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2008 - 2009 - 2010
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
Renewable Energy (Electricity) (Small-scale Technology Shortfall Charge)
Bill 2010
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Climate Change, Energy
Efficiency and Water,
Senator the Honourable Penelope Ying Yen Wong)
Renewable Energy (Electricity) (Small-scale
Technology Shortfall Charge) Bill 2010
GENERAL OUTLINE
The purpose of the Renewable Energy (Electricity) (Small-scale Technology
Shortfall Charge) Bill 2010 (the Bill) is to support the separation of the
Renewable Energy Target (RET) scheme into two parts - the Large-scale
Renewable Energy Target (LRET) and the Small-scale Renewable Energy Scheme
(SRES) - outlined in the Renewable Energy (Electricity) Amendment Bill
2010. The changes will provide greater certainty for households, large-
scale renewable energy projects and installers of small-scale renewable
energy systems such as solar panels and solar water heaters. The enhanced
scheme will further strengthen the Government's commitment that the
equivalent of at least 20 per cent of Australia's electricity will come
from renewable sources by 2020.
In particular, the Bill will establish the rate of charge to be used in the
calculation of the taxation liability assessed under Subdivision C of
Division 1of Part 4 of the Renewable Energy (Electricity) Act 2000.
Background
The legislation underpinning the scheme comprises the Renewable Energy
(Electricity) Act 2000 (the Act); the Renewable Energy (Electricity) Charge
Act 2000 (the Charge Act); and the Renewable Energy (Electricity)
Regulations 2001 (the Regulations).
Under the Act, wholesale purchasers of electricity ('liable entities') are
required to meet a share of the renewable energy target in proportion to
their share of the national wholesale electricity market. The Act provides
for the creation of Renewable Energy Certificates (RECs) by generators of
renewable energy. One REC generally represents one megawatt-hour (MWh) of
electricity from eligible renewable energy sources. Installations of solar
water heaters and small generation units (including rooftop solar panels,
small wind turbines and micro-hydro systems) are able to create RECs under
deeming arrangements prescribed in the Regulations. Once registered, the
RECs are able to be traded and sold to liable entities who may surrender
them to the Regulator to demonstrate their compliance under the scheme and
avoid paying the shortfall charge. The Charge Act sets the level of the
shortfall charge for non-compliance.
Details of the Bill are set out in the Attachment.
Financial Impact Statement
Refer to the statement in the Explanatory Memorandum for the Renewable
Energy (Electricity) Amendment Bill 2010.
NOTES ON INDIVIDUAL CLAUSES
Clause 1 - Short Title
1. This clause is a formal provision specifying the short title of the
amending Act.
Clause 2 - Commencement
2. This clause sets out that sections 1 and 2 of the Act will commence on
the day the Bill receives the Royal Assent and that sections 3 to 7
will commence at the same time Part 1 of Schedule 1 to the Renewable
Energy (Electricity) Amendment Act 2010 commences (1 January 2011).
Clause 3 - Definitions
3. This clause provides that expressions used in the Act will have the
same meaning as those used in the Renewable Energy (Electricity) Act
2000. In particular, the defined terms small-scale technology shortfall
charge and MWh are used in clauses 5 and 6.
Clause 4 - Act to bind Crown
4. This clause sets out that the Act will bind the Crown in right of each
of the States, of the Australian Capital Territory, of the Northern
Territory and of Norfolk Island but will not bind the Crown in right of
the Commonwealth.
Clause 5 - Imposition
5. This clause imposes the small-scale technology shortfall charge that is
payable under the Renewable Energy (Electricity) Act 2000. Accordingly,
this clause will impose the taxation liability assessed under
Subdivision C of Division 1of Part 4 of the Renewable Energy
(Electricity) Act 2000.
Clause 6 - Rate of charge
6. This clause provides that the rate of charge is $65 per megawatt-hour.
This is the same as for the large-scale renewable energy shortfall
charge.
Clause 7 - Act does not impose a tax on property of a State
7. Consistent with section 114 of the Constitution, this clause provides
that the Act does not impose a tax on property of any kind belonging to
a State. Nonetheless, it is not anticipated that the Act would operate
to impose a tax on the property of a State.