Compliance & Audit
Related Documents
This page contains information related to both Scheme Compliance and the conduct of Audits under the ESS, which can be accessed from the links below:
Compliance Overview
Compliance with Energy Savings Targets
Scheme Participants must lodge an Annual Energy Savings Statement with the Scheme Regulator on or before 18 March in each year in respect of the previous compliance period. For example, lodgement of the Annual Energy Savings Statement for the 2009 compliance period is now due on Thursday 18 March 2010.
The Energy Savings Statement must contain an assessment of the Scheme Participant’s individual energy saving target for the previous calendar year. The statement must include particulars of any liable acquisitions made, and any deductions made in respect of any partially exempt loads.
The Scheme Regulator will need to assess whether the Scheme Participant has accounted for any energy savings shortfall for the previous year, including whether there is any liability for an energy savings shortfall penalty. If the participant decides to carry forward another shortfall into the coming year, they will have to declare that when they lodge their Energy Savings Statement.
The legislation provides for the Scheme Regulator to require audits as part of the assessment of compliance by Scheme Participants. It is expected that audits of the Energy Savings Statement will follow a similar process to that used for Benchmark Statement audits under GGAS, with some exceptions made for 'nil' returns or other exceptional circumstances. Where an audit is required, this will involve Scheme Participants engaging an Auditor from the ESS Audit Services Panel. It is expected that appointments will be made to this panel commencing from December 2009 onwards.
If a Scheme Participant does not surrender sufficient ESCs to meet its individual energy savings target, it will have an energy savings shortfall and may be subject to a shortfall penalty. The base penalty rate for the ESS for 2009 is $24.50 per MWh. To calculate the scheme penalty rate, you need to multiply the base penalty rate by 0.94 which is the penalty conversion factor listed in Schedule 1 of the Act. The base penalty rate may also be adjusted by movements in the consumer price index.
Compliance of Accredited Certificate Providers
The ESS Rule makes provisions for the creation for ESCs where an Accredited Certificate Provider (ACP) is carrying out an eligible Recognised Energy Savings Activity. In general certificates are created after the energy savings occur, however the ESS Rule also allows certain types of activities to create certificates in advance of the actual savings. These activities are described in the Deemed Energy Savings Method.
In accrediting a person to carry out an eligible Recognised Energy Savings Activity, the Scheme Administrator may impose certain conditions of accreditation. One of the key functions conferred by the legislation on the Scheme Administrator is the conduct audits or to require the conduct of audits in carrying out its functions. It provides broad powers to the Scheme Administrator and Regulator in determining the how audits may be carried out including placing the liability on the Scheme Participant and Accredited Certificate Provider regarding payment of the costs of these audits.
Third party audits have been used successfully in GGAS to monitor compliance and to ensure the integrity of the scheme. Validation and verification audits will also be used in the ESS, however a strategy for audits is being developed that will be tailored to the types of activities that will be prevalent in the ESS. The Scheme Administrator will make this strategy available in the near future. In addition, the Scheme Administrator intends to establish a panel of approved persons to carry out such audits. If an audit of an ACP is required before this panel is established, the ACP should contact the Scheme Administrator to discuss the Scheme Administrator's requirements before engaging the auditor..
ESS Audit Services Panel
Scope of Audits under the ESS
Under the ESS legislation, IPART has strong auditing and enforcement powers to ensure that:
- Scheme Participants meet their individual energy savings targets, and
- Accredited Certificate Providers are accredited and create ESCs in accordance with the Act, Regulation and the Scheme Rule.
IPART is establishing an Audit Services Panel (“the ESS Audit Panel”) to assist it and other participants in meeting the audit requirements of the Energy Savings Scheme established under Part 9 of the Electricity Supply Act 1995. IPART will be seeking suitably qualified organisations for appointment to the ESS Audit Panel.
Joining the Panel
An Application Form for joining the ESS Audit Panel is available below. Completed application forms may be submitted at any time.
When IPART assesses applications to join the ESS Audit Panel, the following factors will be considered:
- the capacity of the firm to resource and undertake reasonable assurance audits,
- quality assurance and review processes,
- the experience of the nominated Lead Auditors in undertaking audits, particularly compliance and record keeping audits, and
- knowledge and experience using the Australian Auditing Standards or ISAE3000 (all ESS audits must be performed using these standards).
Audit Panel Application Form |
362 kb Word document |
The Panel Agreement
Successful applicants will be required to sign the ESS Audit Services Panel Agreement (“Panel Agreement”) provided below. The Panel Agreement is the contract between IPART and the ESS Audit Panel member, and describes a range of obligations that the ESS Audit Panel member has to IPART, as well as the range of powers that IPART has the discretion to exercise.
These powers and obligations include (but are not limited to) that the ESS Audit Panel member must:
- use suitably qualified personnel and devote sufficient resources to ensure that the services are completed as required,
- comply with any guidelines or policies notified to the panel member by IPART,
- ensure that all of its nominated Lead Auditors have attended any training or information workshops required by IPART,
- hold public liability insurance for a specified amount for any one or more claims arising out of the same set of circumstances and a policy of professional indemnity insurance with a reputable insurer,
- ensure that a Lead Auditor directs, supervises and leads the approved audit team in undertaking of the audit services and signs all written reports or opinions provided by the panel member,
- ensure that each Lead Auditor and each member of the approved audit team has agreed to be bound by the confidentiality obligations, and
- not enter into any agreement, arrangement or understanding or participate in any activity which amounts to a conflict of interest without IPART’s prior written consent.
Audit Services Panel Agreement |
303 kb |
