The Australian Senate today passed the bills repealing the Clean
Energy Act 2011, the centrepiece of the Australian carbon price
scheme that commenced on 1 July 2012.
The bills failed to pass the Senate last week, when the Palmer
United Party sought to introduce further penalties for price
exploitation in the bills. The Federal Government then amended the
bills and re-introduced them into Parliament, for a third time,
earlier this week.
Once the bills have received royal assent, the carbon tax repeal
and most other provisions will take effect from 1 July 2014.
Prohibitions on price exploitation in relation to the
carbon tax repeal
The repeal legislation includes several "price exploitation
provisions", inserting sections in the Competition and
Consumer Act 2010 that prohibit corporations from engaging in
"price exploitation in relation to the carbon tax repeal"
during the period 1 July 2014 to 30 June 2015, in relation to the
supply of natural gas, electricity and other specified goods
These price exploitation provisions commence on the day after
royal assent is given to the repeal bills, and relate to conduct
engaged in from and after that date in relation to the period from
1 July 2014.
In a departure from the previously rejected bills, the bills
passed today by the Senate include a new penalty provision (new
section 60CA of the Competition and Consumer Act) that would apply
if an entity that is a supplier of electricity, gas or
synthetic greenhouse gas breaches the prohibition on price
exploitation in relation to the carbon tax repeal.
If that breach of the price exploitation provisions involves a
failure to pass through all of the entity's cost savings
relating to the supply that are directly or indirectly attributable
to the carbon tax repeal, there is a fixed penalty of 250%
of those cost savings that were not passed through. This
fixed penalty is in addition to any other pecuniary penalty that
may be imposed for breach of the price exploitation provisions by
The legislation also reverses the onus of proof
for alleged price exploitation in relation to the carbon tax
repeal. A notice from the ACCC stating that in the ACCC's
opinion the entity made a supply which did not pass on all of the
entity's cost savings will be prima facie proof of price
The legislation also reverses the onus of proof for alleged
price exploitation in relation to the carbon tax repeal. A notice
from the ACCC stating that in the ACCC's opinion the entity
made a supply which did not pass on all of the entity's cost
savings will be prima facie proof of price exploitation.
What will replace the carbon tax as Australia's
response to climate change?
Two other substantive reforms to Australia's carbon
emissions and renewable energy schemes are also still being
The legislation to implement the Australian
Government's Direct Action policy, under which an
Emissions Reduction Fund will be established to buy up to A$2.55
billion in carbon credits from emissions abatement activity under a
revised Carbon Farming Initiative, is expected to be considered by
the Parliament later in the month.
The review into the Renewable Energy Target,
which was originally intended to mandate that 20% of on-grid
electricity be sourced from renewable sources, is still continuing.
Potential outcomes from that review include closure of the whole
scheme, closure of the small technology (rooftop solar PV) section
of the scheme, or revision of the scheme to a lower target, perhaps
prescribed by percentage of power acquisitions rather than the
present fixed 41,000 GWh per annum target.
In addition, the Federal Government has indicated that it is
developing an additional scheme, known as the Safeguard
Mechanism, which is intended to require large emitters of
greenhouse gases not to raise emissions levels above individually
set baselines. There is limited information currently available,
and the Government proposes to develop the scheme over the coming
year, with a view to commencing operation on 1 July 2015.
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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