How the scheme works

The objectives of the Energy Efficiency (Cost of Living) Improvement Act 2012 (the Act) are:

  1. encourage the efficient use of energy
  2. reduce greenhouse gas emissions associated with stationary energy use
  3. reduce household and business energy use and costs
  4. increase opportunities for priority (low-income) households to reduce energy use and costs in the Territory.

The Act:

  • establishes a Territory-wide energy savings target
  • establishes an energy savings obligations for individual electricity suppliers covering, initially, energy savings in the residential sector
  • allows the Minister to determine activities that electricity retailers may undertake to promote energy efficiency
  • requires Tier 1 electricity retailers to undertake a specified proportion of their energy efficiency activities in priority (low-income) households
  • imposes penalties on electricity retailer that fail to meet their obligations under the Act
  • provides a legislative framework to suit the ACT's own unique circumstances.

The EEIS is funded by electricity retailers, who pass a portion of those costs through to ACT electricity customers. However, the expected overall energy savings are estimated to be significantly greater than the costs of the scheme. The Regulatory Impact Assessment for the 2015 extension estimates that average weekly electricity bill costs due to the Scheme will be $0.62 per week, but that savings resulting from the Scheme will average $3.19 per week. Participating households are expected to save around $5 per week by 2020.

Combined residential sector lifetime savings from the Scheme are estimated at $106 million in present value terms (as modelled for the 2015 Regulatory Impact Statement). And while scheme costs end in 2020, savings from energy efficiency measures implemented will continue to grow.

Similar successful schemes can be seen in South AustraliaVictoria and New South Wales. In 2016 the ACT Scheme was harmonised with these other schemes so that they can work together to support competition for energy efficiency.

Key features of the Energy Efficiency (Cost of Living) Improvements Act 2012 include:

  • A legislated requirement on ACT electricity retailers to achieve targets in relation to:
    • Electricity and gas emissions reduction within the ACT in tonnes CO2-e; and
    • Electricity and gas emissions reductions for priority (low-income) households in tonnes CO2-e.
  • Targets are set for retailers on a pro rata basis in relation to their retail electricity market share.
  • Tier 1 electricity suppliers are defined as:
    • having at least 5,000 customers in the ACT and
    • selling at least 500,000MWh of electricity to customers in the ACT annually.
  • A simplified obligation is provided for Tier 2 suppliers in the form of an Energy Savings Contribution fee.
  • Financial penalties are applicable to suppliers who fail to achieve legislated targets charged in relation to each tonnes CO2-e of shortfall.
  • Monies raised as a result of the scheme must be re-allocated to projects or programs that meet the objectives of the scheme (the Objects of the Act).
  • Make sure good provisions are provided, including a limited capacity for suppliers to roll-over a minor shortfall to a following year.
  • A schedule of eligible activities is included in associated instruments such as the Energy Efficiency (Cost of Living) Improvement (Eligible Activities) Determination.
  • Retailers can subcontract the provision of eligible activities.
  • Retailers can transfer 'credits' generated from undertaking eligible activities between each other on approval from the Administrator.
  • Retailers must report annually on their compliance with scheme rules.

A number of Instruments providing for the energy savings target, priority household target, energy savings contribution and emissions factor, have been made by the Minister. These can be found on the legislation register.