RET-affected trade-exposed (RATE) assistance

23 Jun 2010Archived News Climate Change Matters

The RET-Affected trade-exposed (RATE) assistance scheme has been developed to protect emissions-intensive trade-exposed (EITE) activities from increased electricity costs associated with the expanded Renewable Energy Target (RET).

Background

The revised Renewable Electricity Target (RET) has been introduced to ensure that 20% of Australia’s electricity is produced from renewable sources by 2020. This enhanced target increases the number of Renewable Energy Certificates (RECs) that nominated generators and retailers are required to purchase per MWh of electricity generated/ purchased, the costs of which are passed on to end-consumers.

The RET-Affected trade-exposed (RATE) assistance scheme has been developed to protect emissions-intensive trade-exposed (EITE) activities from increased electricity costs associated with the expanded RET.

Companies performing EITE activities which don’t pay for RECs as part of purchased electricity costs are not eligible for RATE assistance. EITE activities mirror those identified under the proposed Carbon Pollution Reduction Scheme (CPRS).

Eligible EITE activities

The current list of eligible EITE activities is provided within the RET Regulations. This is not an exhaustive list of potential EITE activities, only those for which audited emissions, production and revenue data has been passed by the Department of Climate Change and Energy Efficiency (DCCEE) and a weighted average emissions and electricity consumption baseline for the activity has been assigned.

If an EITE activity is not published within the RET Regulations, it is not eligible for RATE assistance, which is a matter of concern for a number of organisations carrying out EITE activities as the delays in publication are often beyond their control.

RATE assistance is not inextricably linked to the passage of the proposed CPRS. If the CPRS is never passed, EITE activities will still be eligible for most of the prescribed RATE assistance and will be able to apply for this assistance for the 2010 calendar year by 31st October 2010. The Office of the Renewable Energy Regulator (ORER) has not detailed how it will assess EITE activities if there is no requirement for the DCCEE to perform this for CPRS purposes. RATE assistance from 2011 onwards will require application by January the 1st each year.

Applying for RATE assistance

If a company performing an EITE activity is eligible to receive RATE assistance, it is required to complete an application for a Partial Exemption Certificate (PEC). A PEC specifies the number of MWhs that are exempt from a REC liability, thus reducing the pass-through costs of RECs to the EITE activity.

The PEC is only valid between the company performing the EITE activity and the supplier nominated on the PEC. If an EITE activity purchases REC-liable electricity from two suppliers, it will need to apply for two separate PECs.

There is no requirement in the regulations for the supplier to accept the PEC from the holder or to ascribe any particular value to the avoided RECs. This is purely a commercial transaction between the two parties.

The PEC form is quite complex and requires a reiteration of a lot of information provided to the DCCEE throughout the EITE assessment process, reinforcing that the ORER and DCCEE are very separate government departments.

Energetics recommends that companies performing EITE activities which are eligible for RATE assistance commence the completion of PEC forms as soon as possible. The ORER will be processing many forms in the coming months and this will ensure that RATE assistance is secured prior to the National Greenhouse and Energy Reporting (NGER) rush.

Through strong knowledge of EITE, RET legislation and the PEC application process, Energetics is able to support clients with securing RATE assistance for the 2010 calendar year prior to 31st October 2010.

Written by Harriet Kater, Senior Consultant Energetics 

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