Electricity entities in Queensland complying with the Queensland
Gas Scheme and parties trading in Gas Electricity Certificates
should review their contracts following the discontinuance of this
scheme as part of the Queensland Government's stated objective
to review and remove regulatory burdens.
At the same time, two other changes to energy regulation have
been made: a reduction in energy reporting requirements, and more
flexibility for Government in the conditions it can imposed on any
new coal fired power station.
The discontinuance of the Queensland Gas Scheme
The Queensland Gas Scheme, which is currently
found in Chapter 5A of the Electricity Act 1994 (Qld), was
introduced in 2005 to promote gas fired electricity generation when
only 2.4% of electricity was sourced from gas fired power stations
Under the scheme, accredited gas fired generators can create Gas
Electricity Certificates (GECs) for each MWh of eligible gas fired
electricity they produce. Liable persons must surrender GECs to
meet their GEC liability in each year. The GECs are transferable
and a liable person can purchase them from another party.
The liable persons under the scheme are comprised mainly of
electricity retailers. However, the scheme also makes other
entities such as certain holders of Special Approvals, Customers
and Generators, liable entities. The liable load is calculated
based on a nominated percentage (15% for 2012) of the liable
entities electricity load.
Now with almost 20% of electricity used in Queensland is sourced
from gas fired power stations and with low GEC price in the market,
the Queensland Government intends to repeal the legislation
effective 31 December 2013. The Queensland Government argues that
the introduction of the carbon price mechanism by the Commonwealth
means that these regulatory requirements are no longer required and
can be abolished.
It will be important for electricity entities currently
complying with the scheme to check their contracts to determine the
impact that the repeal may have on the terms of their
Repeal of the Clean Energy Act 2008 (Qld)
Under the Queensland Clean Energy Act, participating businesses
must report their energy use annually to the regulator and have an
energy savings plan. Government can require energy providers to
disclose the energy use of certain customers who use between 10TJs
and 500TJs of energy per annum.
Conditions for new coal-fired power stations will be
In 2009, the Queensland Government announced that Generation
Authorities for new coal-fired power stations would be only be
approved in Queensland where:
world best practice low emission technology was applied;
the facility was carbon capture and storage (CCS) ready and
able to retrofit that technology within five years of CCS being
proven on a commercial scale.
These standards will now no longer apply to an application for a
Generation Authority. Approval for a new coal fired power station
will still require Government approvals and authorisations
including those relating to the protection of the environment. The
Government's view is that the current standards for new coal
fired power stations have effectively been replaced by the
introduction of the carbon pricing and that no additional
environmental benefit would be achieved by continuing the
Clayton Utz communications are intended to provide
commentary and general information. They should not be relied upon
as legal advice. Formal legal advice should be sought in particular
transactions or on matters of interest arising from this bulletin.
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