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14 March 2014

Mr David Blowers
Principal Policy Officer
Energy Sector Development Branch
Department of State Development, Business and Innovation
Level 9, 121 Exhibition Street
MELBOURNE VIC 3000

Dear Mr Blowers

ADVICE ON THE ADEQUACY OF BUSINESS IMPACT ASSESSMENT

Thank you for seeking advice on the Business Impact Assessment (BIA) on the proposed reforms to the Victorian Energy Efficiency Target (VEET) Scheme.

The BIA assessed proposed changes to the VEET Scheme. The key elements of the proposal are to close the VEET Scheme on 31 December 2015 with associated transition measures.

The overall aim of BIAs is to ensure a rigorous assessment of legislative proposals, and their alternatives, to better inform government policy decision-making.

In forming its assessment of the BIA, the VCEC has been guided by the BIA requirements in the Victorian Guide to Regulation and has focussed on the quality of the analysis rather than the merits of the proposals themselves.

Our assessment is that overall the BIA meets the requirements of the Victorian Guide to Regulation. The BIA includes a comprehensive analysis of the benefits and costs of options for closing – and continuing – the VEET Scheme and the impacts of these options on different stakeholders. The underlying assumptions and limitations of the analysis are transparently reported in the BIA.

The analysis in the BIA draws on complex external modelling of the impact of the VEET Scheme on energy markets commissioned by the Department of State Development, Business and Innovation. The VCEC has assessed the use of the modelling outputs in the BIA, but has not reviewed the results of the modelling or the underlying model.

I would like to emphasise that our assessment is on the rigour of the analysis supporting the proposal and not its merits. Therefore, the VCEC's advice that the BIA is adequate does not represent an endorsement of the proposal.

Yours sincerely

Andrew Walker

Andrew Walker
Assistant Director
Victorian Competition and Efficiency Commission

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