turns |
|shortfall | |large-scale |a small-scale |
|statement into an | |generation |technology |
|assessment. | |shortfall |shortfall |
| | |statement into an |statement into an |
| | |assessment. |assessment. |
|Section 48 |N/A |Section 48 |Section 48B |
|provides for | |provides for |provides for |
|default | |default |default |
|assessments. | |assessments for a |assessments for a |
| | |large-scale |small-scale |
| | |generation |technology |
| | |shortfall. |shortfall. |
|Sections 49 - 53A |Sections 49 - 53A |N/A |N/A |
|relates to |relates to | | |
|amendments of |amendments of | | |
|assessments and |assessments and | | |
|other matters. |other matters. | | |
|Part 6 relates to |Part 6 relates to |N/A |N/A |
|objections. |objections. | | |
|Part 7 relates to |Part 7 relates to |N/A |N/A |
|the collection and|the collection and| | |
|recovery of the |recovery of the | | |
|charge. |charge. | | |
| |Section 67 | | |
| |clarifies when the| | |
| |large-scale and | | |
| |small-scale | | |
| |charges are | | |
| |payable. | | |
|Part 8 relates to |N/A |Part 8 relates to |N/A |
|refunds of the | |refunds of the | |
|renewable energy | |large-scale | |
|shortfall charge. | |generation | |
| | |shortfall charge. | |
|Section 99 relates|N/A |Section 99 relates|Section 99A |
|to a penalty | |to a penalty |relates to a |
|charge. | |charge for |penalty charge for|
| | |large-scale |small-scale |
| | |liability. |liability. |
|Section 134 |Section 134 |Subsection 134(1) |Subsection 134(2) |
|relates to |relates to |deals with |deals with |
|publication of |publication of |large-scale |small-scale |
|shortfalls. |large-scale and |shortfalls. |shortfalls. |
| |small-scale | | |
| |shortfalls. | | |
|Section 140 |N/A |Section 140 |Section 141AA |
|relates to the | |relates to the |relates to the |
|register of | |register of |register of |
|renewable energy | |large-scale |small-scale |
|certificates. | |generation |technology |
| | |certificates. |certificates. |
Overview of items 1 to 38
5. Items 1 to 38 amend the definitions in the Act to accommodate the
separation of the scheme into large-scale and small-scale components.
The essential approach has been to keep the existing terms as umbrella
concepts that include both large-scale and small-scale elements. For
instance, 'renewable energy certificate' remains a core concept in the
Act. However, there are now two subcategories of renewable energy
certificate: large-scale generation certificates (relating to existing
certificates, generation from power stations and solar water heaters
and small generation units installed up to 31 December 2010) and small-
scale technology certificates (relating to solar water heaters and
small generation units installed after 1 January 2011). The
relationship between the existing and new concepts is summarised in the
following table.
|Existing concept |Umbrella concept |Large-scale |Small-scale |
| | |concept |concept |
|Renewable Energy |Renewable Energy |Large-scale |Small-scale |
|Certificate or |Certificate or |generation |technology |
|Certificate |Certificate |certificate |certificate |
|Relevant |Relevant |N/A |N/A |
|acquisitions |acquisitions | | |
|Partial exemption |Partial exemption |N/A |N/A |
|Required renewable|N/A |Required |N/A |
|energy | |large-scale | |
| | |renewable energy | |
|Renewable power |N/A |Renewable power |Small-scale |
|percentage | |percentage |technology |
| | | |percentage |
|Energy acquisition|Energy acquisition|N/A |N/A |
|statement |statement | | |
|Carried forward |N/A |Carried forward |Quarterly surplus |
|surplus | |surplus | |
|Carried forward |N/A |Carried forward |N/A |
|shortfall | |shortfall | |
|Renewable energy |N/A |Large-scale |Small-scale |
|certificate | |generation |technology |
|shortfall | |shortfall |shortfall (made up|
| | | |of quarterly |
| | | |shortfalls) |
|Renewable energy |Renewable energy |Large-scale |Small-scale |
|shortfall |shortfall |generation |technology |
|statement |statement |shortfall |shortfall |
| | |statement |statement |
|Renewable energy |Renewable energy |Large-scale |Small-scale |
|shortfall charge |shortfall charge |generation |technology |
| | |shortfall charge |shortfall charge |
|Renewable energy |Renewable energy |N/A |N/A |
|shortfall charge |shortfall charge | | |
|related liability |related liability | | |
|Register of |N/A |Register of |Register of |
|renewable energy | |large-scale |small-scale |
|certificates | |technology |generation |
| | |certificates |certificates |
|N/A |Additional |N/A |N/A (also |
| |surrender notice | |surrender |
| | | |instruments) |
|N/A |N/A |N/A |First quarter, |
| | | |second quarter, |
| | | |third quarter and |
| | | |fourth quarter |
|N/A |N/A |N/A |Required surrender|
| | | |amount, assessment|
| | | |year's reduced |
| | | |acquisitions, |
| | | |previous year's |
| | | |reduced |
| | | |acquisitions and |
| | | |surrendered amount|
1 Subsection 5(1)
6. This item provides that a definition for the term additional surrender
notice is given by section 45C.
2 Subsection 5(1)
7. This item provides that a definition for the term assessment year's
reduced acquisitions is given by section 38AA. This is an liable
entity's relevant acquisitions less their partial exemptions.
3 Subsection 5(1) (definition of certificate)
8. This item amends the definition of certificate so that it refers to all
renewable energy certificates.
4 Subsection 5(1)
9. This item defines the new term clearing house as having the meaning
given by section 30J. This term relates to the functions of the
Regulator in facilitating payments for the transfer of small-scale
technology certificates between parties.
5 Subsection 5(1)
10. This item defines the new term clearing house transfer list as having
the meaning given by subsection 30L(2). This term relates to the list
of small-scale technology certificates ready to be transferred by the
clearing house.
6 Subsection 5(1)
11. This item provides that a definition for the term first quarter is
given by section 38AA. This term relates to the quarterly surrender
obligations for small-scale technology certificates.
7 Subsection 5(1)
12. This item provides that a definition for the term fourth quarter is
given by section 38AA. This term relates to the quarterly surrender
obligations for small-scale technology certificates.
8 Subsection 5(1)
13. This item notes that the term GST has the meaning given by the A New
Tax System (Goods and Services Tax) Act 1999. As the Regulator is
involved in a number of transactions, the definition draws attention to
section 177-1 of that Act which concerns the Commonwealth's notional
liability for GST. This will ensure that the arrangements for notional
liability will not impede the intended operation of the GST regime for
the participants in the clearing house and the GST status of the
various transactions.
9 Subsection 5(1)
14. This item defines a new term large-scale generation certificate as a
certificate created under Subdivision A of Division 4 of Part 2. This
new term is in recognition of there now being two types of
certificates. Large-scale generation certificates refer to those
certificates created from the generation of electricity by accredited
power stations.
15. Transitional provisions in Schedule 2 also have the effect that
certificates from small generation units and solar water heaters
installed before 1 January 2011 are taken to be large-scale generation
certificates and some small-scale technology certificates may become
large-scale generation certificates where they relate to pre-existing
contracts.
10 Subsection 5(1)
16. This item defines a new term large-scale generation shortfall as having
the meaning given by section 38. This new term is in recognition of
there now being two types of shortfall - one for each of the large-
scale and small-scale obligations.
11 Subsection 5(1)
17. This item defines a new term large-scale generation shortfall charge as
having the meaning given by section 36. This new term is in recognition
of there now being two types of shortfall charge - one for each of the
large-scale and small-scale obligations.
12 Subsection 5(1)
18. This item defines a new term large-scale generation shortfall statement
as having the meaning given by section 46. This new term is in
recognition of there now being two types of shortfall statement - one
for each of the large-scale and small-scale obligations.
13 Subsection 5(1) (definition of partial exemption)
19. This item amends the definition of partial exemption to refer to the
two types of shortfalls -large-scale generation shortfall and small-
scale technology shortfall. This clarifies that a single partial
exemption amount (in megawatt-hours) will apply in relation to both the
large-scale and small-scale liabilities. The regulations relating to
partial exemptions will be updated to ensure that the effective
assistance rates are consistent with the policy intent of the existing
regulations.
14 Subsection 5(1)
20. This item defines a new term previous year's reduced acquisitions as
having the meaning given by section 38AA. This relates to the previous
year's relevant acquisitions less partial exemptions as assessed by 1
April in a year.
15 Subsection 5(1)
21. This item defines a new term quarter as having the meaning given by
section 38AA. This term relates to the calculation of quarterly
surrender amounts for small-scale technology certificates by liable
entities.
16 Subsection 5(1)
22. This item defines a new term quarterly shortfall has the meaning given
by section 38AE. This term relates to the calculation of the quarterly
shortfall amounts for small-scale technology certificates by liable
entities.
17 Subsection 5(1)
23. This item defines a new term quarterly surplus has the meaning given by
section 38AE. This term relates to the calculation of quarterly
surrender amounts for small-scale technology certificates by liable
entities.
18 Subsection 5(1)
24. This item defines the new term register of large-scale generation
certificates as having the meaning given by section 140. This new term
is in recognition of there now being two types of register - one for
each of the large-scale and small-scale certificates.
19 Subsection 5(1) (definition of register of renewable energy
certificates)
25. This item repeals the definition for the term register of renewable
energy certificates as there will now be two registers - one for each
of the two types of certificates.
20 Subsection 5(1)
26. This item defines the new term register of small-scale technology
certificates as having the meaning given by section 141AA. This new
term is in recognises there will now be two types of register - one for
each of the large-scale and small-scale certificates.
21 Subsection 5(1) (definition of renewable energy certificate)
27. This item provides that the term renewable energy certificate is now an
umbrella term for two types of certificate - large-scale generation
certificate and small-scale technology certificate.
22 Subsection 5(1) (definition of renewable energy certificate shortfall)
28. This item repeals the definition for the term renewable energy
certificate shortfall in recognition of there now being two new types
of shortfall - one for each of the large-scale and small-scale
obligations.
23 Subsection 5(1) (definition of renewable energy shortfall charge)
29. This item provides that the term renewable energy shortfall charge is
now an umbrella term for two types of shortfall charge - large-scale
generation shortfall charge and small-scale technology shortfall
charge.
24 Subsection 5(1) (definition of renewable energy shortfall statement)
30. This item provides that the term renewable energy shortfall statement
is now an umbrella term for two types of shortfall statement - large-
scale generation shortfall statement and small-scale technology
shortfall statement.
25 Subsection 5(1)
31. This item defines the term required large-scale renewable energy as
having the meaning given by section 38.
26 Subsection 5(1) (definition of required renewable energy)
32. This item repeals the definition of the term required renewable energy
which is to be replaced with the concept of required large-scale
renewable energy.
27 Subsection 5(1)
33. This item defines the new term required surrender amount as having the
meaning given by section 38AE. This term relates to the quarterly
surrender obligations for the small-scale technology obligation.
28 Subsection 5(1)
34. This item defines the term second quarter as having the meaning given
by section 38AA. This term relates to the quarterly surrender
obligations for small-scale technology certificates.
29 Subsection 5(1)
35. This item defines a new term small-scale technology certificate as
being a certificate created under Subdivision B or BA of Division 4 of
Part 2 or under section 30P. This term relates to certificates created
from the installation of solar water heaters and small generation units
either by owners or installers of systems or by the Regulator.
30 Subsection 5(1)
36. This item defines the new term small-scale technology percentage as
having the meaning given by section 40A. This term relates to the
quarterly surrender obligations for small-scale technology
certificates.
31 Subsection 5(1)
37. This item defines the new term small-scale technology shortfall as
having the meaning given by section 38AD. This new term is in
recognition of there now being two types of shortfall - one for each of
the large-scale and small-scale obligations.
32 Subsection 5(1)
38. This item defines the new term small-scale technology shortfall charge
as having the meaning given by section 38AB. This new term is in
recognition of there now being two types of shortfall charge - one for
each of the large-scale and small-scale obligations.
33 Subsection 5(1)
39. This item defines the new term small-scale technology shortfall
statement as having the meaning given by section 46. This new term is
in recognition of there now being two types of shortfall statement -
one for each of the large-scale and small-scale obligations.
34 Subsection 5(1)
40. This item defines the new term surrendered amount as having the meaning
given by section 38AE. This new term relates to the quarterly surrender
obligations for liable entities for the small-scale technology
certificates.
35 Subsection 5(1)
41. This item defines the new term surrender instrument as having the
meaning given by subsection 45(1). This new term relates to the
surrender of small-scale technology certificates.
36 Subsection 5(1)
42. This item defines the new term surrender period as having the meaning
given by section 38AA. This new term relates to the surrender of small-
scale technology certificates.
37 Subsection 5(1)
43. This item notes that the term taxable supply has the meaning given by
the A New Tax System (Goods and Services Tax) Act 1999. As the
Regulator is involved in a number of transactions, the definition draws
attention to section 177-1 of that Act which concerns the
Commonwealth's notional liability for GST. This will ensure that the
arrangements for notional liability will not impede the intended
operation of the GST regime for the participants in the clearing house
and the GST status of the various transactions.
38 Subsection 5(1)
44. This item defines the term third quarter as having the meaning given by
section 38AA. This term relates to the quarterly surrender obligations
for small-scale technology certificates.
39 Section 8
45. This item inserts an overview about the two types of renewable energy
certificate: large-scale generation certificates created in relation to
the generation of electricity by accredited power stations; and small-
scale technology certificates created in relation to the installation
of solar water heaters and small generation units.
40 At the end of section 8
46. This item inserts an overview noting that Part 2A relates to the
clearing house facility for the transfer of certificates and the
Regulator's power to create or cancel small-scale technology
certificates.
41 Division 4 of Part 2 (heading)
47. This item replaces the heading of Division 4 with 'Creation of
renewable energy certificates' to clarify that it relates to the
creation of all renewable energy certificates, whether large-scale
generation certificates or small-scale technology certificates.
48. This item also inserts a new section 17B to provide an overview of
Division 4 relating to the creation of renewable energy certificates
and the two types of certificates that may be created - large-scale
generation certificates (as outlined in Subdivision A) or small-scale
technology certificates (as outlined in Subdivisions B and BA).
49. The item also notes that the Division relates to the limited ability of
the Regulator to create small-scale technology certificates under
Part 2A and other requirements relating to the requirement for people
who create certificates under Subdivision B or BA to submit returns
relating to the creation of the certificates and offence and civil
penalty provisions relating to the improper creation of certificates.
42 Subdivision A of Division 4 of Part 2 (heading)
50. This item replaces the heading of Subdivision A to with 'Large-scale
generation certificates for accredited power stations' to specify that
this Subdivision relates only to the creation of large-scale generation
certificates and not small-scale technology certificates.
51. This item also inserts a new section 17C which specifies that renewable
energy certificates created by electricity generation from accredited
power stations are large-scale generation certificates for the purpose
of this Subdivision.
43 Subdivision B of Division 4 of Part 2 (heading)
52. This item replaces the heading of Subdivision B with 'Small-scale
technology certificates for solar water heaters' to specify that this
Subdivision relates only to the creation of small-scale technology
certificates from the installation of solar water heaters.
53. This item also inserts a new section 20B which specifies that renewable
energy certificates created from the installation of solar water
heaters are small-scale technology certificates for the purpose of this
Subdivision.
44 Subdivision BA of Division 4 of Part 2 (heading)
54. This item replaces the heading of Subdivision BA with 'Small-scale
technology certificates for small generation units' to specify that
this Subdivision relates only to the creation of small-scale technology
certificates from the installation of small-scale renewable energy
systems referred to as small generation units.
55. This item also inserts a new section 23AB that specifies that renewable
energy certificates created from the installation of small generation
units are small-scale technology certificates for the purpose of this
Subdivision.
45 Subsection 25(1)
56. This item replaces the reference in subsection 25(1) to certificates to
clarify that this subsection refers to large-scale generation
certificates.
57. This item will also amend the heading of section 25 to be 'Form and
content of large-scale generation certificates'.
46 Subsection 25A(1)
58. This item replaces the reference in subsection 25(1) to certificates to
clarify that this subsection refers to small-scale technology
certificates.
59. This item will also amend the heading to section 25A to be 'Form and
content of small-scale technology certificates'.
47 Paragraph 25A(2)(f)
60. This item replaces paragraph 25A(2)(f) to require that small-scale
technology certificates contain details of whether they are created in
relation to solar water heaters or small generation units.
48 At the end of section 25A
61. This item inserts a new subsection 25A(3) to clarify that section 25A
does not apply in relation to small-scale technology certificates that
the Regulator is required to create under section 30P for the purposes
of providing them to a liable party when there are no small-scale
technology certificates available for purchase in the clearing house.
49 Subsection 26(4)
62. This item replaces the reference to the 'register of renewable energy
certificates' to the 'register of large-scale generation certificates
or the register of small-scale technology certificates (as
appropriate)' to require that when registering a renewable energy
certificate, the Regulator must register that certificate on the
register that accords with the specific type of certificate.
50 At the end of section 26
63. This item inserts a new subsection 26(7) to clarify that section 26
does not apply in relation to a small-scale technology certificate that
the Regulator is required to create under section 30P for the purposes
of providing it to a purchaser when there are no small-scale technology
certificates available for purchase in the clearing house.
51 Section 27
64. This item inserts a reference to subsection 30P(3) to specify that
certificates that have been registered under subsection 30P(3) for the
purposes of providing it to a purchaser when there are no small-scale
technology certificates in the clearing house, may be transferred to
any person.
52 At the end of Section 27
65. This item inserts a note at the end of section 27 noting that
subsection 30P(3) deals with the registration of certificates created
by the Regulator for purchase through the clearing house.
53 At the end of section 28
66. This item inserts a new subsection 28(4) to clarify that section 28
(which relates to notifying the Regulator of certificate transfers)
does not apply in relation to the transfer of small-scale technology
certificates at the top of the clearing house transfer list that the
Regulator is required to transfer under subsections 30N(2) or 30P(4).
54 Section 28A (notes 1 and 2)
67. This item replaces the notes that refer to either the register of large-
scale generation certificates or the register of small-scale technology
certificates depending on the type of certificate being surrendered.
This item also replaces the reference to 'certificates that may be
surrendered under sections 44 and 95' to other references under which
certificates can also be surrendered.
55 Subsection 29(1)
68. This item removes the reference to section 44 relating to the surrender
of certificates and replaces it with a reference to where a certificate
is surrendered under Subdivision A of Division 1 of Part 5.
56 Paragraphs 30D(1)(d) and (3)(b)
69. This item replaces the reference to 'certificates' with large-scale
generation certificates in recognition of the creation of separate
large-scale generation certificates and small-scale technology
certificates.
57 Subsection 30D(6)
70. This item replaces the reference to 'certificates' with large-scale
generation certificates in recognition of the creation of separate
large-scale generation certificates and small-scale technology
certificates.
58 After Part 2
71. This item inserts a new Part 2A in relation to the establishment and
operation of a clearing house to manage the transfer of small-scale
technology certificates. The clearing house will not operate for large-
scale generation certificates.
Division 1 - Preliminary
72. The new Division 1 provides an overview of Part 2A. Small-scale
technology certificates will be created, validated and registered in
accordance with the current processes operated by the Regulator (with
the exception of those created by the Regulator under section 30P). The
creation, transfer and surrender of certificates will be recorded on
the Registry. Information about certificates in the Registry will be
publicly accessible.
73. Transfer of certificates through the clearing house is voluntary as
some liable entities may wish to surrender certificates they create,
are transferred to them from their customers or otherwise acquired on
the market, to acquit their obligation without going through the
clearing house.
74. The clearing house will effectively set the market price as it stands
ready to facilitate the transfer of all small-scale technology
certificates at the fixed price of $44 (GST inclusive). The clearing
house would manage the sale of all certificates offered to it, and
deliver certificates at $44 (GST inclusive) to purchasers.
75. If there are not enough certificates in the clearing house to match
demand, the clearing house will be able to create certificates and
deliver them to purchasers. When the next certificate is entered into
the clearing house it will immediately be cancelled, the seller paid
and the register of small-scale technology certificates amended to show
that the transferred certificate is no longer valid.
Division 2 - Regulator to establish and operate clearing house
76. The new section 30J empowers the Regulator to establish and operate a
clearing house for small-scale technology certificates.
Division 3 - Entering certificates into the clearing house
77. Section 30K allows for holders or creators of small-scale technology
certificates to apply to enter certificates into the clearing house for
sale. A person that creates the certificate, rather than just being
the registered owner, can only apply to enter it into the clearing
house provided that the person has both created the certificate and
advised the Regulator that it has been created (subsection 30K(1)).
This allows for applications to be made as soon as a certificate is
created.
78. Subsection 30K(2) provides that applications must be in writing and in
a form and manner approved by the Regulator and must include additional
information and documents that may be specified in the Regulations.
Examples of such information or documents may include things such as:
a) proof of identity;
b) details of registry accounts;
c) ABN and GST status; and
d) bank account details.
79. Section 30L provides that if an application is made in accordance with
the correct procedures and the certificate is registered or becomes
registered, then the Regulator must include the certificate on the
clearing house transfer list. The Regulator has no grounds to reject an
application other than if the application is made incorrectly or the
certificate is not, or does not become, registered.
80. The Regulator will maintain a clearing house transfer list of
certificates available for transfer through the clearing house
(subsection 30L(2)). Certificates will be placed on the list in the
order the applications are received. This is to ensure that
certificates are transferred to purchasers on a 'first in first out'
basis and to minimise the time that any one certificate is on the
clearing house transfer list.
81. Certificates registered after the application is received will be
placed on the transfer list once they are registered rather than when
the application is received.
82. The Regulator must remove certificates from the clearing house transfer
list if they are withdrawn by the registered owner, transferred
(section 30N) or cancelled (section 30P). Other circumstances under
which the Regulator may withdraw certificates from the clearing house
or remove a certificate from the clearing house transfer list may be
set out in regulations (section 30U). Once the certificate is on the
clearing house transfer list the Regulator must alter the registry to
indicate that it is in the clearing house and undertake any other steps
set out in the Regulations (section 30L).
83. Inclusion on the clearing house transfer list does not prevent the
transfer of certificates to other persons and such a transfer does not
affect a certificate's position on the clearing house transfer list
(subsection 30L(4)). There will be additional notification
requirements relating to such transfers to ensure that account
information is updated appropriately to ensure that the correct person
is paid for the transfer of the certificate.
84. Subsection 30L(5) clarifies that the clearing house transfer list is
not a legislative instrument within the meaning of section 5 of the
Legislative Instruments Act 2003. This provision is included to assist
readers.
Division 4 - Purchase of certificates through the clearing house
85. The new Division 4 outlines the requirements relating to the purchase
of small-scale technology certificates from the clearing house. In most
cases, purchasers of such certificates will be liable entities.
86. A person may apply to purchase certificates from the clearing house,
(subsection 30M(1)) unless they are specifically prevented from doing
so by the regulations (subsection 30M(2)). The regulations may provide
either general circumstances or relate to specific persons or
particular circumstances. Circumstances where a person may not be
entitled to make an application may include not having a registry
account.
87. Applications must be in writing in a form approved by the Regulator
(subsection 30M(3)).
88. The Regulations may also set out a fee to accompany the application
(paragraph 30M(3)(d)).
89. The application must also be accompanied by $44 (GST inclusive) for
each certificate.
90. If a purchaser makes an application to purchase a certificate and there
is a certificate on the list, the Regulator must transfer the
certificate at the top of the list (subsection 30N(2)). The Regulator
must as soon as possible inform the purchaser in writing, pay the
seller and alter the register to show the purchaser as the owner
(subsection 30N(3)).
91. The amount that the Regulator must pay the seller depends on whether
there is a taxable supply by the seller to the purchaser. This ensures
GST registered and unregistered sellers are treated equitably.
92. The transfer of ownership is completed once the register of small scale
technology certificates is altered.
93. If a purchaser makes an application to the clearing house and there is
no certificate on the transfer list then the Regulator is empowered to
and must create a certificate (subsection 30P(2)).
94. Once the Regulator creates the certificate the certificate is valid.
The Regulator must give notice in writing to the purchaser, create an
entry in the registry and record the purchaser as the owner of the
certificate (subsection 30P(3)).
95. The power of the Regulator to create and cancel certificates in these
circumstances allows the Regulator to ensure that there is always a
supply of certificates available to purchasers by, in effect,
temporarily increasing the supply of certificates, or 'borrowing
certificates from the future'. In order to reduce this temporary
supply the Regulator must cancel the next certificate registered in the
clearing house. This is achieved by immediately cancelling the
certificate, paying the seller and updating the register of small-scale
technology certificates to show that the transferred certificate is no
longer valid (paragraph 30P(4)(b)). The creation and cancellation of
certificates in this manner does not impact on the small-scale
technology percentage for the year which is set with reference to the
certificates created in relation to solar water heaters and small
generation units.
96. The amount paid by the Regulator will depend on whether the transaction
constitutes a taxable supply.
97. Section 30Q requires that small-scale technology certificates created
by the Regulator are created in an electronic form approved in writing
by the Regulator and each certificate will indicate the year and date
it was created, the fact that it was created by the Regulator, and a
unique identifying reference number.
Payments and GST
98. The supply of renewable energy certificates for consideration is a
taxable supply if the requirements of the A New Tax System (Goods and
Services Tax) Act 1999 are satisfied.
99. Purchasers will not have control over which certificates are allocated
to them from the clearing house. They may be allocated a certificate
which the seller did not transfer as a taxable supply. In these
circumstances the purchaser will not be entitled to claim an input tax
credit because the transfer to the purchaser did not include GST.
100. Paragraph 30M(3)(c) provides that an application for a certificate
must be accompanied by $44. This price includes $4 of GST where the
transfer of the certificate by the Regulator to the applicant is a
taxable supply.
101. If the purchaser is registered for GST or required to be registered
for GST the Regulator will transfer the certificate to the purchaser
and it is intended that the Regulator will supply the purchaser with a
tax invoice, as appropriate. It is expected that this will allow the
purchaser to claim input tax credits on any GST paid. It is possible
that a purchaser may be allocated a certificate from a seller that is
not registered for GST. In this case the purchaser will be unable to
claim input tax credits. In order for the GST exclusive price to be
fixed at $40, the Regulator will refund $4 when it transfers the
certificate to the purchaser. It is intended that the clearing house
will be an intermediary arrangement provided for under section 153-50
of the A New Tax System (Goods and Services Tax) Act 1999.
102. Subsection 30N(4) specifies the amount that the Regulator must pay the
seller. This amount will be dependent on whether the transfer is a
taxable supply.
103. If the transfer is a taxable supply by the seller to the purchaser the
amount is $44. The seller will remit $4 to the Australian Tax Office
(ATO) and the purchaser will be entitled to claim an input tax credit
of $4.
104. If the transfer is not a taxable supply by the seller to the purchaser
the amount is $40 and there will be no GST collected or eligibility to
claim an input tax credit.
105. Certificates may also be purchased where there is no certificate on
the clearing house transfer list in the circumstances provided by
section 30P. Paragraph 30P(5) specifies the amount that the Regulator
must pay the seller. This amount will be dependent on whether the
seller's transfer of the certificate to the Regulator is a taxable
supply.
106. If the transfer is a taxable supply by the seller to the Regulator the
amount is $44. The seller would remit $4 to the ATO and the Regulator
will claim an input tax credit of $4.
107. If the transfer is not a taxable supply by the seller to the Regulator
the amount is $40. The seller would not be liable for GST and would not
remit $4 to the ATO. The Regulator would not be entitled to claim an
input tax credit by the Regulator.
Division 5 - Renewable Energy Special Account
108. In order to comply with the Financial Management and Accountability
Act 1997 a Special Account, the Renewable Energy Special Account, to
handle transactions in relation to the clearing house, will be
established (section 30R). A Special Account is an appropriation
mechanism that sets aside an amount within the Consolidated Revenue
Fund (CRF) to be expended for specific purposes.
109. All amounts received by the Regulator for the purchase of certificates
must be credited to the Renewable Energy Special Account (section 30S).
110. Section 30T sets out that the purposes of the Renewable Energy Special
Account are to:
a) pay for the amounts in relation to the transfer of certificates
(paragraph 30N(3));
e) pay amounts in relation to the transfer of certificates
(subparagraph 30P(4)(b)(ii));
f) refund amounts under regulations (subparagraph 30U(2)(i)); and
g) pay amounts of GST for which the Regulator is liable (section 30P).
Division 6 - Other matters
111. Section 30U allows for the detailed policies, procedures and rules for
setting up and operating the clearing house to be prescribed in
regulations. The regulations may include provisions relating to:
a) the timing when applications may be made;
b) the timing for processing applications;
c) procedures for the withdrawal of certificates from the clearing house
by registered owners;
d) the circumstances in which the Regulator may remove a certificate from
the clearing house transfer list other than under paragraph 30L(2)(c);
e) the timing and methods of payment of amounts;
f) how and when information about the clearing house is published,
including publication of the clearing house transfer list and how
records of the clearing house are to be kept;
g) information on fees that may be payable in connection with the services
offered by the clearing house; and
h) how refunds may be calculated.
112. The list of issues in subsection 30U(2) is not intended to limit the
issues which may need to be dealt with by regulation under subsection
30U(1).
59 Before Division 1 of Part 4
113. This item inserts a new Division 1AA relating to the renewable energy
shortfall charge.
114. This item also inserts a new section 34A which provides an overview of
the Part as it relates to the two types of shortfall charges that apply
to liable entities - the large-scale generation shortfall charge and
the small-scale technology shortfall charge. This item also specifies
what is taken into account in determining the amount of large-scale
generation shortfall charge or small-scale technology shortfall charge
that would apply to a liable entity.
60 Before section 35
115. This item inserts a new heading 'Subdivision A - Liable entities' to
allow for an additional subdivision to be added relating to the large-
scale generation shortfall charge.
61 Sections 36 to 38
116. This item includes several amendments to sections 36 to 38 to replace
the sections relating to the shortfall charge (or charge) with separate
sections relating to the large-scale generation shortfall charge and
inserts new sections 38AA to 38AI relating to the small-scale
technology shortfall charge, to reflect the two separate obligations.
117. A large-scale generation shortfall charge is payable by a liable
entity if it has a large-scale generation shortfall for a year where it
has not met the requirement to surrender their proportion of large-
scale generation certificates to meet its annual liability. This
section largely maintains the features of the previous renewable energy
shortfall charge but clarifies that it relates specifically to a liable
entity's obligations to surrender certificates from large-scale
generation. Accordingly, the replacement sections 36 to 38 amend the
terminology in the existing sections but are intended to operate in the
same manner.
118. In particular, this item specifies that if a liable entity has a large-
scale generation shortfall, it is required to pay a shortfall charge,
unless the shortfall is less than 10 per cent of the liable entity's
annual liability to surrender large-scale generation certificates.
Where the liable entity's large-scale generation shortfall for a year
is less than 10 per cent of its total liability for year, the shortfall
is carried over to the following year.
119. The large-scale generation shortfall charge for a liable entity is
calculated by a liable entity's large-scale generation shortfall
multiplied by the rate of charge as specified in section 6 of the
Renewable Energy (Electricity) (Large-scale Generation Shortfall
Charge) Act 2000.
120. Section 38 continues to outline a method statement to specify how a
liable entity's large-scale generation shortfall is calculated,
incorporating a liable entity's relevant acquisitions net of any
partial exemptions and the renewable power percentage.
121. This item also inserts new sections 38AA to 38AI in relation to the
calculation of a liable entity's small-scale technology shortfall. A
liable entity will be liable to pay a small-scale technology shortfall
charge if it does not surrender small-scale technology certificates on
a quarterly basis. The structure is similar to the large-scale
generation shortfall charge.
122. There are four surrender periods throughout the year, 28 days after
the end of each quarter for the first three quarters and then up to
14 February of the following year for the fourth quarter, which is the
time that the liable entity is required to lodge their energy
acquisition statement to advise the Regulator of their relevant
acquisitions for the year just passed. These quarterly surrender
periods are intended to encourage the timely purchase of small-scale
technology certificates by liable entities. Subsection 38AA(7) provides
that the 28 April, 28 July and 28 October deadlines are not moved when
those dates fall on a Saturday, Sunday or public holiday. This ensures
there is no overlap of surrender periods.
123. The small-scale technology shortfall charge for a liable entity is
calculated by a liable entity's small-scale technology shortfall
multiplied by the rate of charge as specified in section 6 of the
Renewable Energy (Electricity) (Small-scale Technology Shortfall
Charge) Act 2010.
124. This item outlines four method statements for calculating a liable
entity's small-scale technology shortfall in each quarter. The
required surrender amount is higher in the first quarter of a year
(35 per cent of relevant acquisitions) to encourage the timely transfer
of small-scale technology certificates that are in the clearing house.
It is also noted that 28 April is itself a third of the way through the
year, rather than a quarter.
125. Ordinarily, the number of small-scale technology certificates that a
liable entity is required to surrender is determined with reference to
the small-scale technology percentage and the liable entity's previous
year's reduced acquisitions (total relevant acquisitions less any
partial exemptions for that year). The required surrender amount also
takes into account any extra small-scale technology certificates that
the liable entity surrendered in the previous quarter which was surplus
to its liability. A liable entity's 'previous year's reduced
acquisitions' is determined with reference to their last energy
acquisition statement (as it was at 1 April in the year). This ensures
liable entities know exactly what their quarterly surrender obligations
will be for the first three quarters of the year and there are no
additional compliance costs with working out quarterly acquisitions.
126. In the fourth quarter, a liable entity's quarterly shortfall is
calculated using a different method, based on the actual reduced
acquisitions in the current compliance year to 'true-up' any difference
between the previous year's reduced acquisitions on which the first
three quarter liabilities have been based and the actual reduced
acquisitions for the current compliance year.
[pic]
127. The number of small-scale technology certificates to be surrendered
each quarter will be calculated as per:
|1st quarter|(previous year's |- |previous year's |x 35 % x |
|liability |relevant | |partial |STP[2] |
|= |acquisitions | |exemptions) | |
|2nd quarter|(previous year's |- |previous year's |x 25 % x STP|
|liability |relevant | |partial | |
|= |acquisitions | |exemptions) | |
|3rd quarter|(previous year's |- |previous year's |x 25 % x STP|
|liability |relevant | |partial | |
|= |acquisitions | |exemptions) | |
|4th |[(current year's |-|current year's |x STP] |(1st, 2nd & |
|quarter |relevant | |partial |- |3rd quarter |
|liability|acquisitions | |exemptions) | |liability) |
|= | | | | | |
|Therefore, |= |(actual relevant |- actual |x STP |
|total annual | |acquisitions |partial | |
|liability | | |exemptions) | |
128. Where a liable entity surrenders fewer small-scale technology
certificates in any one quarter than required to, it will incur a
quarterly shortfall. If a liable entity surrenders more small-scale
technology certificates than it is required to for the quarter, the
surplus is carried over and taken into account in the next quarter as a
quarterly surplus. It is not possible to cancel out a shortfall for the
first three quarters when annual liability is assessed as this would
undermine the quarterly surrender model.
129. The item also inserts a new section 38AF which provides an option for
liable entities that have a 'previous year's reduced acquisitions'
number but wish to use a different basis for quarterly surrender. They
may apply to the Regulator for a different amount to be used instead.
The Regulator must consider the application and make a decision in
accordance with the section and any associated regulations. The
Regulator may approve a different number to that proposed, but this
cannot be less than proposed or more than the liable entity's existing
baseline (so that there is no disadvantage to the applicant). The
Regulator's decisions under the section are subject to the appeal
process in section 66. This section is intended to accommodate a
significant reduction in acquisitions which may make the use of the
previous year's baseline inappropriate.
130. Subsection 38AF(7) states that if actual reduced acquisitions are
greater than the approved number by more than the prescribed percentage
the actual reduced acquisitions are applied instead. This ensures that
the Regulator will not be gamed by liable entities attempting to
inappropriately reduce or avoid quarterly shortfalls.
131. A similar provision applies in the new section 38AG where a liable
entity has not lodged an energy acquisition statement for the previous
year and the liable entity applies to the Regulator for a proposed
amount to apply instead. As these entity's are essentially 'new
entrants' to the scheme and may have only started part way through a
year, a different baseline may be applied for in relation to each
quarter. Section 38AH provides a default rule for these persons whereby
actual reduced acquisitions apply other than in relation to a quarter
when no relevant acquisitions were made (which is treated as zero).
132. A number of subsections clarify that the Regulator's determinations
are not legislative instruments (subsections 38AF(4) and 38AG(4)).
These provisions are included to assist readers, as the instrument is
not a legislative instrument within the meaning of section 5 of the
Legislative Instruments Act 2003 (and so this is not a substantive
exemption from that Act).
133. Section 38AI provides the specific requirements for applications to
the Regulator for a proposed amount to be used instead of relevant
acquisitions. This is consistent with other application provisions in
the Act (such as section 46A).
Example
In 2010 a retailer acquired 1,000,000 MWh and had partial exemptions
for 200,000 MWh. Their 2010 reduced acquisitions would therefore be
800,000 MWh. As the 2010 renewable power percentage is 5.98% the
retailer needs to surrender 800,000 x 5.98% = 47,840 renewable energy
certificates by 14 February 2011. It does so by lodging its energy
acquisition statement on or before that date.
If the small power percentage was set at 4% for 2011, by 14 April 2011
the Regulator would notify the retailer of their assumed quarterly
liability under section 38AE. This would be 800,000 MWh x 35% x 4% =
11,200 for the first quarter and 8,000 for each of the second and third
quarters (based upon 800,000 MWh x 25% x 4%).
By 28 April 2011 the retailer surrendered 12,000 small-scale technology
certificates and thus had a quarterly surplus of 800 for the first
quarter. By 28 July 2011 the retailer surrendered another 7000 small-
scale technology certificates. This would result in a quarterly
shortfall of 200 small-scale technology certificates for the second
quarter (8,000 - 7,000 - 800 = 200).
By 28 October 2011 the retailer surrenders 8,000 certificates and thus
has a no quarterly surplus or shortfall for the third quarter.
After 2011 is over the retailer determines that they have made relevant
acquisitions of 900,000 MWh and have partial exemptions of 150,000 MWh.
Their actual reduced acquisitions is therefore 900,000 - 150,000 =
750,000 MWh. The retailer's total small-scale liability is therefore 4%
x 750,000 = 30,000. The fourth quarter required surrender amount is
then 30,000 - 11,200 - 8,000 - 8,000 = 2,800. If the retailer
surrenders 2,800 small-scale technology certificates in its energy
acquisition statement by 14 February 2012 it will have no quarterly
shortfall for the fourth quarter. However, it will still have a
shortfall of 200 certificates from the second quarter and will thus
need to lodge a small-scale technology shortfall statement in respect
of those 200 certificates.
The retailer would also surrender large-scale generation certificates
in its energy acquisition statement. The number of these would be based
upon the 2011 renewable power percentage which would be set to achieve
10,400 GWh of renewable energy (as set out in section 40).
62 Section 38A
134. This item replaces the reference to the renewable energy shortfall
charge with the large-scale generation shortfall charge and small-scale
technology shortfall charge to clarify the two separate charges that
apply to each liable entity.
63 Division 2 of Part 4 (heading)
135. This item replaces the heading with 'Renewable power percentage for
large-scale generation shortfall charge' to specify that it only
relates to the renewable power percentage for determining large-scale
generation liability.
64 Subsection 39(1)
136. This item is to clarify that the renewable power percentage specified
in the regulations relates only to this subsection on large-scale
generation.
65 Paragraph 39(3)(d)
137. This item replaces the reference in paragraph 39(3)(d) to all partial
exemptions expected to be claimed for the year with the amount
estimated as the amount of all partial exemptions that will be claimed
for the year, to clarify that the Minister must take into consideration
an estimate of the partial exemptions likely to be claimed in
determining the renewable power percentage.
66 After Division 2 of Part 4
138. This item inserts a new Division 2A, 'Small-scale technology
percentage for small-scale technology shortfall charge'. The item also
inserts new section 40A to provide for the regulations to specify a
small-scale technology percentage for use by liable entities in
calculating their small-scale liability. As is currently the case, the
Regulator will be expected to provide advice to the Minister on what
the percentage should be. It is also envisaged that other expertise
will also be drawn upon in developing the estimate. The regulations
prescribing a percentage for a year must be made on or before 31 March
in the year.
139. The structure of section 40A is designed to replicate the structure of
section 39 which deals with the renewable power percentage. In
particular, subsection 40A(3) sets out the core estimates that need to
be taken into account in setting a percentage designed to result in all
small-scale technology certificates created in a year being surrendered
in relation to that year's liability. Essentially this means that the
percentage would ordinarily be determined by the estimate of small-
scale technology certificates that are expected to be created in the
year divided by the total of expected relevant acquisitions less
expected partial exemptions. However, the extent to which the previous
estimate of these three variables resulted in more or less small-scale
technology certificates being surrendered for the previous year is
taken into account in setting the following year's percentage. This
true-up mechanism is designed to ensure that over time all small-scale
technology certificates will be required to be surrendered. The result
of this is that the denominator for calculating the renewable power
percentage and small-scale technology percentage should be the same.
140. This item also includes a formula for determining the default small-
scale technology percentage if the regulations do not prescribe a
percentage for the year starting on 1 January 2012 or a later year.
67 Division 3 of Part 4 (heading)
141. This item replaces the heading 'Other provisions related to the
charge' with 'Other provisions related to renewable energy shortfall
charge'.
142. This item also inserts a new section 40B which requires the Regulator
to publish an estimate of the small-scale technology percentage for the
two years following the current compliance year before 31 March of the
current year. This estimate is intended to provide liable entities
with an indication of their potential liability over the forward two
years to assist liable entities in managing their small-scale
liabilities into the future, but is not a binding percentage.
143. This item also inserts a new section 40C which requires the Regulator
to provide a liable entity written notice of the estimated amount of
small-scale technology certificates they are required to surrender for
the first three quarters of the current year where the liable entity
has provided an energy acquisition statement.
144. In making the estimate, the Regulator is to disregard any
determination made where the liable entity made an application to have
a different amount apply for their previous year's reduced acquisitions
other than the last year's reduced acquisitions (subsection 40C(2)).
This will ensure the estimates are not delayed.
68 Paragraph 41(b)
145. This item replaces the reference to 'renewable energy certificate
shortfall' with large-scale generation shortfall or small-scale
technology shortfall to reflect the two separate obligations to
surrender large-scale generation certificates and small-scale
technology certificates.
69 Division 1 of Part 5
146. This item replaces Division 1 and inserts a new Division 1AA. Section
43A provides an overview of the part that relates to a liable entity's
obligation to lodge an annual energy acquisition statement and a
renewable energy shortfall statement where a liable entity has a large-
scale generation shortfall or a small-scale technology shortfall.
147. This item also replaces sections 44, 45, 45A and 46 and inserts new
sections 44A, 45B, 45C, 45D and 45E in relation to annual energy
acquisition statements and surrender of certificates to reflect the
separate requirements for the large-scale and small-scale obligations
and clarify the operation of the existing provisions.
148. The item largely maintains the current provisions in section 44 in
relation to the provision of energy acquisition statements to the
Regulator and clarifies certain details that may be provided, along
with additional requirements in relation to a liable entity's separate
large-scale and small-scale obligation. This item clarifies the
information that is required to be provided by a liable entity in its
energy acquisition statement, the form of that statement and the
accompanying certificates it is required to surrender. The Regulator
will need to approve a new form to cater for the new information for
the 2011 compliance year assessed in early 2012.
149. Section 44A clarifies the manner in which large-scale generation
certificates are surrendered through the energy acquisition statement
consistent with existing practice.
150. Section 45 details the requirements of liable entities to provide
notice to the Regulator when it surrenders small-scale technology
certificates for the first three quarters of a year and then as part of
the annual energy acquisition statement for the fourth quarter
surrender. This will assist both the Regulator and liable entities to
manage compliance with the requirement to surrender small-scale
technology certificates. Fees relating to quarterly surrender may be
paid annually to minimise compliance costs.
151. Consistent with subsection 45A(1) of the current Act, section 45A
provides that a liable entity may apply for an amendment to an energy
acquisition statement within 12 months of lodging that statement. This
could be because they have discovered a metering error relevant to
their acquisitions. A liable entity may also apply to surrender more
certificates to avoid a large-scale generation shortfall or the fourth
quarter liability relating to the small-scale obligation. As it is
important that a liable entity does not use this process to delay
compliance, the Regulator has a discretion as to whether or not to
accept any proposed amendments. Subsection 45A(9) clarifies that the
amendment process does not allow for surrendered certificates to be
returned to a liable entity. This is consistent with section 45A of the
current Act.
152. Consistent with subsection 45A(2) of the current Act, section 45B
provides that the Regulator may amend an energy acquisition statement
on its own initiative within four years of lodgement. This could be
because the Regulator has identified an error in an entity's reported
acquisitions. These amendments cannot increase or reduce the number of
certificates a liable party has surrendered.
153. Section 45C clarifies that where an energy acquisition statement is
amended by the Regulator and this increases the liable entity's
liability, the liable entity has an opportunity to surrender additional
certificates to avoid the relevant shortfall charge. This must be done
within 30 days of receiving notice of the amendment.
154. Section 45D provides for limits on the certificates that may be
surrendered under the Division. This is consistent with section 45 of
the current Act. In particular, a certificate must have been created
before the end of the assessment year. The only exception to this rule
is for certificates purchased through the clearing house (where a
person may not be able to guarantee which vintage year of certificate
they will be acquiring).
155. Section 45E provides for fees in relation to the surrender of
certificates consistent with subsections 44(5), (7) and (8) of the
current Act.
156. A number of provisions clarify that notices are not legislative
instruments (subsections 44A(4), 45(6), 45A(6) and 45C(6)). These
provisions are included to assist readers, as the notice is not a
legislative instrument within the meaning of section 5 of the
Legislative Instruments Act 2003 (and so this is not a substantive
exemption from the Act).
157. This item also inserts a new Subdivision B to deal with the annual
renewable energy shortfall statements which clarifies that there are
two types of shortfall statements for the large-scale generation and
small-scale technology obligations. The requirements for lodging a
large-scale generation shortfall statement for a year are largely the
same as the current provisions. Additional requirements relate to the
requirement to lodge a small-scale technology shortfall statement in
the event of a shortfall.
70 Subsection 46C(4) (note)
158. This item inserts an additional reference in the note to reflect a new
section 48B.
71 Sections 47 and 48
159. This item splits the division into three new subdivisions:
'Subdivision A - Large-scale generation shortfall charge'; 'Subdivision
B - Small-scale technology shortfall charge'; and 'Subdivision C -
Other provisions relating to assessments'.
160. This item replaces the current provisions relating to assessments of
liability by the Regulator with new provisions which retain many of the
same features but reflect the two types of shortfall in relation to a
liable entity's separate large-scale and small-scale obligations.
72 Section 52
161. This item adds a reference to new section 48B to the notice of
assessment provisions.
73 Subsection 66(1) (after table item 5DA)
162. This item inserts an additional reviewable decision that a person can
request the Regulator to review. The decision relates to the
Regulator's assessment of a liable entity's application to use a
proposed amount instead of the previous year's reduced acquisitions or
the default rule in section 38AH when calculating their amounts for
quarterly surrender of small-scale technology certificates.
74 Subsection 66(1) (cell at table item 5E, column headed "made under
...")
163. This item adds a reference to new section 45B to the table of
reviewable decisions.
75 Section 67
164. This item replaces section 67 which relates to when a shortfall charge
is payable with new provisions which retain many of the same features
but reflect the two types of shortfall in relation to a liable entity's
separate large-scale and small-scale obligations.
76 Part 8 (heading)
165. This item replaces the current heading with 'Refunding large-scale
generation shortfall charge' to clarify that refunding the charge under
this part relates only to the shortfall charge incurred for the large-
scale obligation. It is not appropriate to allow for refunding of the
small-scale technology shortfall charge as this would undermine
quarterly surrender.
77 Paragraph 95(1)(a)
166. This item replaces the term 'renewable energy shortfall charge' with
'large-scale generation shortfall charge' to specify that it relates
only to the large-scale obligation.
78 Paragraph 95(1)(b)
167. This item replaces the term 'certificates' with 'large-scale
generation certificates' to specify that it relates only to the large-
scale obligation.
79 Subsection 95(2)
168. This item replaces 'renewable energy shortfall statement' with 'large-
scale generation shortfall statement' to specify that it relates only
to the large-scale obligation.
80 Subsection 95(2)
169. This item replaces 'renewable energy shortfall charge' with 'large-
scale generation shortfall charge' to specify that it relates only to
the large-scale obligation.
81 Subsection 95(3)
170. This item replaces 'certificate is' with 'large-scale generation
certificates are' to specify that it relates only to the large-scale
obligation.
82 Subsection 96(1)
171. This item replaces 'certificate surrendered' with 'large-scale
generation certificate surrendered' to specify that it relates only to
the large-scale obligation.
83 Subsection 96(1)
172. This item replaces 'renewable energy shortfall charge' with 'large-
scale generation shortfall charge' to specify that it relates only to
the large-scale obligation.
84 Subsection 96(2)
173. This item replaces 'certificates surrendered' with 'large-scale
generation certificates surrendered' to specify that it relates only to
the large-scale obligation.
85 Subsection 96(2)
174. This item replaces 'renewable energy shortfall charge' with 'large-
scale generation shortfall charge' to specify that it relates only to
the large-scale obligation.
86 Section 97
175. This item replaces 'surrender certificates' with 'surrender large-
scale generation certificates' to specify that it relates only to the
large-scale obligation.
87 Section 97
176. This item replaces 'renewable energy certificate shortfall' with
'large-scale generation shortfall' to specify that it relates only to
the large-scale obligation.
88 Section 98
177. This item replaces 'certificates' with 'large-scale generation
certificates' to specify that it relates only to the large-scale
obligation.
89 Section 99
178. This item replaces section 99 in relation to the penalty charge for
failure to provide statements or information to reflect that this
provision relates separately to information on the large-scale and
small-scale shortfall charges. This item retains the same features
that currently apply under the penalty provisions but creates two
distinct sections for the separate penalty charge in relation to a
liable entity's large-scale and small-scale shortfall charge.
179. This item also inserts a new section 99A relating to the penalty
charge for failure to provide statements or information for the small-
scale technology shortfall charge. Both sections clarify that only one
trigger for requiring a penalty charge would apply for each year.
90 Section 134
180. This item replaces section 134 in relation to information that the
Regulator may publish to separate the provisions to reflect the
separate large-scale shortfall charge information and insert new
provisions in regard to publishing small-scale technology shortfall
charge information.
91 Paragraph 135(c)
181. This item replaces paragraph 135(c) which relates to the 'register of
renewable energy certificates' to include two separate references to
the register of large-scale generation certificates and the register of
small-scale technology certificates.
92 Division 4 of Part 13 (heading)
182. This item replaces the heading 'The register of renewable energy
certificates' with 'the register of large-scale generation
certificates' to specify that the Division relates only to large-scale
generation certificates.
93 Section 140
183. This item replaces the reference to the 'register of renewable energy
certificates' with 'register of large-scale generation certificates' to
specify that the section relates only to large-scale generation
certificates.
94 Paragraph 140(a)
184. This item replaces the reference to 'renewable energy certificate'
with 'large-scale generation certificate' to specify that it relates
only to large-scale generation certificates.
95 Subsection 141(3)
185. This item replaces a subsection relating to the form of the register
of certificates with a general provision requiring the Regulator to
ensure that the registry is kept up to date.
96 After Division 4 of Part 13
186. This item inserts a new Division 4A (including new sections 141AA and
141AB) relating to the register of small-scale technology certificates
which replicates many of the features of the current renewable energy
certificate registry and specifies that a separate registry must be
kept for small-scale technology certificates as well as large-scale
generation certificates. The provisions also require that the register
must also contain information on small-scale technology certificates
created by the Regulator to lend to liable entities where there are not
enough certificates in the clearing house.
97 Paragraph 156(2)(a)
187. This item replaces the reference to other sections to a number of new
sections to clarify that the Regulator may not delegate its functions
or powers in relation to those sections. This maintains the effect of
the existing non-delegable functions and powers with the new section
numbering.
98 Paragraph 160(2)(c)
188. This item replaces the reference to 'certificates' with 'large-scale
generation certificates and small-scale technology certificates' to
capture the two types of certificates that may be created.
99 Paragraph 162(1)(c)
189. This item replaces paragraph 162(1)(c) relating to the Renewable
Energy (Electricity) (Charge) Act 2000 with two separate references to
the two different charge Acts for the large-scale and small-scale
obligations.
Part 2-Other amendments
RENEWABLE ENERGY (ELECTRICITY) ACT 2000
Overview of Part
190. Part 2 of Schedule 1 provides for a number of amendments to the Act
which are proposed to commence on the day after the Royal Assent. These
amendments deal with improving the enforcement and compliance framework
in the Act, information issues associated with partial exemptions and
minor technical amendments. These issues are important to clarify for
the existing scheme and are made more important in the context of the
amendments made by Part 1 of Schedule 1.
Enforcement
191. The existing enforcement and compliance framework has been successful
in promoting general compliance with the requirements of the Act since
it was enacted in 2000. The changes will make the enforcement
framework stronger by the introduction of a civil penalty regime,
enforceable undertakings, injunctions, executive officer liability and
a number of minor clarifications. This will bring the legislation in
line with other similar Commonwealth legislation and create a more
flexible and cost effective framework for the Regulator to take action
to extract pecuniary penalties for non-compliance and remedy issues of
non-compliance that occur.
Partial exemptions
192. The partial exemption provisions are dependent upon the Government
having the necessary information to list an activity as an emissions-
intensive trade-exposed activity and set a baseline of electricity
intensity for that activity. Proposed section 46D would introduce a
regime for the necessary information to be requested from corporations.
If a corporation does not wish to comply with the request it is then
prohibited from seeking a partial exemption certificate in respect of
the relevant activity for a period of five years.
Waste coal mine gas eligibility
193. Waste coal mine gas is included as an eligible source in the Act for a
specified period commencing on 1 July 2011 as a transitional measure in
recognition of the planned cessation of the NSW Greenhouse Gas
Reduction Scheme (GGAS). The annual targets were increased to
accommodate renewable energy certificates created by existing waste
coal mine gas generators to ensure they do not crowd out renewable
energy generation.
194. As the inclusion of waste coal mine gas in the scheme has the
potential to result in 'double-dipping' if waste coal mine gas projects
were to receive assistance from GGAS and under the Act, the Bill makes
a number of amendments to allow for the eligibility of waste coal mine
gas to create renewable energy certificates to be postponed until such
time as GGAS ceases. The amendments allow for the commencement of
eligibility of waste coal mine gas to be determined by making
regulations specifying a start date.
100 Subsection 5(1) (definition of Australian Greenhouse Office)
195. This item repeals the definition of Australian Greenhouse Office that
related to the Australian Government agency that previously was
responsible for the administration of the Act but that no longer
exists. Its functions have been taken over by the Department of Climate
Change and Energy Efficiency.
101 Subsection 5(1)
196. This item defines a new term civil penalty order as having the meaning
given by the new subsection 154B(2).
102 Subsection 5(1)
197. This item defines a new term civil penalty provision as referring to
provisions declared by the Act to be 'civil penalty provisions'. This
will include proposed sections 24A and 24B.
103 Subsection 5(1)
198. This item defines a new term engage in conduct as doing an act or
omitting to do an act. This term is used in the new civil penalty
provisions.
104 Subsection 5(1)
199. This item defines a new term executive officer of a body corporate as
referring to directors, chief executive officers, chief financial
officers or secretaries of body corporates. This is consistent with
other Commonwealth legislation.
105 Subsection 5(1)
200. This item defines a new term Federal Court as meaning the Federal
Court of Australia.
106 Subsection 5(1) (definition of Head of the Australian Greenhouse
Office)
201. This item repeals the definition of Head of the Australian Greenhouse
Office, a Commonwealth agency position that no longer exists.
107 Subsection 5(1) (definition of offence against this Act)
202. This item broadens the definition of offence against this Act to also
include any offences against the regulations, and to account for the
possibility that the amendments may increase the likelihood that people
will engage in fraudulent conduct or the provision of false or
misleading statements as set out in the Criminal Code. Such an offence
could involve, for example, the provision of false or misleading
statements in applications relating to the claims for partial exemption
certificates. The proposed definition will more accurately reflect the
offences which exist in relation to the Act and conduct which relates
to the Act.
108 Subsection 6(2)
203. This item ensures that the Crown is not liable to a pecuniary penalty
under the Act and therefore indemnifies the Crown from being ordered by
a court to pay the Commonwealth a pecuniary penalty (a civil penalty
order) as set out in clause 154B. This is consistent with other
Commonwealth legislation.
109 Subsection 13(2A)
204. This item removes the specific deadline (of 30 June 2010) for the
receipt of applications for accreditation as a power station using
waste coal mine gas from the Act and instead allows for regulations to
be made specifying this date.
110 Subsection 15A(3)
205. This item removes the specific deadline (of 31 December 2010) for the
decision of the Regulator on applications for accreditation as a power
station using waste coal mine gas from the Act and instead provides
that this date will be six months after the date specified in
regulations under subsection 13(2A).
111 Subparagraph 17A(1)(a)(i)
206. This item repeals the subparagraph relating to the start date (1 July
2011) for when the generation of electricity by accredited power
stations from waste coal mine gas becomes eligible. This item further
allows for regulations to be made specifying the start date. This is
consistent with the current provision which allows for the 1 July 2011
start date to be deferred by regulation.
112 At the end of section 17A
207. This item clarifies the intent of the previous items 109 to 111 by
specifying that if regulations are not made to prescribe a start date
for eligibility of waste coal mine gas, then it is not an eligible
source under the Act.
113 Section 19
208. This item allows for the Regulator to allow for the creation of
certificates beyond the end of the year after the year of generation.
Section 19 currently requires that certificates can only be created
from accredited power stations up to the end of the year after the year
of generation. For instance, generation in January 2009 can only result
in the creation of certificates up until 31 December 2010. This is
important for ensuring timely creation of certificates and promoting
market transparency. However, the amendment will allow for more
flexibility in situations where circumstances beyond the control of the
relevant power station have meant that the time limit could not be
complied with.
114 Section 19 (note)
209. This item updates the note by referencing both the offences and the
new civil penalty provisions relating to the creation of certificates
covered in Subdivision C.
115 At the end of subsection 21(1)
210. This item inserts a note to cross reference the subsection (which
relates to the creation of certificates from the installation of solar
water heaters) with the provisions that relate to offences and civil
penalties relating to the creation of certificates outlined in
Subdivision C.
116 After subsection 21(1)
211. This item inserts a new subsection 21(1A) to clarify that regulations
may prescribe conditions that solar water heaters and their
installation must meet in order for certificates to be created, such as
in relation to safety and technical quality matters. Under this
subsection, the regulations may also require the provision of specific
information or documentation in relation to the solar water heater
(e.g. a statement of compliance) and that the information be supported
by statutory declaration. This provision will ensure that the
regulations can continue to create a clear and robust framework around
the appropriate creation of certificates from solar water heaters.
117 Subsection 22(2)
212. This item would replace subsection 22(2) of the Act with a new
subsection which clarifies the nature of the 'written determinations'
referred to in the existing paragraph 22(2)(a). It clarifies that the
regulations may:
a) provide for the Regulator to determine the number of certificates that
may be created for a particular installation of a solar water heater;
h) prescribe requirements to be complied with in relation to the making of
such a determination, which may include a requirement that a
determination is to be made in accordance with a legislative instrument
made by the Regulator; and
i) prescribe other matters relating to such a determination or legislative
instrument.
213. In particular, it is expected that the methodology for determining the
number of renewable energy certificates that a particular type of solar
hot water system will create will in future be set out in a legislative
instrument which is registered on the Federal Register of Legislative
Instruments. This will improve the transparency and accessibility of
the Regulator's current methodology and practice relating to these
matters. However, it is not intended that this change would
substantially change the current approach of the Regulator in this
area.
118 At the end of subsection 23A(1)
214. This item inserts a note to cross reference the provisions that relate
to offences and civil penalties relating to the creation of
certificates outlined in Subdivision C.
119 After subsection 23A(1)
215. This item inserts two new subsections relating to when certificates
can be created for small generation units. The new subsection 23A(1A)
allows for regulations to prescribe conditions small generation units
and their installation must meet in order for renewable energy
certificates to be created, for example relating to safety and
technical quality matters. Under this subsection, the regulations may
also require the provision of specific information or documentation in
relation to the solar water heater (e.g. a statement of compliance) and
that the information be supported by statutory declaration.
216. Subsection 23A(1B) clarifies that regulations made under subsection
23A(1A) may include conditions relating to small generation units after
installation, such as requiring that such systems remain operational
for the second and subsequent one or five year 'deeming' intervals.
120 At the end of Subdivision C of Division 4 of Part 2
217. This item will insert section 24A (Improper creation of certificates -
civil penalty) and section 24B (False etc. information resulting in
improper creation of certificates under Subdivision B or BA-civil
penalty) in the Act.
218. Section 24A will create a civil penalty for creating certificates
without an entitlement to do so. It mirrors the criminal penalty
provision in section 24. The key difference is that, as a civil
penalty provision, civil penalty actions will be able to be undertaken
by the Regulator and will only need to be proved to a civil standard of
proof. The criminal penalty will remain in section 24 for the more
serious offenders, but the civil penalty regime will provide a more
practical mechanism for the Regulator to manage non-compliance.
219. While the Regulator needs to validate renewable energy certificates
under section 26, there remains a risk that certificates get created
and validated when they were not entitled to be created. A strong civil
penalty regime will ensure that if certificates are improperly created,
the Regulator will be able to take swift and cost effective action
against the creator. This will ensure that there remains a culture of
compliance for registered persons and the potential penalties for non-
compliance will ensure that registered persons put in place appropriate
systems to avoid the improper creation of certificates.
220. There are a number of ways in which certificates may be improperly
created. For instance, an accredited power station may generate
electricity from an eligible energy source as well as a fossil fuel
(such as natural gas). A power station could thus attempt to claim that
natural gas fired generation has created certificates when the Act does
not allow this to occur. For small-scale systems, it is possible that a
system may not actually be installed at a particular address, may not
meet the relevant standard to be eligible under the scheme or may
breach another condition relevant to the ability to create
certificates. A person may also use the wrong system information to
create more certificates than they are entitled to create.
221. It is important that all of these issues are able to be dealt with
appropriately by the Regulator. In most cases to date where a mistake
has been made, the Regulator has worked with the individuals or
companies involved to resolve the issue. This can include ensuring the
system is installed appropriately or surrendering certificates under
section 28A equivalent to those which should not have been validated.
222. Section 154M will make this provision a strict liability offence which
is consistent with the offence currently provided by subsection 24(1)
of the Act. This is important given the information asymmetries which
exist in relation to the Regulator investigating and gathering evidence
in relation to non-compliance with the Act and regulations.
Nonetheless, section 154N will make clear that the mistake of fact
defence still applies in relation to the prosecution of the civil
penalty.
223. Subsection 24A(2) will provide for ancillary contraventions where a
person may:
a) aid, abet, counsel or procure a contravention of subsection (1);
j) induce, whether by threats or promises or otherwise, a contravention of
subsection (1);
k) be in any way, directly or indirectly, knowingly concerned in, or party
to, a contravention of subsection (1); or
l) conspire with others to effect a contravention of subsection (1).
224. This is not a strict liability provision, but it will provide a clear
deterrent to those persons who may benefit from encouraging breaches of
the Act.
225. Section 24B will create a civil penalty provision in relation to
providing false or misleading information to another person who relies
on that information to create certificates in relation to solar water
heaters and small generation units. For instance, if an agent honestly
relies on inaccurate information to create certificates they may not be
liable to the offences created by section 24 and 24A or equivalent
offences against the Criminal Code (because of the mistake of fact
defence). Accordingly, this provision will impose civil liability on a
person who provides that information in the circumstances where
certificate creation was intended to result from that provision of
information. Ancillary contraventions will also apply (see subsection
24B(2).
121 Subsection 30A(1)
226. This item replaces a reference to regulations in subsection 30A(1) to
refer instead to the new civil penalty provisions. Section 30A
prescribes a number of circumstances when the Regulator may suspend the
registration of a person under the Act. As creation of certificates is
dependent on registration, this is a significant compliance tool for
the Regulator. The amendment would allow contravention of a civil
penalty provision to be a ground for the suspension of registration for
up to 12 months.
122 Section 40
227. This item creates a new subsection 40(1) that requires the annual
targets for required GWh of renewable source electricity to be subject
to the new subsections 40(2), 40(3) and 40(4).
123 Section 40 (table items dealing with 2011 to 2030 (inclusive))
228. This item replaces the annual targets for required GWh of renewable
source electricity in the table for the period 2011 to 2030 with
revised targets that no longer include the amounts that were added for
eligible waste coal mine gas. Specifically, the item:
a) reduces the targets from 2011 to 2030 by 4,000 GWh in recognition of
the separate liability now imposed in relation to small-scale
technologies; and
m) further reduces the annual target in 2011 by 425 GWh and the following
years' targets by 850 GWh per year (to remove waste coal mine gas
elements).
229. The profile of annual targets relates to the quantity of large-scale
renewable electricity generation that is required to be sourced by
liable entities which increases each year from 2011 to reach 41,000 GWh
in 2020. The annual targets are maintained at 41,000 GWh each year
until the scheme ends at the end of 2030.
230. In 2009 waste coal mine gas was included as an eligible source in the
Act for a specified period commencing on 1 July 2011 as a transitional
measure in recognition of the planned cessation of the NSW GGAS. The
annual targets were increased to accommodate certificates created by
existing waste coal mine gas generators to ensure they do not crowd out
renewable energy generation.
231. As the inclusion of waste coal mine gas in the scheme has the
potential to result in 'double-dipping' if waste coal mine gas projects
were to receive assistance from GGAS and under the Act, the amendments
made by item 111 allow for the eligibility of waste coal mine gas to
create certificates to be postponed until such time as GGAS ceases. The
change in the targets made by this item ensures that the liability
under the Act is not increased in the period before waste coal mine gas
is eligible.
232. The dual purpose of this amendment has meant that it is included in
Part 2 of Schedule 1 rather than Part 1. However, the targets contained
in the amendment assume that Part 1 of Schedule 1 comes into effect on
1 January 2011.
124 At the end of section 40
233. This item inserts three new subsections that allow for the targets
reduced by item 123 to be automatically increased should regulations be
made under subparagraph 17A(1)(a)(i) that specify a start date (the
WCMG start day) for the eligibility of waste coal mine gas.
234. Subsection 40(3) specifies a formula for the amount the annual targets
in the table in subsection 40(1) would be increased:
|850 GWh x |Remaining days in the year |
| |Number of days in the year |
235. For example, if regulations were made that specified that waste coal
mine gas was eligible from 1 July 2012, the annual target for 2012
(12,300 GWh) would be increased by:
|850 GWh x|183 |= 425 GWh|
| |366 | |
236. Subsection 40(4) further specifies that should regulations be made to
make waste coal mine gas an eligible source, the number of GWh that the
annual targets in the table should be increased by for later years is
850 GWh.
237. Subsection 40(5) provides that if waste coal mine gas is made eligible
after regulations setting the renewable power percentage for the year
are made, those regulations are still valid despite the fact that the
required GWh of renewable source electricity for that year would have
changed.
125 After paragraph 46A(2)(b)
238. This item ensures that an application for a partial exemption
certificate must include any documents or reports prescribed by the
regulations. For instance, it may be important to require an audit
report in relation to applications which seek a significant level of
partial exemption.
126 Subsection 46B(1)
239. This item provides that the Regulator can only issue partial exemption
certificates under subsection 46B(1) subject to the application of
section 46E (which relates to circumstances in which partial exemption
certificates cannot be issued).
127 At the end of Division 1A of Part 5
240. This item inserts three new sections relating to the issuance of
partial exemption certificates for emissions-intensive trade-exposed
activities under the Act.
241. The effectiveness and fairness of the emissions-intensive trade-
exposed assistance in the Act depends on the Government having the
necessary audited information in relation to particular activities to
determine eligibility and an allocative baseline per unit of product.
The Department of Climate Change and Energy Efficiency has already
received audited information with regard to a number of potential
activities which is sufficient to make these decisions. There remain,
however, a number of potential emissions-intensive trade-exposed
activities which will still need to be formally assessed. It will be
important for the Government to receive comprehensive information from
an industry so that historical information can be the primary input
into the decision making process. Quality historical information will
reduce the necessity for detailed comparison of international
information to assist in the determination of eligibility and baselines
which may disadvantage parties who have fully complied with the
information request.
242. The new section 46D provides for circumstances where an entity has
come forward and both requested an assessment of an emissions-intensive
trade-exposed activity and provided information in support of that
request and the Government is not able to make a decision to include
that activity in the regulations without formally requesting
information of particular companies who have information relevant to
that assessment. The Minister may accordingly issue notices to a
constitutional corporation to provide information and audit reports
relevant to the question of whether the activity is an emissions-
intensive trade-exposed activity and what its electricity baseline
should be. Such a power is limited to the circumstances where an
emissions-intensive trade-exposed activity is not yet listed in the
regulations. It is intended that such a power would only be exercised
as a last resort in circumstances where a potential recipient of
assistance is unwilling to provide the necessary information.
243. Subsections 46D(3) and (5) provide that the Minister's information
requests must give at least 30 days for compliance if only information
is requested and 60 days if a report is also requested to accompany
that information.
244. Section 46E provides that a refusal or failure to comply with a notice
issued under section 46D will render that constitutional corporation
ineligible for partial exemption certificates for the first five years
which begin after the date of the notice if they were capable of
complying with the notice and the Minister informs the Regulator that
the non-compliance was significant (the request time). This is
proportionate to the potential for the withholding of such information
to result in windfall gains for a particular entity over the period.
245. Section 46F will ensure that the Minister may also disclose this
information to the Regulator to assist them with their functions and
powers under the Act and regulations.
128 Subsection 72(1)
246. This item ensures consistency with other references to the renewable
energy shortfall charge in other parts of the Act.
129 At the end of paragraph 73(1)(d)
247. This item ensures the provisions for third party recovery apply to
money owed in relation to a civil penalty order as it currently does to
money owed in relation to criminal penalties and other matters.
130 Subparagraph 111(1)(h)(ii)
248. This item inserts a reference to civil penalty provision into the
monitoring powers as a reason why a thing may need to be secured.
131 Subsection 125B(2)
249. This item inserts a reference to a civil penalty order to the
protection against self-incrimination provisions outlined in section
125B.
132 Paragraph 132(1)(a)
250. This item repeals the paragraph that refers to the Australian
Greenhouse Office and officers of that office. The Australian
Greenhouse Office no longer exists as an Australian Government agency.
Those functions are now performed by the Department of Climate Change
and Energy Efficiency. This item amends the section to refer to the
Minister, the Secretary of the Department and officers of the
Department authorised by the Secretary.
133 Paragraphs 154(1)(a) and (3)(a)
251. This item provides that a person is not guilty of an offence for the
failure to provide documents if that has occurred under section 46D
(which requires the provision of information requested by the Minister
in relation to partial exemption arrangements).
134 After Part 15
252. This item inserts two new Parts in the Act: 'Part 15A - Civil
penalties' and 'Part 15B -Other Remedies'.
Part 15A - Civil penalties
253. The proposed regulatory framework for civil penalties in Part 15A is
consistent with that provided for in other Commonwealth legislation
(see Part 5 of the National Greenhouse and Energy Reporting Act 2007,
Part 6.3 of the Personal Properties Securities Act 2009 and Division 4
of Part 8 of the Water Act 2007). It allows for the new civil penalty
provisions created in sections 24A and 24B to be prosecuted by the
Regulator in a court of civil jurisdiction to a civil standard of
proof.
254. Section 154A provides that references to a Court means:
a) the Federal Court; or
n) the Federal Magistrates Court; or
o) the Supreme Court of a State or Territory; or
p) a District Court or County Court of a State.
255. It is considered appropriate that a wide range of courts have
jurisdiction to hear civil penalty proceedings. However, state or
territory magistrates courts will not be involved given that a number
of technical issues may be involved.
256. Section 154A also defines the term penalty unit by reference to
section 4AA of the Crimes Act 1914. Currently, a penalty unit is $110.
257. Section 154B establishes the ability for a Court to make a civil
penalty order to pay the Commonwealth a pecuniary penalty. Accordingly,
it is for the Court to determine whether a person has contravened a
civil penalty provision and to order the person to pay a penalty.
258. The maximum amount of the pecuniary penalty is specified, as are the
matters which the court may have regard to in determining the amount of
the penalty. They include the nature and extent of the contravention,
previous contraventions, and, in the case of a body corporate, whether
it has exercised due diligence to avoid the contravention. These
factors reflect the approach indicated in A Guide to Framing
Commonwealth Offences, Civil Penalties and Enforcement Powers. They
follow the Australian Law Reform Commission Report 95: Principled
Regulation: Federal Civil and Administrative Penalties in Australia.
They also include the question of whether a person in breach of section
24A has surrendered certificates under section 28A to compensate for
improper creation of certificates.
259. Generally, the maximum penalty is 500 penalty units for a body
corporate and 100 penalty units for other persons. In relation to
subsection 24A, the maximum penalties for contraventions involving more
than 100 certificates are higher. For an individual, it is 1 penalty
unit for each improperly created certificate up to a maximum of 10,000
penalty units. It is five times this amount for a corporation. The per
certificate individual penalty is consistent with the criminal penalty
amount currently prescribed by section 24(1) (although that provision
has no maximum amount). A per certificate maximum is appropriate as the
economic value of improperly creating certificates is directly
proportionate to the number of certificates which may be improperly
created.
260. Section 154C will provide that only the Regulator may apply for a
civil penalty order and this does not exclude the operation of the
Director of Public Prosecutions Act 1983. Section 154D will provide
that two or more proceedings may be heard together. Section 154E will
provide that proceedings for a civil penalty order may be started no
later than 6 years after the contravention. Section 154F will provide
that the Court must apply the rules of evidence and procedure for civil
matters when hearing proceedings for a civil penalty order.
261. Section 154G will provide that the Court must not make a civil penalty
order against a person for contravening a civil penalty provision if
the person has been convicted of an offence for conduct that is
substantially the same as the conduct constituting the contravention.
This is relevant to the application of sections 24 and 24A as well as
related Criminal Code breaches.
262. Sections 154H and 154J will clarify the interaction between criminal
and civil proceedings. Section 154K will provide that evidence given in
proceedings for a civil penalty order is not admissible in criminal
proceedings
263. Section 154L provides for a mistake of fact defence to civil penalty
provisions. It provides that a person is not liable to have a civil
penalty order made against him or her for a contravention of a civil
penalty provision if the person considered whether or not facts existed
and was under a mistaken but reasonable belief about those facts and
had those facts existed, the conduct would not have constituted a
contravention of the civil penalty provision. A person who wishes to
rely on the relevant subsections bears an evidential burden in relation
to that matter.
264. Section 154M is a state of mind provision which has the effect of
making sections 24A and 24B strict liability. It is reasonable to
expect those subject to the provision will take steps to guard against
any inadvertent contravention and the information asymmetries would
make general enforcement difficult if the various states of mind needed
to be established. This is consistent with the current criminal penalty
provided by subsection 24(1).
265. Division 2 of Part 15A will establish a regime for civil liability of
executive officers of a corporation where they knew, or were reckless
or negligent as to whether, a civil penalty provision would be
contravened, were in a position to influence the corporation but failed
to take all reasonable steps to prevent the contravention. These
executive officer provisions are similar to those in other Commonwealth
legislation (such as Division 4 of Part 5 of the National Greenhouse
and Energy Reporting Act 2007). Section 154P will provide guidance as
to what 'all reasonable steps' includes. These provisions are intended
to ensure that there is appropriate corporate governance to prevent
breaches of the Act and executive officers are held accountable for
their role in breaches of the Act.
266. The maximum penalty level for this accessorial liability is determined
by reference to the underlying breach by the corporation. Extended
accessorial liability is appropriate in this context. The aim is to
ensure that compliance with the Act is taken seriously at a high level
within corporations. Liability is not being imposed simply because the
person is an officeholder at the relevant time but requires a degree of
blame before a civil penalty can be imposed.
Part 15B-Other remedies
Division 1 - Enforceable undertakings
267. Division 1 of Part 15B provides for an enforceable undertakings
regime. Enforceable undertakings are part of a number of Commonwealth
enforcement regimes (see Division 3 of Part 5 of the National
Greenhouse and Energy Reporting Act 2007, Division 4 of Part 6.3 of the
Personal Properties Securities Act 2009, Part 5.8 of the
Radiocommunications Act 1992 and Division 6 of Part 8 of the Water Act
2007). They allow persons who may not have complied with the Act in the
past to agree to a number of measures to ensure compliance, future
compliance or rectify non-compliance. In particular, paragraph
154Q(1)(d) allows for persons who have created certificates they were
not entitled to create to agree to surrender certificates under section
28A to compensate for that creation. Section 154S provides for the
enforcement of an undertaking in the Federal Court.
Division 2-Injunctions
268. Division 2 of Part 15B provides for injunctions in relation to
conduct, or a refusal or failure, that would constitute an offence
against the Act or contravention of a civil penalty provision.
Applications may be made in the Federal Court by the Regulator or a
person aggrieved by the conduct. Section 154S achieves this in a
similar manner to other injunction powers (such as section 147 of the
Gene Technology Act 2000).
135 Paragraph 156(2)(b)
269. This item will insert Parts 15A and 15B in the list of matters that
cannot be delegated to a contractor under section 156. This is
consistent with other enforcement-related provisions.
136 After section 160
270. This item will include sections 160A (Prescribing matters by reference
to other instruments) and 160B (Administrative decisions under the
regulations) into the Act.
271. Section 160A will allow the regulations to refer to documents as in
force from time to time. This will allow the regulations to refer to
the current Australian Standards without constant regulation changes.
Where a document is incorporated by reference, the section will require
that document to be made available on the Regulator's website unless
there are copyright issues involved. Given the development of the
renewable energy industry this power is appropriate to ensure that the
regulatory system is kept up to date with industry development and
innovation.
272. Section 160B provides for regulations to make provision in relation to
a matter by conferring a power to make a decision of an administrative
character on the Regulator. This removes any doubt as to whether or not
the regulations may confer significant administrative decision making
functions on the Regulator to implement the framework established by
the Act.
Schedule 2-Application, saving and transitional provisions
PART 1-PROVISIONS RELATING TO MAIN AMENDMENTS
1 DEFINITIONS
273. This item defines a number of terms used throughout Part 1 of Schedule
2, including:
a) amended REE Act defined as the REE Act as in force after the reform
commencement (i.e. after 1 January 2011);
q) old REE Act defined as the REE Act as in force immediately before the
reform commencement (i.e. immediately before 1 January 2011);
r) REE Act refers to the Renewable Energy (Electricity) Act 2000;
s) reform commencement refers to the commencement of Part 1 of Schedule 1
which is 1 January 2011;
t) reform transitional provisions defined as the provisions in this Part
and any regulations made under Part 3 that relate to any of the
amendments made by Part 1 of Schedule 1; and
u) Schedule 1 refers to Schedule 1 to this Act.
137 Application of amendments relating to liability to charge
274. This item mandates that the amendments made by items 59 to 89 of
Schedule 1 relating to the obligations of liable entities only apply
from the year starting on the reform commencement, that is for the 2011
compliance year. Accordingly, liability relating to 2010 and earlier
years will be determined in accordance with the old REE Act provisions.
It is intended that the forms and regulations for assessing 2010
liability will be preserved by regulations. Therefore, the
documentation and assessments required by 14 February 2011 deadline for
the 2010 acquisitions will not be impacted by the amendments.
138 Application of amendments relating to creation of certificates
275. This item mandates that the amendments made by 39 to 48 of Schedule 1
relating to the creation of certificates only apply from the year
starting on the reform commencement, that is from 1 January 2011.
139 Certificates created before the reform commencement
276. This item is a transitional provision that clarifies that renewable
energy certificates created under the REE Act before the reform
commencement (i.e. before 1 January 2011) will be treated as large-
scale generation certificates. This includes all certificates created
in relation accredited power stations and solar water heaters and small
generation units. This is intended to ensure that there is adequate
liquidity in the large-scale market.
277. Subitem (2) clarifies that this does not impact on certificates which
have already been surrendered before 1 January 2011.
140 Certificates created after reform commencement for small-scale
technology installed before that commencement
278. This item is a transitional provision that clarifies that renewable
energy certificates created under the REE Act from installations of
solar water heaters and small generation units made before the reform
commencement (i.e. before 1 January 2011) will be treated as large-
scale generation certificates. This is intended to ensure that there is
adequate liquidity in the large-scale market. It ensures that persons
who have installed small generation units before 1 January 2011 and
have utilised 1 or 5 year deeming are not adversely impacted by the
changes as they will continue to create large-scale generation
certificates in accordance with the regulations in force at the end of
2010.
141 References in contracts to renewable energy certificates
279. This item provides that for contracts entered into before the Royal
Assent, any references in the contract to a 'renewable energy
certificate' or 'certificate', within the meaning of the old REE Act
are taken to refer to large-scale generation certificates. This is
important as the Act will now provide that both large-scale generation
certificates and small-scale technology certificates are a form of
renewable energy certificate.
280. The item ensures that the nature of contractual arrangements relating
to renewable energy certificates are not adversely impacted by the
change in terminology (such as resulting in ambiguity as to whether
small-scale technology certificates or large-scale generation
certificates could be supplied to comply with a contractual
obligation). In this context the large-scale generation certificates
have corresponding utility for the purposes of the Act as did all
renewable energy certificates before the split. It is possible that the
regulations may need to provide for particular cases where this is not
appropriate.
281. Subitem (2) further provides that this is subject to whether any
contrary intention to the above is expressed in the contract or agreed
by the parties. Subitem (4), however, states if a contract referred to
certificates as being created in relation to solar water heaters or
small-generation units is not, that by itself, would not be a contrary
intention for the purpose of subitem (3).
282. A contrary intention may arise in a number of circumstances. For
instance, a person may have entered into a contract to assign the
rights of certificate creation for a particular system to be installed
after 1 January 2011. It could readily be assumed that this was clearly
intended to be in relation to the types of renewable energy
certificates which are able to be created from such as system
(i.e. small-scale technology certificates).
142 Contracts for the supply of certificates relating to small-scale
technology
283. This item provides for the recognition of rights in 'pre-existing
contracts' for the transfer of certificates created from the
installation of solar water heaters and small generation units. The
provisions allow for the regulations to establish a mechanism where
either party to such a contract may apply to the Regulator to have
their contract recognised under the section. If their contract meets
the requirements outlined below then the regulations will be able to
provide that the small-scale technology certificates transferred under
the contract become large-scale generation certificates. The intention
of this item is to limit the impact of the changes on genuine
contractual agreements that were made based on the existing design of
the scheme.
284. Subitem (1) set the requirements for such contracts as:
a) the contract is or was entered into on or before 25 February 2010
(before the date the Government announced of the changes intended to be
made to the Act);
v) the contract is in writing;
w) the contract requires one of the parties to the contract to transfer
renewable energy certificates to another party on or after 1 January
2011;
x) because of item 6 of Schedule 2, the renewable energy certificates that
are required to be transferred under the contract are large-scale
generation certificates;
y) the contract either implies or explicitly states that the certificates
are created from the installation of solar water heaters or small-
generation units (for instance a contract with an aggregator who
conducts a business of acquiring certificates from small-scale
installers and on-selling those to liable parties could be assumed to
relate to certificates created from the installation of small-scale
technologies) ;
z) the contract does not solely relate to certificates created before 1
January 2011 or certificates from solar water heaters or small
generation units installed before 1 January 2011 (for instance a
contract for supply in January 2011 may be designed to relate to
certificates created from 2010 or earlier so that they may be used for
liability on or before 14 February 2011).
285. For example, an agent who creates renewable energy certificates on
behalf of the owners of solar water heaters and small-generation units
may have signed a contract with a liable entity in January 2010 for the
delivery of 300 renewable energy certificates on 1 July 2011, 1 January
2012 and 1 July 2012. The contract may have just specified 'renewable
energy certificates' as the deliverable item, without any particular
reference to how these were to be created. The context of this
arrangement was the liable entity's future obligations to surrender
certificates under the old REE Act which did not have any fixed price
component. Because the seller was an agent who carries on a business
relating to the creation of certificates from solar water heaters and
small generation units, this would provide clarity that the context of
the contract created an expectation that the certificates would come
from those technologies.
286. Because of item 6, the contractual obligation will require the agent
to supply large-scale generation certificates on the three dates. As
the agent does not carry on the business of running a power station to
create large-scale generation certificates it would be inequitable if
the agent was forced to purchase large-scale generation certificates to
meet their contractual obligation. The transitional provision has been
designed to ensure that both parties to the contract are effectively in
the position they would have been had the amendments not been made.
287. Subitem (2) provides for regulations to be made specifying that some
or all of the certificates, when they are transferred under such a
contract, to become large-scale generation certificates. The intention
is for regulations to recognise contractual obligations for the
transfer of certificates created from solar water heaters and small
generation units in a market with no fixed price that would have
occurred regardless of the amendments being made.
288. The regulations will be developed in consultation with affected
parties to ensure that they provide an appropriate transitional
mechanism such that the rights of each party to the contract are not
adversely impacted. The regulations will deal with questions of detail
(such that only genuine contractual relationships are recognised and
transfers relating to existing certificates are not covered). A
priority will be placed on getting the regulations into place as early
as is practicable to provide market certainty and allow for individual
contracts to be assessed.
289. As a small-scale technology certificate will be regarded as a large-
scale generation certificate after transfer and will be deemed to have
been a large-scale generation certificate from its creation, those
certificates will not need to be taken into account for the purposes of
setting the small-scale technology percentage under section 40A.
290. Subitem (3) further provides that regulations may be made specifying
information or documents that applicants must provide to the Regulator
including verification by statutory declaration. In addition,
regulations may provide for the Regulator to make consequential changes
to the register of small-scale technology certificates and the register
of large-scale generation certificates to recognise any transfers that
occur under this provision. In particular, some adjustment may need to
be made to the information relating to a certificate to ensure that it
can be appropriately listed on the register of large-scale generation
certificates (such as the reference to the eligible energy source).
143 The register of renewable energy certificates
291. This item provides the existing 'register of renewable energy
certificates' under the old REE Act to transition to the register of
large-scale generation certificates.
292. Subitem (2) further allows for the Regulator to amend that register if
appropriate because of any of the following:
a) the change of name of the register;
aa) the fact that the certificates included in the register are, under the
amended REE Act, known as large-scale generation certificates;
ab) the fact that, because of the reform transitional provisions, the
register will also include certificates created in relation to some
solar water heaters and small-generation units.
144 No effect on time of creation or on number of certificates that can be
created
293. This item clarifies that the reform transitional provisions do not
impact: the number of certificates that can be created, the time when
certificates can be created or the validity of certificates created.
For instance, the transitional arrangements do not provide for any
double dipping or changes to the year of any certificates. Certificates
which have been created but not yet validated under section 26 are also
not somehow validated by the transitional provisions and similarly
certificates refused registration are not made valid by the changes.
145 Application of section 40C
294. This item clarifies that the new section 40C (relating to the
requirement for the Regulator to give liable entities an estimate of
their required quarterly small-scale technology certificate surrender
amounts) only applies in relation to energy acquisition statements
lodged after 1 January 2011. This means that the first estimates will
occur by 14 April 2011.
Part 2-Provisions relating to other amendments
146 APPLICATION OF AMENDMENT MADE BY 113 OF SCHEDULE 1
295. This item clarifies that the amendment made by item 113 of Schedule 1
(relating to when large-scale generation certificates may be created)
applies to the year of generation that started on 1 January 2008 and
later years of generation. Accordingly, the Regulator may extend the
certificate creation period back until 1 January 2008 (but no earlier).
147 Saving provision relating to amendment made by item 117 of Schedule 1
296. This item clarifies that regardless of the amendment made by item 117
of Schedule 1 to subsection 22(2) (relating to regulations to be made
in relation to certificates created from installations of solar water
heaters), regulations made under that section continue until such time
that new regulations are made. Accordingly, regulations 19A and 19B
will remain valid until they are replaced.
148 Application of amendment made by 134 of Schedule 1
297. This item clarifies that the new civil penalty and injunction
provisions cannot be used against a person in relation to conduct that
occurred before the commencement of Schedule 1, the day after the Royal
Assent.
Part 3-Regulations
149 REGULATIONS MAY DEAL WITH TRANSITIONAL ETC. MATTERS
298. This item allows for regulations to be made relating to the
transitional, saving or application nature of the amendments being
made, including conferring a decision making power on the Regulator. It
is recognised that a number of issues may need to be dealt with by
regulation, particularly with respect to forms and other delegated
instruments associated with 2010 liability. This item provides a broad
power to deal with whatever issues may need to be addressed.
150 Regulations
299. This item allows for the Governor-General to make regulations
specifically required or permitted under Schedule 2 or necessary or
convenient to give effect to the provisions outlined in Schedule 2.
Part 4-Other matters
151 COMPENSATION FOR ACQUISITION OF PROPERTY
300. This item clarifies that if any of the amendments result in an
acquisition of property from a person otherwise than on just terms, the
Commonwealth would be liable to pay a reasonable amount of compensation
to the person. Further it provides that if the Commonwealth and the
person cannot agree on the amount of the compensation, that person may
institute proceedings in a court to determine an appropriate amount of
compensation.
301. This item also defines the terms acquisition of property and just
terms as having the same meaning as in paragraph 51(xxxi) of the
Constitution.
302. The Government considers that the amendments and proposed transitional
arrangements will be adequate to avoid any potential claims under this
item.
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[1] Large-scale refers to a power generation system accredited as a power
station by the Regulator. Small-scale refers to all other generation and
electricity displacement systems.
[2] Small-scale Technology Percentage - see item 66