Origin Energy

8 July 2013

Review of the Energy Saver Incentive: Issues Paper - June 2013

Origin Energy Limited (Origin) welcomes the opportunity to comment upon the Department of State Development Business and Innovation's (DSDBI) Review of the Energy Saver Incentive: Issues Paper - June 2013 (Issues Paper).

Origin is a major Australasian integrated energy company focused on gas exploration, production and export, power generation and energy retailing. listed in the sap ASX top 20, Origin has over 5,800 employees and is a significant investor in low emissions and renewable energy technologies. Origin is also one of the largest Relevant Entities under the Energy Saver Incentive (ESI). Our responses to the issues raised in the issues paper are provided below.

It is appropriate for the proposed Regulatory Impact Statement (RIS) process to properly consider and assess whether the ESI should continue beyond 31 December 2014. In undertaking this assessment, the RIS should consider the objectives of the ESI and policy developments and broader developments in energy markets since its introduction. Specifically, Origin notes that the purpose of the Victorian Energy Efficiency Target Act 2007 (the Act) "is to promote the reduction of greenhouse gas emissions by establishing the VEET scheme."

Important developments to be considered since the introduction of the Act include the introduction of a national carbon pricing mechanism, the expansion of the national Renewable Energy Target, and reduced forecasts for electricity consumption. In addition to broader issues to be considered, the RIS process should also assess administrative issues associated with the ESI that could be improved (if the scheme is to continue). Further, as a member of both the Energy Retailers Association of Australia (eraa) and the Energy Supply Association of Australia (esaa), we note their respective submissions which make comment on the ongoing policy rationale for the scheme. In particular, the stated barriers which the ESI was designed to address, which may be less relevant today than when the scheme was introduced in 2009.

Further details on specific administrative issues that the RIS process should consider are included in Attachment 1.

If you have any questions regarding this submission, please contact me on (02) 8345 5025 or Sally Bell (Senior Trading Integration Ana lyst) on (02) 9503 5418.

Yours sincerely,

Melissa Perrow

Manager, Carbon, Wholesale & Regulations

Attachment 1

Harmonisation

If a Victorian E51 is to continue, the RIS process should assess how further harmonisation with the NSW Energy Savings Scheme could be achieved - as has previously been pledged by the NSW and Victorian Premiers.

Large Energy Users under the E51

Origin does not oppose the exclusion of large energy users from an efficiency scheme, providing that any target is appropriately reduced to account for the relevant load. In order to assist Relevant Entities in identifying the applicable load for these large users, Origin requests the following information to be published for all exemptions granted:

  • Company name; and
  • Site specific details including physical address; and
  • National Metering Identifiers (NMls) or Meter Installation Reference Numbers (MIRNs) for the site.

Furthermore, large user exemptions should be applicable for a full compliance year, with the relevant details published prior to the commencement of that year. Information must be easily accessible for Relevant Entities to ensure exempt loads are correctly excluded from any liability calculations.

Further Information: Method and timing of scheme percentages

If an energy efficiency scheme is to remain in Victoria, Origin's preference is for binding percentages (GHGRRs) to be set prior to the commencement of any compliance year. Origin suggests that the DSDBI considers using a combination of actual and AEMO forecast data, with a wash-Up process to occur in the following year to ensure the relevant scheme target is achieved. Origin also requests the methodology used to determine GHGRRs is made publically available to assist retailers to forecast future compliance obligations.

Further Information: Scheme Amendments

Origin would also like to recommend that any future changes to the structure of an efficiency scheme be applied at the start of a compliance year. This will minimise the administrative burden on Relevant Entities (one liability calculation methodology for a compliance year) as well as the Scheme Regulator and Administrator (one methodology in setting the target and GHGRRs). Any changes to the scheme should also include a timeframe for consultation and importantly, sufficient time for Relevant Entities to implement and communicate the changes to customers.

Further Information: New Activities

Finally, while Origin notes the barriers described in section 1 under Key issues for consultation set out in the issues paper, we also think the RIS should examine regulatory and policy barriers facing scheme participants when introducing approved (but not deployed) activities or proposing new activities. In relation to accrediting energy saving devices under the scheme and proposing new activities, Origin believes that the efficiency of the assessment and approval process needs to be improved from both a policy and regulatory perspective.

Inconsistent interpretation of regulation and policy intent has the potential to discourage accreditation of activities under the scheme and influence the viability of delivering accredited devices under the scheme.

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