Determining liability

Relevant acquisitions are typically large purchases of electricity that are made by electricity retailers or, in some circumstances, electricity generation companies, on liable grids.  Relevant acquisitions are required to be reported to the Clean Energy Regulator annually.

There are two types of relevant acquisitions:

1. wholesale acquisitions - an acquisition of electricity from:
   • the Australian Energy Market Operator (AEMO) or a person or body prescribed like the Independent Market Operator (IMO); or
   • a person who did not acquire it from another person.
2. notional wholesale acquisitions - can be an acquisition of electricity sold to an end user directly from the generator. In this scenario the generator is the RET liable entity.

Sections 31 to 34 of the Act provide details about relevant acquisitions.  Actual and potential RET liable entities are encouraged to review these sections and where required seek independent legal advice on liabilities under the Act.  Special exclusions apply for self-generators of electricity as stipulated under section 31 (2) (b) and section 33 (3) of the Act. However, the party must be able to demonstrate to the Clean Energy Regulator that they meet the self-generator criteria described in the Act and Regulations.

When are relevant acquisitions liable?

All relevant acquisitions of electricity on grids with an installed capacity of 100 MW or more are liable.  A grid is defined as a network of transmission and/or distribution lines that connects generators to end-users.  This means relevant acquisitions of electricity on grids across Australia and isolated grids supplying regional areas above this size are covered by the Act.

To calculate the installed capacity of a grid, RET liable entities should identify all of the RET power stations that are connected to the grid and add together the installed capacity of the RET power stations. RET liable entities can exclude standby or emergency plants and privately owned grid connected domestic generators.  A standby plant must, for the immediately preceding three years:

• produce less than 50 GWh per annum; or
• has less than a 5% load factor.  For example, if a power station generates less than 5% of its generation capacity.

As soon as a grid reaches the installed capacity of 100 MW or more, all relevant acquisitions on the grid become liable. Grid operators are obliged under section 31 (4) of the Act to inform the Regulator, within 28 days, of any changes to an existing grid that make the grid exceed the 100 MW threshold. 

There are many cases where a company could be liable under the legislation and appropriate legal advice should be sought by the relevant entity to confirm if the entity made a relevant acquisition under sections 31 – 34 of the Act, as the Clean Energy Regulator takes no responsibility for any decisions made on the basis of this information. 

Where is the liability reporting point?
Regulation 21 (1) (a) requires that RET liable entities:

For subsection 31 (3) of the Act, the amount of electricity acquired under a relevant acquisition is:

if the electricity is acquired from AEMO or IMO – the amount worked out on the basis of metering data used for AEMO or IMO settlement statements;

Regulation 21 (1) (b) – (e) provide alternate points of liability in relation to different metering parameters.  You should seek independent legal advice and where applicable discussions with the Regulator may be helpful as regulation 21 (2) specifies that the Regulator chooses in consultation with the RET liable entity the liability point for Regulation 21 (1) (b), (c) and (e).

For further information about determining the correct metering points please contact the RET Liability Assessment team in the Clean Energy Regulator.

Companies conducting emission intensive trade exposed (EITE) activities can apply to the Clean Energy Regulator for PECs.  Eligible renewable energy target EITE activities are listed under Schedule 6 of the Regulations.  Assuming renewable energy target EITE companies are successful they are issued with a PEC. Renewable energy target EITE companies and RET liable entities can then negotiate and agree to the terms of PEC transfer.  PECs contain the following information:

• Unique serial number
• Year of PEC
• MWh of exemption
• Name of EITE activity
• Name of liable entity

The RET liable entity uses PECs they receive to reduce their relevant acquisition which reduces their overall STC and LGC liability.  To reduce your MWh relevant acquisitions and certificate liabilities you must provide an original or copy of the PECs with the lodgement of the AEAS, as applicable.  If no PECs are included, no exemption will be used to determine your total reduced acquisitions

For further information regarding renewable energy target EITE activities and PECs see Emissions-Intensive-Trade-Exposed activities.

When do renewable energy target EITEs need to apply?

For information about PEC application lodgement dates see Timelines for PECs.

Your assessment year's reduced acquisitions is determined by the following:

The formula for determining your assessment year’s reduced acquisitions is as follows:

RET liable entities have a quarterly liability under the SRES. For reporting and surrender periods see Timelines.

Quarters 1 – 3

RET STC liability is determined by the following:

The formula for determining your required surrender amount (based on previous year’s reduced acquisitions) for quarters 1-3 is as follows:

Quarter 4 – Determining your Net STC surrender requirement

RET STC liability is determined by the following:

The formula for determining your Net STC surrender requirement for quarter 4 is as follows:

RET liable entities have an annual liability under the LRET. For reporting and surrender periods see Timelines.

RET LGC liability is determined by the following:

RET Liable entities need an account in the REC Registry in order to purchase, sell, voluntary surrender and mandatory surrender certificates.

Existing Account

If you already have an account in the REC Registry, are GST registered and wish to purchase STCs from the STC Clearing House, your account administrator will need to upgrade your account through your ‘manage account’ menu item and complete a Proof of Identity (PoI) check prior to using the STC Clearing House.

For more information visit About Proof of Identity Verification.  On this page you will find details on appropriate sources and have these on hand before starting the process.

New Account

If you do not have an account in the REC Registry, are GST registered and you wish to purchase and surrender certificates to acquit your certificate liability with LGCs or STCs you will need to open a ‘General’ account through the New Account Wizard.

If you wish to purchase STCs through the STC Clearing House you will need to complete a Proof of Identity (PoI) check. the wizard will assist you with completing the POI Verification process and lead you to create an account in the REC Registry.  For more information visit About the Proof of Identity Verification.  On this page you will find details on appropriate sources and have these on hand before starting the process.

You can register for a new REC Registry account as follows:

1. Go to the New Account Wizard.
2. If you do not wish to purchase STCs from the STC Clearing House go to Step 4.
3. Follow the steps to the ‘General’ account pages
4. If you wish to use the STC Clearing House complete the POI Verification process.
5. Follow the steps to create an account in the REC Registry. 
6. Once your application has been approved you are ready to purchase, sell, voluntary surrender and mandatory surrender certificates.

Liable entities:

• that lodge an Annual Energy Acquisition Statement (AEAS) can make applications under section 38AF of the Renewable Energy (Electricity) Act 2000 (the Act) to reduce or increase their previous year’s reduced acquisitions for the purpose of amending their required surrender amounts for quarters 1 to 3 of a year. 
• that did not lodge an AEAS for the previous year can make an application under section 38AG of the Act to have an amount apply as if it were the previous years’ reduced acquisitions to ensure their required surrender amounts for quarters 1 to 3 are met.  It is the liable entity’s responsibility to make an application under 38AG of the Act if they make relevant acquisitions in a quarter.
• that do not apply under section 38AG of the Act and make relevant acquisitions in a year will be issued with a default assessment under section 38AH of the Act.  Under this assessment, the liable entity will need to pay the small-scale technology shortfall charge (STSC).

Applying under section 38AF

The process, including considerations, for RET liable entities to apply for a required surrender amount, instead of the previous year’s reduced acquisitions under section 38AF of the Act, is as follows:

Applying under section 38AG

The process for liable entities to apply for a required surrender amount as if it were the previous year’s reduced acquisitions (section 38AG) is as follows:

Issuing a default assessment under section 38AH

The process for the Clean Energy Regulator to calculate a default required surrender amount under section 38AH is as follows: