EXPLANATORY STATEMENT

Select Legislative Instrument 2008 No. 129

 

Issued by the Authority of the Minister for Resources and Energy

 

Energy Efficiency Opportunities Act 2006

 

Energy Efficiency Opportunities Amendment Regulations 2008 (No. 1)

 

The Energy Efficiency Opportunities Act 2006 (the Act) establishes the Energy Efficiency Opportunities program. The Act requires energy efficiency opportunities assessments and public reporting of outcomes by large energy using businesses.

Section 41 of the Act provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.

The purpose of the Regulations is primarily to streamline the energy data reporting requirements under the EEO program with the National Greenhouse and Energy Reporting (NGER) System, which commences on 1 July 2008 under the National Greenhouse and Energy Reporting Act 2007. The Regulations also make a number of minor administrative amendments.

The effect of the amendments is that corporations participating in both the EEO program and the NGER system will be able to collect and report one set of energy use data that will meet the energy data reporting requirements for both the EEO program and the NGER System, thereby reducing a potentially duplicative regulatory burden.

Details of the Regulations are set out in the Attachment.

The Regulations will commence on 1 July 2008.

ATTACHMENT

 

Details of the Energy Efficiency Opportunities Amendment Regulations 2008 (No. 1)

 

Regulation 1 – Name of Regulations

 

Regulation 1 provides that the name of the Regulations is the Energy Efficiency Opportunities Amendment Regulations 2008 (No. 1).

 

Regulation 2 – Commencement

 

Regulation 2 provides that the Regulations commence on 1 July 2008, to coincide with the commencement of the National Greenhouse and Energy Reporting (NGER) System.

 

Regulation 3 – Amendment of Energy Efficiency Opportunities Regulations 2006

 

Regulation 3 provides that Schedule 1 amends the Energy Efficiency Opportunities Regulations 2006 (the Principal Regulations).

 

Schedule 1 – Amendments

 

Item [1] – Regulation 1.3, after definition of Act

 

This item adds a definition for baseline energy to the definitions at regulation 1.3 of the Principal Regulations. The term baseline energy is relevant for a controlling corporation to determine the amount of energy to which sub-regulations 5.3(2) and (3) of the Principal Regulations apply, that is the amount of energy of which a particular percentage must be assessed in each assessment cycle. This amendment is intended to make clear that the relevant percentage is to be a percentage of the baseline energy use, rather than the energy use for some other period during the assessment cycle.

 

Item [2] – Regulation 1.3, definition of combustible fuel

 

This item amends the definition of combustible fuel in regulation 1.3 to remove the reference to Part 1 of Schedule 1 to the Principal Regulations. Part 1 of Schedule 1 to the Principal Regulations is removed in these Regulations to streamline the relevant energy sources with those used for the purposes of the NGER System, so this reference to Part 1 of Schedule 1 becomes redundant.

 

Item [3] – Regulation 1.3, after definition of combustible fuel

 

This item adds a definition for energy-mass balance to regulation 1.3. This clarifies the meaning of the technical term "energy-mass balance", used in Key Requirements 3.2(d) and 3.3(b) of Schedule 7 to the Principal Regulations.

 

Item [4] – Regulation 1.4

 

This item substitutes a new subregulation 1.4 to change the method used to determine the "user of energy", which determines the entity that is responsible for assessing and reporting particular energy use. The replacement regulation 1.4 provides that the user of energy is the entity that has operational control over the facility at which energy is consumed or produced, or, if the energy is derived from a reductant, the entity that has operational control over the facility in which the reductant is used to produce energy or combustible fuel.

This aligns with the method used to determine responsibility for energy use under the National Greenhouse and Energy Reporting Act 2007 (the NGER Act), where paragraphs 13(1)(b) and (c) of that Act respectively attribute energy production and consumption to the entity that has operational control over the facility where energy is produced or consumed.

This proposed amendment will facilitate the streamlining of energy data reporting requirements, by attributing responsibility for energy use consistently under both the NGER System and EEO program. This will enable corporations to collect and report one set of energy use data for the purposes of both schemes.

The definitions of "consumption, of energy", "facility", "operational control" and "production, of energy" will have the same meaning as they have under the NGER Act.

This item also provides under a new subregulation 1.4(3) that where a trustee of a trust uses energy on behalf of the trust, it is the trustee that will be considered the "user of energy" for the purposes of the EEO program (and therefore be subject to assessment and reporting requirements), and not the trust or beneficiaries of the trust. This provision is not intended to change the entity responsible for energy use. Rather, it is proposed as an explanatory provision in order to eliminate confusion about the situation where a trustee is the user of energy.

 

Item [5] – Subregulation 1.5(3)

 

This item amends subregulation 1.5(3) to provide that the relevant energy and energy sources to be used to determine energy used will be those mentioned in Part 1 of Schedule 1 to the National Greenhouse and Energy Reporting Regulations 2008 (the NGER Regulations), rather than Part 1 of Schedule 1 of the Principal Regulations.

 

This will allow companies to refer to a single list of energy sources in collecting energy use data that they may then use to report energy use for both programs.

 

Item [6] – Subregulation 1.5(5)

 

This item amends subregulation 1.5(5) to update and streamline the conversion factors that corporations should use to convert a physical amount of an energy source to an amount of energy. It provides that the relevant conversion factors are the energy content factors mentioned in the National Greenhouse and Energy Reporting (Measurement) Determination 2008, rather than those mentioned in the publication Energy in Australia 2005.

 

This is intended to enable companies to use a single set of conversion factors for calculating their energy use under both the NGER System and the EEO program.

 

Item [7] – Subregulation 1.6(1)

 

This item amends subregulation 1.6(1), to make it subject to the proposed new subregulation 1.6(1A).

 

Item [8] – After subregulation 1.6(1)

 

This item inserts a new subregulation 1.6(1A), providing that, if an entity satisfies the methods and criteria for the measurement of energy consumption that are set out in the National Greenhouse and Energy Reporting (Measurement) Determination 2008, they will be taken to have met the accuracy requirements set out in items 1, 2 and 4 of subregulation 1.6(1).

 

This amendment assists in streamlining the energy data requirements of the two programs by providing that companies that meet the technical measurement requirements for measurement of energy consumption under the NGER System will be considered to have satisfied the energy use accuracy requirements of the EEO program.

 

Item [9] – Paragraph 3.2(2)(b)

 

This item amends the address specified in paragraph 3.2(2)(b) to which a hard copy application for registration must be given.

 

The address will be nominated in writing by the Secretary of the Department of Resources, Energy and Tourism (the Department), and be made available on the Department's website. Changed administrative arrangements mean that the address current specified in the Principal Regulations is no longer correct.

 

Item [10] – Paragraph 3.4(2)(c)

 

This item amends the address specified in paragraph 3.4(2)(c) to which a hard copy application for an exemption from the requirement to be registered for the EEO program must be given.

 

The address will be nominated in writing by the Secretary of the Department of Resources, Energy and Tourism (the Department), and be made available on the Department's website. Changed administrative arrangements mean that the address current specified in the Principal Regulations is no longer correct.

 

Item [11] – Paragraph 4.3(2)(b)

 

This item amends the address specified in paragraph 4.3(2)(b) to which a hard copy application for deregistration must be given.

 

The address will be nominated in writing by the Secretary of the Department of Resources, Energy and Tourism (the Department), and be made available on the Department's website. Changed administrative arrangements mean that the address current specified in the Principal Regulations is no longer correct.

 

Item [12] – Subregulation 5.1(4)

 

This item amends the address specified in paragraph 5.1(4) to which a hard copy assessment plan must be given.

 

The address will be nominated in writing by the Secretary of the Department of Resources, Energy and Tourism (the Department), and be made available on the Department's website. Changed administrative arrangements mean that the address current specified in the Principal Regulations is no longer correct.

 

Item [13] – Subregulation 5.3(2)

 

This item replaces the term "energy" used in subregulation 5.3(2) with the term "baseline energy". The amendment clarifies for participating corporations that at least 80% of the corporate group's baseline energy use must be assessed in the first 5 year assessment cycle, and at least 90% of baseline energy use must be assessed in the second and subsequent 5 year assessment cycles.

 

"Baseline energy" is defined by item [1] of these Regulations.

 

Item [14] – Subregulation 5.3(3)

 

This item replaces the term "energy" used in subregulation 5.3(3) with the term "baseline energy". The amendment clarifies for participating corporations that, where a part of the corporate group submits a separate assessment plan, at least 80% of the baseline energy use of that part of the group must be assessed in the first 5 year assessment cycle, and at least 90% of the baseline energy use of that part of the group must be assessed in the second and subsequent 5 year assessment cycles.

 

"Baseline energy" is defined by item [1] of these Regulations.

 

Item [15] – After subregulation 5.3(5)

 

This item adds new subregulations 5.3(6) and (7). Subregulation 5.3(6) provides that sites using greater than 0.5PJ of energy in a financial year that a member of the group has built or acquired up to 18 months before the end of the 5 year assessment cycle are required to be assessed.

 

Many participating corporations may build or acquire a site over 0.5 PJ at some time in an assessment cycle. New subregulation 5.3(6) clarifies for these corporations when these sites will be required to be assessed under the EEO program. This approach is consistent with advice provided in the program's Industry Guidelines.

 

Subregulation 5.3(7) provides that the assessment of a site mentioned in subregulation 5.3(6) may be an assessment undertaken during the design phase of the construction of the site.

 

Item [16] – Subregulation 7.1(2)

 

This item amends subregulation 7.1(2) of the Principal Regulations, and adds new subregulations 7.1(3) and (4).

 

Subregulation 7.1(2) is amended to be subject to subregulation 7.1(3).

New subregulation 7.1(3) provides that a registered corporation may elect to have its reporting periods end at the end of the financial year. Reports for the purposes of the NGER System will refer to a reporting period that is a financial year, beginning with the 2008/2009 financial year. New subregulation 7.1(3) is intended to allow streamlining of reporting requirements between the two schemes, by allowing the second and subsequent reporting periods for reports to the public to refer to the period used under the NGER System, that is, each financial year, beginning with the 2008/2009 reporting year.

New subregulation 7.1(4) provides that if a corporation does elect to have a reporting period that ends at the end of the financial year, each subsequent 12 month period will also end at the end of each financial year.

 

Item [17] – Subregulation 7.4(2)

 

This item amends subregulation 7.4(2) of the Principal Regulations, and adds a new subregulation 7.4(3).

 

Subregulation 7.4(2) is amended to be subject to subregulation 7.4(3).

 

New subregulation 7.4(3) provides that, if a registered corporation makes its first report to the public available before 31 October 2008, the corporation may, at their discretion, choose to extend the due date for the second report to the end of 31 October 2009.

 

The first report for the purposes of the NGER System is due by 31 October 2009 for all corporate groups participating in that scheme. Corporations may wish to use energy data provided to NGER in their second and subsequent public reports. In order to facilitate streamlining, the earliest date for publishing a second report to the public is aligned with the date for providing a report under the requirements of the NGER System.

 

The new subregulation also provides that, if the corporation did decide to extend the due date for their second report, subsequent reports are due on the anniversary of the date of submission of the second report.

 

 

 

 

Item [18] – Regulation 7.7

 

This item creates subregulation 7.7(1), the content of which is the same as Regulation 7.7 of the Principal Regulations. This is a renumbering intended to facilitate the addition of new subregulation 7.7(2).

 

Item [19] – Paragraph 7.7(a)

 

This item omits from paragraph 7.7(a) the reference to the kinds of energy and energy sources mentioned in Schedule 1 of the Principal Regulations, and replaces it with a reference to the kinds of energy and energy sources referred to in subregulation 1.5(3).

 

As described under item [5], subregulation 1.5(3) refers to the energy and energy sources mentioned in Part 1 of Schedule 1 of the NGER Regulations.

 

Item [20] – Paragraph 7.7(e)

 

This item replaces the term "energy use" in paragraph 7.7(e) of the Principal Regulations with "energy use and production".

 

This amendment means that, for the purposes of reports to the Secretary, corporations must provide total energy use and production data for relevant parts of the group.

 

The NGER System requires corporations that meet given thresholds to report energy production data, as well as energy consumption data. This amendment will mean that, by reporting one set of energy consumption and production data, participating corporations will meet the requirements of both the EEO program and the NGER System.

 

Item [21] – After Regulation 7.7

 

This item inserts a new subregulation 7.7(2), providing that the amount of energy use reported in the report to the Secretary must include energy sources that were used to produce energy used by an entity.

Under the NGER Regulations, corporations are to be required to report both gross energy consumption and gross energy production. Gross energy consumption is a measurement of energy use that includes energy used to produce other energy.

Paragraph 1.5(4)(b) of the Principal Regulations previously provided that the total of all energy used by an entity does not include energy sources to the extent that those sources were used to produce energy used by the entity.

This item will facilitate streamlining between the EEO and NGER schemes by enabling companies to report the same gross energy use data for the purposes of both.

 

 

Item [22] – Paragraph 7.10(2)(b)

 

This item amends the address to which a hard copy report to the Secretary must be given.

 

The address will be nominated in writing by the Secretary of the Department of Resources, Energy and Tourism (the Department), and be made available on the Department's website. Changed administrative arrangements mean that the address current specified in the Principal Regulations is no longer correct.

 

Item [23] – After Part 9

 

This item inserts a new Part 10, which incorporates transitional provisions included to minimise potential adverse impacts the amendments might otherwise have on some participating corporations in the current 5 year assessment cycle.

 

Corporations which make use of these transitional provisions would be able to continue to meet their EEO assessment and reporting obligations by following the requirements that were in force prior to these amendments. However, they would lose the benefits of streamlining provided by these amendments and would need to maintain separate energy use data sets and report separately under EEO and NGER.

 

New subregulations 10.1 to 10.5 are inserted.

 

New subregulation 10.1 provides that the new Part 10 applies to controlling corporations that applied for registration for the EEO program prior to 1 July 2008 (the date of commencement of these Regulations). Controlling corporations who apply to register subsequent to this date would be expected to apply these Regulations, which would be in force at that time.

 

New subregulation 10.1 also provides that a provision of the new Part 10 would apply until the end of the last day of the first five year assessment cycle, unless another date is specified. In subsequent assessment cycles, controlling corporations would be expected to apply these Regulations, which would be in force at that time.

 

New subregulation 10.2 defines terms used in the new Part 10.

 

New subregulation 10.3 provides that an entity is taken to satisfy the requirements of the Regulations relating to an assessment plan (10.3(1)), an assessment (10.3(2)), the preparation of a report (10.3(3)), and making a report available (10.3(4)), if the entity satisfies the requirements of the Principal Regulations that were in force prior to these amendments.

A number of corporations have provided assessment plans and commenced assessments on the basis of the Principal Regulations. New subregulation 10.3 provides transitional relief to ensure that the amendments to the Principal Regulations defining the meaning of ‘energy used’ by an entity would not result in a corporation, which has submitted an assessment plan in accordance with the Principal Regulations as applying prior to 1 July 2008, being in breach of the Energy Efficiency Opportunities Act 2006 (the EEO Act).

It is intended that an affected corporation may choose to vary its assessment plan under section 19 of the EEO Act, to assess in accordance with the amended Regulations, or may continue with the assessments which were proposed in the assessment plan submitted under the Principal Regulations as in force prior to these amendments.

In addition, a number of registered corporations have started doing assessments in accordance with the Principal Regulations as they applied prior to 1 July 2008, with a view to making reports based on those assessments. New subregulation 10.3 provides transitional relief to ensure that if the corporation reports energy use in accordance with the Principal Regulations as currently drafted, that corporation is deemed to have complied with the requirements of the amended Regulations. For example, where a corporation has done assessments based on it being the last purchaser of energy (rather than having operational control over the facility where that energy is consumed) it is intended that it may elect to report energy use data on that basis.

It is intended that a corporation that chooses to vary its assessment plan (under s19 of the EEO Act) to comply with the amended Regulations should report accordingly (i.e. on the basis of energy used in facilities over which its group members have operational control).

New subregulation 10.3 would not alter the need for corporations to record 2008/2009 energy use data for NGER System registration and reporting obligations in 2009 in accordance with the NGER definitions of responsibility for energy use, and to report energy use to NGER on an operational control basis.

New subregulation 10.4 provides transitional relief for any entity that would experience a significant increase or decrease in the energy use attributed to their corporate group as a result of the amendment described in item [5].

New subregulation 10.5 provides transitional relief by allowing entities to continue to use the conversion factors that were in force prior to the proposed amendments.

 

Item [24] – Schedule 1, Part 1

 

This item removes Part 1 of Schedule 1 to the Principal Regulations. This Part lists energy and energy sources that a controlling corporation is currently required to consider when determining the amount of energy used by itself or a member of its corporate group.

 

As discussed in item [5], this list of energy and energy sources has been replaced with a reference to the energy and energy sources mentioned in Part 1 of Schedule 1 to the NGER Regulations. This allows companies to refer to a single list of energy sources in collecting energy use data that they may then use to report energy use for both schemes.

 

Item [25] – Schedule 3, Item 103

 

This item removes the current item 103 of Schedule 3, and replaces it with new subitems 103(1) and (2).

 

The new subitems 103(1) and (2) make it clear that the corporate information relating to parts of the corporate group that is required in an assessment plan, as listed in new subitem 103(1), is required for the members of one of the subsets of the corporate group listed in new subitem 103(2).

It is the intention of the EEO program to allow corporations to structure their assessments according to a breakdown of the corporate group that is most appropriate. Therefore, corporations may choose to assess their corporate group by group member, key activity, business unit or site.

Other items in Schedule 3 (including the new item 107 (see item [27]), and the new item 201 (see item [28]) also allow controlling corporations to disaggregate their group in accordance with one of the same subsets. This ensures that all the required information in an assessment plan is provided consistently according to the selected breakdown of the corporate group.

 

As key activities do not have an ABN or head office address, the new paragraphs 103(1)(c) and (d) also clarify that corporations choosing to structure their assessments by key activity are not required to provide this information.

 

Item [26] – Schedule 3, Item 106

 

This item removes item 106 of Schedule 3 to the Principal Regulations. Item 106 of Schedule 3 requires information to be provided in an assessment plan regarding members of the corporate group that are exempted by the application of regulation 2.2 of the Principal Regulations. Regulation 2.2 exempts members of the group whose main business is in electricity generation, or electricity or gas transmission or distribution, and who do not use greater than 0.5PJ in non-energy supply activities.

The information provided under item 106 is not necessary for the purposes of the program. Deleting this information removes this administrative burden on registered corporations.

 

Item [27] – Schedule 3, Item 107

 

This item removes the current item 107 of Schedule 3, and replaces it with new subitems 107(1) and (2).

 

The new subitem 107(1) makes it clear that the corporate structure diagram provided in an assessment plan must show links between the controlling corporation and the members of one of the subsets of the corporate group listed in new subitem 107(2) that are intended to be assessed.

 

As discussed for item [25], this is intended to allow corporations to structure their assessments according to a breakdown of the corporate group that is most appropriate, and ensures that all the required information in an assessment plan is provided consistently according to the selected breakdown of the corporate group.

 

 

 

Item [28] – Schedule 3, Item 201

 

This item removes the current item 201 of Schedule 3, and replaces it with new subitems 201(1) and (2).

 

The new subitems 201(1) and (2) make it clear that the summaries of energy use provided in an assessment plan in accordance with subitem 201(1) must be provided for the corporate group, and for the members of one of the subsets of the corporate group listed in new subitem 201(2).

 

As discussed for item [25], this is intended to allow corporations to structure their assessments according to a breakdown of the corporate group that is most appropriate, and ensures that all the required information in an assessment plan is provided consistently according to the selected breakdown of the corporate group.

 

Item [29] – Schedule 3, Item 203

 

This item removes the current item 203 of Schedule 3, and replaces it with new subitems 203(1) and (2).

 

The new subitems 203(1) and (2) make it clear that the information provided in an assessment plan regarding the corporate group's existing energy efficiency opportunities (according to the criteria listed in subitem 107(1)) must be provided for the group and for the members of one of the subsets of the corporate group listed in new subitem 203(2).

 

As discussed for item [25], this is intended to allow corporations to structure their assessments according to a breakdown of the corporate group that is most appropriate, and ensures that all the required information in an assessment plan is provided consistently according to the selected breakdown of the corporate group.

 

Item [30] – Schedule 3, Item 204

 

This item removes the current item 204 of Schedule 3, and replaces it with new subitems 204(1) and (2).

 

The new subitem 204(1) amends the information to be provided for the energy efficiency opportunities mentioned in an assessment plan for the purposes of Item 203 of Schedule 3. The information required is an estimate of the per annum net energy savings and net financial savings based on: (a) trigger year energy use and production levels; and (b) forecast production levels in the final year of the first five-year assessment cycle.

 

References to the year 2011 in item 204 of Schedule 3 to the Principal Regulations are references to the final year in the first five year assessment cycle for those corporations for which the energy use trigger year (see section 10 of the EEO Act) is 2005-2006. It is the intention of the EEO program that an estimate of the per annum net savings and per annum net financial savings should be based on forecast production levels in the final year of the first five-year assessment cycle for all corporations. Therefore, for example, for corporations whose trigger year is 2006-2007, the information would be provided by reference to forecast production levels in 2012.

 

The new subitem 204(2) makes it clear that the information that is required by the new subitem 204(1) must be identified for the corporate group, and for the members of one of the subsets of the corporate group listed in new subitem 204(2).

 

As discussed for item [25], this is intended to allow corporations to structure their assessments according to a breakdown of the corporate group that is most appropriate, and ensures that all the required information in an assessment plan is provided consistently according to the selected breakdown of the corporate group.

 

Item [31] – Schedule 3, Items 301 and 302

 

This item removes items 301 and 302 of the Principal Regulations.

 

Item 301 of the Principal Regulations requires a statement of which group members, joint ventures, partnerships, business units or sites are in the controlling corporation's group. Item 302 of the Principal Regulations requires a statement of which corporations, joint ventures, partnerships, business units or sites need to be assessed.

 

These items are proposed to be removed because proposed new item 103 (see item [25]) and the new item 107 (item [27]) require the same information, making items 301 and 302 redundant.

 

Item [32] – Schedule 3, Item 401, note

 

This item replaces the term "controlling group" in the note to item 401 of Schedule 3 with the term "controlling corporation's group", to correct a drafting error.