Environmental Scheme costs to change during 2016

by Energy Action | Mar 07, 2016
The Australian Energy Market has been going through significant changes over the past 12 months with many of those changes to impact your environmental charges, both electricity and gas, during this next year.

The expansion of the NSW Government Energy Savings Scheme and the Victorian Energy Efficiency Target, (also known as the Energy Saver Incentive), as well as the agreement on a revised Renewable Energy Target of 33,000 gigawatt hours by 2020 will all have an impact on environmental scheme costs over the next few years. 

The setting of about 23.5 per cent of Australia's electricity from renewable sources by 2020 in particular has sparked a rise in the prices of renewable energy certificates.

The Energy Savings Scheme targets were changed with effect from 1 January 2016 and the scheme was expanded to include gas.  The Victorian Energy Efficiency Target and Retailer Energy Efficiency Scheme are the other two schemes that involve gas. 

Electricity retailers (and in some cases gas retailers) incur costs from state and Federal environmental schemes.  These costs are passed on to their electricity and gas clients and may be shown as separate items on their invoices. 

Typically the costs are based on two factors: negotiable certificate prices and regulated scheme percentages.  The former may be specified in your electricity or gas contract.  The latter are set by the scheme regulator and with two exceptions will change every year according to a set timetable. 

These changes to the scheme percentages may change the costs you see on your electricity and gas invoices.  Retailers tend to update their environmental scheme charges in the next billing cycle after the scheme percentages are announced.  In addition they may reconcile the previous invoice charges if they were based on estimated scheme percentages. 

The table below sets out the relevant dates and schemes:

Scheme Name

Scheme Type

Jurisdiction

Scheme %

Commodity

Large-scale Renewable Energy Target - LRET

Renewable Energy

Federal

Change every calendar year. Must be declared by 31st March

Electricity Only

Small-scale Renewable Energy Scheme - SRES

Renewable Energy

Federal

Change every calendar year. Must be declared by 31st March

Electricity Only

Victorian Energy Efficiency Target - VEET

Energy Efficiency

Victoria Only

Change every calendar year. Must be declared by 31st May

Electricity & Gas

Energy Savings Scheme - ESS

Energy Efficiency

New South Wales Only

Set scheme percentages per year.

Electricity & Gas

Energy Efficiency Improvement Scheme - EEIS

Energy Efficiency

Australian Capital Territory only

Set scheme percentages per year.

Electricity Only

Retailer Energy Efficiency Scheme - REES

Energy Efficiency

South Australia Only

Specific to each retailer

Electricity & Gas

For your information, we provide below a recap on the relevant schemes:

LRET & SRES – Federal renewable energy schemes. They provide a financial incentive for the installation of large and small scale renewable energy generation. Large-scale systems tend to be commercial wind and solar installations. Small-scale systems tend to be rooftop solar panels.

VEET & ESS– State based energy efficiency schemes for VIC and NSW. They create financial incentives for organisations to invest in energy efficiency activities.

REES & EEIS– State based energy efficiency schemes for SA and ACT. They create financial incentives for organisations to invest in energy efficiency activities. Unlike VEET and ESS no certificates are created

Emissions Reduction Fund (ERF) – Federal scheme to provide incentives for emissions reduction activities. Periodic auctions are held to assess the lowest cost options and award a contract for delivery of emissions reduction. One Australian Carbon Credit Unit (ACCU) is issued per tonne of carbon abated.


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