Victorian Energy Efficiency Target – Proposed Changes for EREP Exempt Sites

by Energy Action | Jul 04, 2016
The Victorian government no longer considers prior inclusion in the Environment and Resource Efficiency Plans scheme reasonable grounds for exclusion from the Victorian Energy Efficiency Target scheme. As part of a larger public consultation on various issues, the government has proposed two alternative options.

The Current Situation

The Victorian Energy Efficiency Target (VEET) scheme obliges electricity and gas retailers to engage in energy efficiency activities.  Usually retailers engage third parties to carry out these activities for them.  Examples are installing standby power controllers or energy efficient lighting.  The costs of these activities are passed on to electricity and gas consumers via their retailer invoices.  It is a state specific scheme and applies to Victorian sites only. 

Currently a small group of sites cannot participate in the VEET scheme and are not subject to VEET costs.  These sites participated in the now abolished Environment and Resource Efficiency Plans (EREP) program and are listed in the EREP register. The EREP program targeted large energy users, so although the number of sites is low their electricity and gas consumption tends to be high. 

What’s Changing?

The Victorian government no longer considers prior inclusion in the EREP scheme reasonable grounds for exclusion from the VEET scheme.  As part of a larger public consultation on various VEET issues, the government has proposed two alternative options for EREP sites.

The Immediate Option: All sites currently on the EREP register will be included in the VEET scheme from 1 January 2017 and subject to VEET charges.

The Gradual Option: Sites on the EREP register can opt into the VEET scheme from 1 January 2017 onwards but are not obliged to do so until 1 January 2020.  As above, VEET charges will apply once sites opt in. 

What’s the Impact?

VEET scheme charges vary by retailer, commodity and period.  However, we have listed some indicative charges below:

Electricity - $2.50 per MWh or 0.25 c/kWh

Gas - $0.30 per GJ

To offset these costs, companies can engage in energy efficiency activities and create Victorian Energy Efficiency Certificates or VEECs.  In practice, most companies use a third party to do so.  VEECs have a dollar value and are sold to electricity and gas retailers. 

Further Information

To find out if your sites are affected, the EREP register is available here.

Full details on the proposals are available here.

The public consultation itself is open until 13th July 2016.  The Victorian government is seeking submissions from all interested parties.

If you would like to discuss this subject further please contact your Energy Action account manager.  As the largest independent provider of energy procurement services in Australia we’d be delighted to help you.

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