Electricity entities in Queensland complying with the Queensland Gas Scheme and parties trading in Gas Electricity Certificates should review their contracts following the discontinuance of this scheme as part of the Queensland Government's stated objective to review and remove regulatory burdens.
At the same time, two other changes to energy regulation have been made: a reduction in energy reporting requirements, and more flexibility for Government in the conditions it can imposed on any new coal fired power station.
The discontinuance of the Queensland Gas Scheme
The Queensland Gas Scheme, which is currently found in Chapter 5A of the Electricity Act 1994 (Qld), was introduced in 2005 to promote gas fired electricity generation when only 2.4% of electricity was sourced from gas fired power stations in Queensland.
Under the scheme, accredited gas fired generators can create Gas Electricity Certificates (GECs) for each MWh of eligible gas fired electricity they produce. Liable persons must surrender GECs to meet their GEC liability in each year. The GECs are transferable and a liable person can purchase them from another party.
The liable persons under the scheme are comprised mainly of electricity retailers. However, the scheme also makes other entities such as certain holders of Special Approvals, Customers and Generators, liable entities. The liable load is calculated based on a nominated percentage (15% for 2012) of the liable entities electricity load.
Now with almost 20% of electricity used in Queensland is sourced from gas fired power stations and with low GEC price in the market, the Queensland Government intends to repeal the legislation effective 31 December 2013. The Queensland Government argues that the introduction of the carbon price mechanism by the Commonwealth means that these regulatory requirements are no longer required and can be abolished.
It will be important for electricity entities currently complying with the scheme to check their contracts to determine the impact that the repeal may have on the terms of their arrangements.
Repeal of the Clean Energy Act 2008 (Qld)
Under the Queensland Clean Energy Act, participating businesses must report their energy use annually to the regulator and have an energy savings plan. Government can require energy providers to disclose the energy use of certain customers who use between 10TJs and 500TJs of energy per annum.
The Government has announced that the Clean Energy Act 2008 Queensland will be repealed at the earliest opportunity and that "in the interim, it is proposed that participants will not be required to undertake compliance action in relation to any outstanding obligations under the Clean Energy Act 2008. Participants will receive written notification from the Regulator."
Conditions for new coal-fired power stations will be removed
In 2009, the Queensland Government announced that Generation Authorities for new coal-fired power stations would be only be approved in Queensland where:
world best practice low emission technology was applied; and
the facility was carbon capture and storage (CCS) ready and able to retrofit that technology within five years of CCS being proven on a commercial scale.
These standards will now no longer apply to an application for a Generation Authority. Approval for a new coal fired power station will still require Government approvals and authorisations including those relating to the protection of the environment. The Government's view is that the current standards for new coal fired power stations have effectively been replaced by the introduction of the carbon pricing and that no additional environmental benefit would be achieved by continuing the policy.