Legal News & Analysis – Asia Pacific – Australia – Energy & Project Finance

WHAT YOU NEED TO KNOW

• The Queensland Gas Scheme will close on 31 December 2013, with no further Gas Electricity Certificates created. Queensland electricity retailers and other liable parties will no longer have liability after this date.
• Administration of the scheme and the registry will continue until 30 June 2014.

WHAT YOU NEED TO DO

• Electricity retailers, large retail customers and parties trading in Gas Electricity Certificates will need to review and possible renegotiate any relevant contracts in place.
• Liable entities will still need to ensure they meet their liabilities and submit all relevant reports up to 30 June 2014 as civil penalties still apply for the 2013 liable year.

The Queensland Government is discontinuing the Queensland Gas Scheme (Scheme) effective 31 December 2013, the end of the 2013 liable year.

The Scheme was introduced in 2005 to promote Queensland’s gas industry by encouraging investment in gas-fired electricity generation, boosting gas production and reducing greenhouse gas emissions. At the time of announcing the closure of the Scheme, the Queensland Government stated that the Scheme was no longer necessary as a mature gas industry had developed in Queensland (almost 20% of electricity used in Queensland is sourced from gas fired power stations) and it duplicates the impacts of the federal Carbon Pricing Mechanism (CPM).

See our report on the announcement of the closure of the Scheme here.

Important Upcoming Dates

Accredited Generators

Accredited generators may continue to transfer or amend their accreditation until 31 December 2013. This is also the last date to generate eligible electricity for Gas Electricity Certificate (GEC) creation.

Accredited generators must then review the accuracy of information used to determine eligible electricity generated during the relevant period (ie conduct a GEC review) by 31 March 2014.

Accredited generators may continue to register GECs for creation until 30 April 2014, and may transfer or mortgage GECs up until 24 June 2014.

Accredited generators who incurred a liability under the Scheme in 2013 may, before 3 June 2014, apply to the Director-General of the Department of Energy and Water Supply (the Regulator) for permission to create and register GECs to meet that liability.

Scheme Participants

Scheme participants will only incur liability under the Scheme until 31 December 2013, which is also the last day to apply to the Regulator to amend liable load exemptions.
Scheme participants must submit their annual compliance reports to the Regulator and surrender the required number of GECs to satisfy the participant’s 2013 liability by 30 April 2014. GECs may still be transferred to Scheme participants before 24 June 2014.

Final Administration Of The Scheme

The Scheme will cease to operate on 30 June 2014. All accreditations, GEC creations, GEC liabilities and other rights under the Scheme will expire at midnight 30 June 2014. The Regulator may still issue civil penalties for non-compliance with the Scheme, the final day for payment of these penalties is 30 September 2014.

Comments

Contract Review

Electricity retailers (and other liable entities) and large customers with fixed pricing arrangements in relation to liabilities under the Scheme (as opposed to a cost pass through) should review their contracts to ascertain the impact the closure of the Scheme will have. Where the closure of the Scheme has not been specifically dealt with, it may be captured by the change in law provisions.

Repeal Of CPM

One of the reasons for the stated closure of the Scheme was the introduction at the federal level of the CPM and the duplication of intended impacts.
The Australian Government recently introduced a bill to repeal the CPM into Parliament; however its passage through the Senate remains uncertain. If the CPM is abolished, we consider that it is unlikely the Queensland Government will reinstate the Scheme, especially given the Queensland Government’s stated commitment to cut red tape from the energy sector.

For further information, please contact: 

Paul Newman, Partner, Ashurst
[email protected]

Peter Limbers, Partner, Ashurst
[email protected]

Teresa Scott, Ashurst
[email protected]

Yun Ho, Ashurst
[email protected]

Julia Goncalves, Ashurst
[email protected]

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