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RENEWABLE ENERGY (ELECTRICITY) AMENDMENT (FEED-IN-TARIFF) BILL 2008

                                2008




 THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA




                              SENATE




Renewable Energy (Electricity) Amendment (Feed-in-Tariff) Bill 2008




                EXPLANATORY MEMORANDUM




              (Circulated by authority of Senator Milne)
Renewable Energy (Electricity) Amendment (Feed-in-Tariff) Bill 2008 ­
Explanatory Memorandum

Background:

The purpose of the Renewable Energy (Electricity) Amendment (Feed-in-Tariff)
Bill 2008 is to amend the Renewable Energy (Electricity) Act 2000 to establish a
national feed-in tariff (FiT) scheme. The objective of the scheme is to provide
greater financial support for the commercialisation of a broad range of
prospective renewable energy technologies, particularly those that are generally
unsupported by the mandatory renewable energy target scheme.

In summary the scheme is intended to operate as follows:

Feed-in-Tariff Rates

  i.   It is the responsibility of the Minister for Climate Change to set a
       feed-in-tariff (FiT) rate for any of the sources of renewable energy
       technology listed in section 17 of the Act, each year.

  ii. The Minister's objective is to support the economic viability of electricity
      generation from a range of prospective renewable energy technologies. To
      achieve this, the Minister may vary FiT rates according to the type and
      location of qualifying generators.

  iii. The owner of a 'qualifying generator' will receive a constant FiT for 20
       years, set at the time that they register with the scheme, on all of the
       electricity that they produce (not just the component which is exported to
       the grid). Only generators installed after the commencement of the scheme
       and which forgo participation in the mandatory renewable energy scheme
       can be a 'qualifying generator'.

  iv. The Minister must review the FiT rate applying to each renewable energy
      generator type each year ­ with adjusted rates applying to new installations.
      In order to provide a degree of certainty to manufactures and suppliers of
      renewable energy products, the Minister may increase the FiT rate, but can
      only decrease the rate it after a period of 5 years from the date that the rate
      was initially set, and then by a maximum of 10% per year. An exception to
      this rule could occur if the Minister elects to set a target level of installed
      renewable energy capacity (for any particular technology), and that target is
      achieved, beyond which point the Minister may reduce the tariff if such a
      course of action is deemed desirable.

Feed-In-Tariff Levy

  v. The Minister must set a FiT levy rate per MWh of electric energy acquisition
     from the electricity grid, to fund the FiT rate scheme. The FiT levy is to be
     imposed by a proposed Renewable Energy (Electricity) Feed-in-Tariff Levy
     Act 2008. The FiT levy rate must be sufficient to cover the estimated cost
     of payments under the feed-in-tariff rate scheme.
  vi. The FiT levy is payable by all electricity retailers and direct customers of
      electric energy from the grid, calculated by reference to their annual energy
      acquisition statements lodged under section 44. Note that the annual
      energy acquisition statement is also used to calculate the renewable energy
      shortfall charge of an electricity retailer or a direct customer.

Feed-In-Tariff Payments

  vii. An annual return by the owner of a qualifying generator must be lodged
       with the Regulator within 30 days of each anniversary of the registration of
       the qualifying generator. The Regulator must pay the feed-in-tariff rate to
       the owner of a qualifying generator within 30 days of receiving from the
       owner an annual return in the prescribed form indicating the metered
       energy produced by the qualifying generator.

Feed-In-Tariff Register

  viii. The Regulator must establish a Register which records:
           a. details of all qualifying generators, including the name and address
              of the owner of the generator, the date of registration of the
              generator and the type of generator (that is, the eligible renewable
              energy source used by the generator); and
           b. the total amount of electricity produced by each qualifying
              generator; and
           c. the feed-in-tariff rate to be paid to the owner of a registered
              qualifying generator and the period for which the feed-in-tariff rate
              will be paid.
Reporting

  i.   The Minister must ensure that an independent report on the operation of the
       FiT scheme is prepared and tabled each year. The report must include
       details of total renewable energy produced and total payments made under
       the feed-in-tariff rate scheme, and the total receipts from the feed-in tariff
       levy.

  ii. The Minister must provide statements explaining how the feed-in-tariff rates
      and levy rates are calculated and must table those statements in both
      Houses of Parliament each year.