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Renewable Energy (Electricity) Amendment Bill 2006 [2006] AUSStaCSBRp 17 (21 June 2006)

Renewable Energy (Electricity) Amendment Bill 2006

Introduction

The Committee dealt with this bill in Alert Digest No. 3 of 2006. The Minister for the Environment and Heritage responded to the Committee’s comments in a letter dated 17 May 2006. A copy of the letter is attached to this report.

Extract from Alert Digest No. 3 of 2006

Introduced into the House of Representatives on 2 March 2006

Portfolio: Environment and Heritage

Background

This bill amends the Renewable Energy (Electricity) Act 2000 to implement the Government’s response to a 2003 independent statutory review to make changes to improve market transparency and business certainty.

The bill:

• amends and clarifies procedures for the creation, claim and surrender of renewable energy certificates;

• provides for provisional accreditation of proposed generation projects and establishes timeframes for the consideration of applications for accreditation of generators;

• allows for the publication of additional data and information relevant to investment decisions;

• provides increased opportunities for bioenergy and solar energy technologies by amending procedures and expanding the range of eligible installations;

• ensures only one entity is made liable in relation to the purchase of electricity; and

• allows the Renewable Energy Regulator (the Regulator) to vary the energy acquisition and shortfall statements and baselines for accredited power stations, to gather information in relation to monitoring and compliance, and to suspend an accredited power station.

Legislative Instruments Act - Declarations
Schedule 1, item 57

Item 57 of Schedule 1 would add a new  subsection 22(2)  to the Principal Act, under which regulations made for the purpose of the existing subsection 22(1) might empower the Regulator to make written determinations in relation to the number of renewable energy certificates able to be created for a particular solar water heater installation. Unfortunately, the explanatory memorandum merely restates the provisions of the bill (on page 25) and does not indicate whether such a written determination would be legislative in character or administrative. If such a determination were to be legislative in character, it would appear that the proposed new subsection 22(2) would allow for sub-delegation of legislative power, and would not subject the exercise of such sub-delegation to any scrutiny by the Parliament. The Committee seeks the Minister’s advice on the nature of these written determinations of the Regulator.

Pending the Minister’s advice, the Committee draws Senators’ attention to the provisions, as they may be considered to insufficiently subject the exercise of legislative power to parliamentary scrutiny, in breach of principle 1(a)(v) of the Committee’s terms of reference.

Relevant extract from the response from the Minister

You have sought my advice on the nature of written determinations of the Renewable Energy Regulator (the Regulator) proposed by new subsection 22(2) (inserted by Item 57 of Schedule 1 of the Bill). The intention of this amendment is to provide clarity to manufacturers of solar water heaters regarding the methodology that is used by the Regulator when determining the number of certificates that can be created for a particular installation of a solar water heater.

New subsection 22(2) will enable regulations made for the purposes of  subsection 22(1)  of the Renewable Energy (Electricity) Act 2000 (the Act) to empower the Regulator to make written determinations setting out the method by which the number of certificates that can be created for a particular installation of a solar water heater is calculated.

The determinations of the Regulator referred to in the proposed new  subsection 22(2)  will determine the number of certificates. The determination will be made in accordance with guidelines to be specified in regulations. The principal document that will form the basis of the calculations, which is to be specified in the regulations, is the Australian Standard AS 4234. The calculation for determining the number of certificates that can be created for a particular installation of a solar water heater is technical. The Standard, together with other guidelines published by the Regulator (which will also be specified in regulations), set out the methodology for this calculation in comprehensive detail and leave no room for the discretion of the Regulator. I have been advised that there is no sub‑delegation of power as the Regulator will be performing these calculations strictly in accordance with the guidelines which will be specified in the regulations.

I am also advised that as the Regulator is merely applying the law in a particular context, and not determining the content of the law, the written determinations of the Regulator pursuant to new proposed  subsection 22(2)  would not be legislative instruments for the purposes of the Legislative Instruments Act 2003 (LIA).

The Committee thanks the Minister for this response and for clarifying that the determinations provided for in subsection 22(2) are not legislative in character. The Committee reiterates its expectation that provisions of this nature be adequately explained in the explanatory memorandum to the bill.

Legislative Instruments Act - Declarations
Schedule 1, item 100

Proposed new subsections 44(5), 44(6), 44(7) and 44(8) of the principal Act provide for the payment of a fee for the surrender of renewable energy certificates within a period of 28 days from an entity receiving a notice from the Regulator following the lodgement of an energy acquisition statement. Proposed new subsection 44(9), to be inserted by item 100 of Schedule 1, declares that such a notice, provided for under proposed new subsection 44(6), is not a legislative instrument. It would appear that such a notice is not of a legislative character, and therefore proposed new subsection 44(9) is no more than declaratory. However, while the explanatory memorandum clarifies the purpose of the notice (on page 33), it does not clarify whether the proposed new subsection is declaratory of the existing position. The Committee seeks the Minister’s advice whether the proposed new subsection is merely declaratory.

Pending the Minister’s advice, the Committee draws Senators’ attention to the provisions, as they may be considered to insufficiently subject the exercise of legislative power to parliamentary scrutiny, in breach of principle 1(a)(v) of the Committee’s terms of reference.

Relevant extract from the response from the Minister

You have also sought my advice on whether the proposed new subsection 44(9) (inserted by Item 100 of Schedule 1 of the Bill) is declaratory. The purpose of this new subsection is to confirm that the written notice of the Regulator under the proposed new subsection 44(6) is not a legislative instrument for the purposes of the LIA.

In this regard, the notice referred to in new subsection 44(6) would be provided by the Regulator only once all of the conditions specified in section 44 and 45 regarding the surrender of certificates have been satisfied. The Regulator would be specifying the number of certificates to be surrendered by a liable entity for a particular year, and the fee that is payable by the liable entity in respect of the surrender of those certificates based on the fact that the relevant statutory conditions have been fulfilled. As such, the notice provided by the Regulator under the new subsection 44(6) is not a legislative instrument within the meaning of section 5 of the LIA because the Regulator will not be determining or altering the content of the law.

I trust that the above addresses your concerns.

The Committee thanks the Minister for this response and reiterates its expectation that provisions of this nature be adequately explained in the explanatory memorandum to the bill.

Robert Ray

Chair