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8th July 2013

Submission to Energy Saver Incentive Scheme Issues Paper

Dear David,

This submission represents the views of the Energy Users Association of Australia's (EUAA) members on the Energy Saving Incentive (ESI) scheme issues paper. The EUAA represents many of Victoria's and Australia's largest consumers of gas and electricity. Our Victorian members have had energy efficiency obligations imposed under the defunct Energy Resource Efficiency Plan (EREP) scheme and the current Energy Efficiency Opportunity (EEO) scheme.

Our Victorian members have faced significant increases in energy prices for several years and have responded by undertaking energy efficiency measures regardless of imposed obligations. Some member companies have reported that they are not in a position to pass on these cost increases due to overseas competition and other market forces.

Our submission deals with the large energy users section of the Issues Paper.

Exclusion from the Scheme

Our preferred position is that large energy users continue to be excluded from the scheme given that they have already made investments in energy efficiency measures under the EREP and the EEO scheme. Member feedback has stated that schemes are not required to drive energy efficiency improvements when regulated prices are ever increasing, this alone is enough to drive energy efficiency measures and their preference is to focus on this and not be distracted through compliance to yet another scheme when suitable schemes already exist. It is now commonplace for aggressive energy efficiency measures to be self imposed core business objectives.

The Federal Government has established the energy efficiency exchange1 which is a website for the sharing of information on energy efficiency measures for medium and high energy users. The site provides case studies, education, contacts and a list of grants available to assist in implementing energy efficiency measures. Given that there is a mechanism for large energy users to investigate energy efficiency measures at the Federal level that takes into account the more sophisticated nature of energy usage for large organisations, a requirement to participate in another scheme is redundant. The EEO program also includes a verification process which assures process within large user organisations is in place to properly focus on energy efficiencies.

If the Victorian Government proceeds to include large energy users in the scheme from 2015 then we ask that the scheme be consistent with other State based schemes such as the New South Wales Energy Savings Scheme (ESS). This will reduce the costly compliance burden and allow for an easy transition into a national energy efficiency scheme should one eventuate.

Emissions Intensive Trade Exposed (EITE) industries have exemptions under the current carbon reduction scheme, the Renewable Energy Target (RET) and the ESS in New South Wales. Some of our Victorian members (some who are not included as EITE) are exposed to international competition and users should be exempt from the scheme.

Including large energy users

If large energy users are included in the scheme there is no mechanism that recognises previous energy efficiency measures that they have undertaken. Given that the energy efficiency measures for large users have longer payback periods then it is likely that their efforts will continue past the current 3 year operating period of the ESI and such efforts should be recognised. An appropriate mechanism to account for previous efforts could involve baseline approach where Victorian Energy Efficiency Certificates (VEECs) are created for the difference between a baseline of energy consumption and the reduced energy consumption.

Red-tape Burden

We disagree that excluding large energy users would generate a red-tape burden for energy retailers. As the current ESI excluded large users with EREP obligations retailers have had to account for this in their billing systems which have already been established. There are additional mechanisms in place for exempting large users in other schemes that also provide appropriate guides. They are as follows:

  • Audited and publically available data on energy usage under the National Greenhouse and Energy Reporting System (NGERs).
  • The use of Partial Exemption Certificates (PECS) that allow users to undertake liability for emissions for gas use under the carbon scheme.

We do not agree that there is a red tape burden imposed on accredited providers (APs) in identifying large energy users. Large energy users have likely contacted providers themselves through the other energy efficiency schemes that have been imposed on them e.g. the EREP scheme. The significant increase in energy prices has resulted in large users developing relationships with consultancies such as Energetics, outside of governmental obligations. AP's can also use the energy efficiency exchange website to identify potential contacts; it is not up to large users to assist APs to identify themselves.

Other Issues

Thresholds for compliance

We note that the DPI has changed the eligibility criteria for small energy retailers with less than 5,000 customers, and now covers these retailers 30,000MWh of electricity and 350,000PJ of gas customer load will now be included. Some EUAA members strongly object to this as they will now receive a VEET obligation from their retailer as well as their energy efficiency obligations at the Federal Government level and other relevant schemes. This exemption should be maintained as it increases competition in the retail market allowing niche retailers to compete with the larger retailers. The decisions to now cover small retailers will need to be reversed.

In summary, large energy users already face energy efficiency obligations at the national level and have undertaken energy efficiency measures outside of the ESI scheme. These have been driven by the significant energy price increases that they have been exposed to and through the positive impact of commercially driven energy efficiency measures. Furthermore, large energy users have also had obligations under the EREP scheme where the benefits are likely to accrue past when the current compliance period ends at the end of 2014. As such we strongly recommend that large energy users should continue to be exempted from the ESI.

Sincerely,

Phil Barresi

CHIEF EXECUTIVE OFFICER

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