May 2018 Energy Roundup: Budget 2018 and New Renewable Energy Projects

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May has been another massive month for regulatory and compliance developments in Australia. While April was dominated by the National Energy Guarantee and new Consumer Data Right, May was dominated by Budget 2018 and a range of exciting new renewable energy projects coming online. Another theme has been metering; several regulators have commenced action around slow metering installation and the over-use of estimates (see the activities of AEMC, ESC (Vic) and IPART below). As usual, we list all ongoing consultations, both nationally and in the National Electricity Market jurisdictions so that you can have a say in the areas that interest you the most.

new renewable energy projects

Photo by Andreas Gücklhorn on Unsplash

By Dr Drew Donnelly, Regulatory Specialist, Compliance Quarter

1. Budget 2018

Budget 2018 didn’t provide any significant surprises for the energy sector. While the Government announced a funding package of $37.6 million, this is primarily funding to support the development and implementation of initiatives that are already underway. This includes:

• The National Energy Guarantee (NEG). The Government confirms that Renewable Energy Targets will be gone from 2020 and replaced by the NEG. The Government submits, based on modelling by the independent Energy Security Board that this will result in a $400 reduction to the average Australian household’s annual power bill;
• The implementation of the Consumer Data Right for energy businesses;
• Purchase of Snowy Hydro 2.0 from the Victorian and NSW state governments;
• Promoting gas supply by funding geological and feasibility studies and acceleration grants.

Although not part of the Budget energy package per se, another aspect of Budget 2018 that could have a significant impact on energy businesses, particularly start-ups and the tech firms, are changes to the Research & Development (R&D) Tax Incentive Scheme. Note, in particular, the Government’s introduction from July this year of a $4 million annual cap on cash refunds for R&D claimants with aggregated annual turnover less than $20 million. The Government hopes that refinements to the scheme will save $2 billion.

2. New Renewable Energy Funding Projects

Other than the Snow Hydro purchase and any low-emissions generation incentivised by the NEG, there is no major renewable energy investment in Budget 2018. Nevertheless, in May there have been an astounding number of renewable energy funding, financing and implementation announcements from various Government bodies including:

• The launch of phase 2 of the solar energy transformation project in the Northern Territory. On May 31 it was announced that this project, jointly funded by the Commonwealth and Northern Territory Governments to the tune of $59 million will roll out solar PV across a further 17 communities in the Territory from Finke near the South Australian border to the Tiwi Islands;
• The Australian Renewable Energy Agency’s (ARENA) $240,000 grant to the University of Technology, Sydney for a feasibility study on ‘solar gardens’. These are centralised solar arrays enabling customers in apartments or low-income housing to purchase or lease solar panels with the electricity generated credited to their energy bill;
• A $7 million funding initiative trialling how solar parks, wind farms or batteries can provide grid stability and security services.
The Clean Energy Finance Corporation (CEFC) announced financing to support :
• The CEFC’s tenth investment in large-scale wind with the 135 MW Crudine Ridge Wind Farm near Mudgee, NSW;
• An 18-month extension of the CEFC’s innovative green loan marketplace;
• Provision of a $39 million debt facility as part of a co-financing package for the $125 million Pro-Invest Group energy efficient hotel development in South Bank, Melbourne.

3. Consultations and Announcements from Commonwealth Regulatory Bodies

As usual, there has been a heap of consultations and announcements from Commonwealth regulatory bodies over the last month including the Council of Australian Governments Energy Council (COAG Energy Council) consultation on the powers of the Australian Energy Regulator (AER) and civil penalties, due 29 June 2018.

Throughout May, the Australian Energy Market Commission (AEMC) initiated consultations with respect to draft National Electricity Rules and rule change requests for:

• Technical performance standards for generators, due 13 July 2018;
• Metering installation maximum timeframes, due 12 July 2018;
• An AER power to develop new Customer Hardship Policy Guidelines, enforceable by civil penalties, due 28 June 2018;
• Regulating bill estimation, including a proposal to allow customers to have their electricity or gas bill based on their own reading of the meter, due 14 June 2018;
• A new compensation framework for participants who incur loss during a market suspension event, due 14 June 2018;
• A requirement for large electricity generators to provide at least three years notice before closing, due 7 June 2018;
• A new AER responsibility for calculating values of customer reliability. This is a mechanism providing for customer input into reliability conditions in the National Electricity Market, due 7 June 2018.

The AER’s key announcements and consultations in May included:

• AER’s final decision for the regulatory period 2014-2019 that the distributor Essential Energy will recover $1.7 billion less than it originally proposed;
• The release of the March 2018 Quarterly Compliance Report. You can read more, including the AER’s compliance activities with respect to embedded networks at;
• Consultation on the AER’s approach to assessing regulatory proposals for Victorian Network Businesses, due 7 June 2018;
• New network tariffs for NSW, Queensland, Tasmania, ACT and South Australia;
• Reviews of the regulatory tax approach and return on debt for network businesses. Read more about the tax approach here.

The Australian Energy Market Operator (AEMO) announced several consultations in May, open consultations include :

• Changes to B2B procedures in light of last year’s Life Support Rule Change. This will introduce two new B2B transactions with respect to Life Support customer details, due 19 June 2018;
• Congestion Information Resource Guidelines (CIR Guidelines), due 29 June 2018;
• Tolerance ranges, due 8 June 2018.

Last but not least, the Department of the Environment and Energy seeks feedback on draft amendments to the National Greenhouse and Energy Reporting (Measurement) Determination 2008. This is intended to improve the clarity of guidance for emissions reporting. Submissions are due 6 June 2018.

4. Consultations and announcements from state and territory regulatory bodies

The Victorian Essential Services Commission (ESC) announced:

• A compliance focus (through audits) on how energy companies estimate bills after concerns raised about customers being over-charged thousands of dollars;
• New consumer protections for embedded network customers;
• A proposed change to powerline voltage standards for bushfire mitigation, submissions due 22 June 2018;
• Proposed changes to reporting guidelines helping prevent Victorian customers from getting into high levels of debt and new safeguards against disconnection, submissions due 22 June 2018.
The New South Wales Independent Pricing and Regulatory Tribunal (IPART) announced :
• Commencement of the annual review of the performance and competitiveness of the retail electricity and gas markets in NSW. Stakeholder views on certain questions sought by 29 June 2018;
• A review of metering installations. Stakeholder feedback on their experiences with digital meter installation, upgrade or repair are sought by 29 June 2018.

The Queensland Competition Authority announced:

• 2018-2019 Solar feed-in tariffs for regional Queensland;
• Regulated retail electricity prices for regional Queensland in 2018-2019;
• The launch of an investigation into whether Ergon Energy has overcharged large regional business customers in breach of the National Energy Retail Law.

If you think we could be of any help in getting your compliance processes up-to-date with any of these changes, please get in contact with us.

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