Bills Digest no. 7 2009–10
Renewable Energy (Electricity) (Charge) Amendment Bill
2009
WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.
CONTENTS
Passage history
Purpose
Background
Financial implications
Main provisions
Contact officer & copyright details
Passage history
Date
introduced: 17 June
2009
House: House of Representatives
Portfolio: Climate Change and Water
Commencement:
The day after Royal
Assent.
Links: The relevant
links to the Bill, Explanatory Memorandum and second reading
speech can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/.
When Bills have been passed they can be found at ComLaw, which is
at http://www.comlaw.gov.au/.
The
Renewable Energy (Electricity) (Charge) Amendment Bill 2009 (the
Bill) amends the Renewable Energy (Electricity) (Charge) Act
2000 (the Charge Act) to increase the renewable energy
shortfall charge from its current $40 to $65.
Along with the
Renewable Energy (Electricity) Amendment Bill 2009, this Bill is
designed to give effect to the Government s commitment to replace
the existing Mandatory Renewable Energy Target (MRET) scheme with a
national Renewable Energy Target (RET) scheme. Background on both
the MRET and RET, and relevant policy issues, is contained in the
Digest
for the Renewable Energy (Electricity) Amendment Bill 2009.[1]
This Bill increases
the shortfall charge potentially payable by certain liable entities
generally Australian electricity retailers and other large buyers
of electricity under the both the MRET and proposed RET. Such a
charge is payable when such entities fail to surrender to the
Renewable Energy Regulator (the relevant Commonwealth regulatory
body) sufficient renewable energy certificates (RECs) to cover
their required purchases of electricity generated from renewable
sources.[2] Liable
entities will generally acquire the RECs by purchasing them. The
shortfall charge will increase from $40 to $65 thus if a liable
entity surrendered 100 too few RECs, their liability under the
charge would be $6500. However, it appears that such entities do
generally surrender sufficient RECs to avoid the shortfall
charge:
According to data published by the Office of
the Renewable Energy Regulator, there has been a consistently high
level of compliance with the mandatory renewable energy target
since the scheme began in 2001, which means that very few liable
parties have, in fact, needed to pay the shortfall charge. The new
shortfall charge seeks to encourage affordable deployment of
renewable energy through continued high levels of compliance, while
taking into account the significant increase in annual targets
under the expanded scheme.[3]
In this respect, the relevant part of the 2008 annual report of
the Office of the Renewable Energy Regulator comments:
for the 2007 compliance period, only 3 out of
the 70 liable parties had individual shortfalls. The 2007 shortfall
was effectively 6,333 RECs. As on 31 December 2008 more
than 99.45 percent of the 2007 liability was met by the surrender
of RECs. [emphasis added][4]
The shortfall charge is effectively a tax. Section 55 of the
Constitution requires any law imposing a tax cannot deal with any
other matter. The Renewable Energy (Electricity) Amendment Bill
2009 covers non-tax issues, hence the need for two separate
Bills.
The relevant part of the Explanatory Memorandum refers readers
to the Explanatory Memorandum for the Renewable Energy
(Electricity) Amendment Bill 2009, which states:
As part of the 2008-09 Budget, the Government
provided $15.5 million over five years for the Office of the
Renewable Energy Regulator to administer the expanded Renewable
Energy Target. The measure included $2.2 million over two years in
capital funding to modify and expand the capacity of the renewable
energy certificate online register and $14.0 million over five
years in administered revenue from the increased trade in Renewable
Energy Certificates.[5]
The proposed increase in the shortfall charge could potentially
increase revenue to the Commonwealth. However, assuming the
situation (of very small shortfalls) described above remains into
the future, any extra revenue is likely to be modest.
Item 1 changes the shortfall charge from $40 to
$65.
Item 2 provides that the increased charge
applies from 1 January 2010 and runs until 31 December
2030.[6]
Copyright Commonwealth of Australia
Members, Senators and Parliamentary staff can obtain further
information from the Parliamentary Library on (02) 6277 2764.
Angus Martyn
5 August 2009
Bills Digest Service
Parliamentary Library
© Commonwealth of Australia
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