Legislation

The Energy Savings Scheme (ESS) commenced operation on 1 July 2009 and was established through amendments to the Electricity Supply Act 1995 (the Act) and the Electricity Supply (General) Regulation 2001 (the Regulation). The ESS is administered by the Scheme Administrator through the legislation and the Energy Savings Scheme Rule of 2009 (ESS Rule). In addition, the Energy Savings Scheme - Scheme Regulator Exemptions Rule No. 1 of 2009 (Exemptions Rule) sets out how the Scheme Regulator will determine that exempt loads have been correctly deducted from a Scheme Participants’ Total Liable Acquisitions.

Act

The Act establishes the ESS for the purpose of creating a financial incentive to reduce the consumption of electricity by encouraging energy saving activities.  To do this, the Act sets out the Energy Savings Targets, and the conditions under which the targets may be changed.

It imposes an obligation on NSW electricity retailers (and certain other parties), known as Scheme Participants, to surrender sufficient Energy Savings Certificates to meet their Individual Energy Savings Targets which are calculated in the Act.  For this purpose, the Act also defines what are considered Liable Acquisitions, including the means by which a person or class of persons may be granted an exemption under the scheme. 

Where insufficient Energy Savings Certificates are surrendered by a Scheme Participant, the Act sets the scheme penalty rate and penalty conversion factors.  The scheme allows for a participant to carry forward a shortfall into the following year and the provisions for calculating this are described in the Act.

The Act sets out the functions and responsibilities given to the Independent Pricing and Regulatory Tribunal (IPART) to:

The Act is supported by the Regulation which makes provision for aspects of the operation of ESS.  The Regulation provides the principles governing the assessment by the Scheme Regulator of Scheme Participants’ compliance with their individual energy savings target,  any adjustments to the energy savings shortfall and  the mechanism for the CPI adjustment of the penalty rate.

The Regulation also provides the core eligibility requirements for accreditation as an Accredited Certificate Provider, the imposition of conditions of accreditation either directly by the Regulation or by the Scheme Administrator, the creation and transfer of Energy Savings Certificates (ESCs), the fees applicable to registering ESCs, and the conduct of audits of Scheme Participants and Accredited Certificate Providers.

Rules

The ESS Rule provides additional eligibility requirements for persons wishing to become accredited as Accredited Certificate Providers (ACPs in respect of activities that increase energy efficiency and reduce electricity demand in NSW).  Once accredited, an ACP is entitled to create ESCs by using the calculation methodologies set out in the ESS Rule.  More information on each of the methodologies in the ESS Rule can be found by following the link to the Activities section of the website.

The development of the policy framework, drafting of the ESS Rule and consulting on proposed changes to the ESS Rule is the responsibility of the Department of Environment, Climate Change and Water and the Department of Industry and Investment.  IPART’s responsibility is to administer the ESS through the application of the ESS Rule in its role as Scheme Administrator.

Details of workshops and the consultation process feeding into the ESS Rule development can be found on the Energy Savings Scheme page of the Department of Industry and Investment website.

The Exemptions Rule provides guidance to Scheme Participants concerning calculations of deductions for exemptions granted in a Ministerial Order from their Total Liable Acquisitions. The Exemptions Rule contains a step by step approach to calculating the 60 or 90 per cent exempt proportion of exempt loads, including the further deduction of 5 per cent to account for network losses from the Scheme Participants’ Total Liable Acquisitions.

Exemptions to the ESS are granted by the NSW Minister for Energy through the publishing of a Ministerial Order in the Government Gazette. The NSW Minister for Energy published the first interim Ministerial Order in the Gazette on 14 August 2009. More information on deducting exempt loads and the Exemptions Rule can be found by following the link to the Scheme Participants section of the website.

If a Site is not listed in the Order, a request for review may be made to the Minister for Energy. If approved any changes will be included in a subsequent Ministerial Order which is to be issued prior to the calendar year for which it is to take effect. The next Ministerial Order will be published prior to 31 December 2009 for 2010, taking into account any further developments in the Commonwealth Government’s approach to exemptions. For further information see the Policy Framework accompanying the Ministerial Order.