Page 1121 - Week 03 - Thursday, 26 February 2009
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The ICRC, the Independent Competition and Regulatory Commission, also advised me that the transitional franchise tariff is not a retail price actually paid by Canberrans. It is a reference point used by them in setting electricity prices and, in fact, is higher than the usual retail price. Payment of a multiple of that figure would overstate the premium price and lead to unwarranted additional imposts on consumer bills. Additional problems relating to taxation law arise from the multiplied use of a GST inclusive figure, which the transitional franchise tariff is.
I have taken these problems into consideration in determining under existing Part (10)(2) of the act that the premium price for the period 1 March 2009 to 30 June 2010 will be 50.05c per kilowatt hour, GST exclusive. No amendment was required to make this determination. However, it is the use of the transitional franchise tariff as the normal cost of electricity factor that has the potential to undermine the effectiveness and take-up of the scheme. Electricity retailers are entitled to recover, through charges back to the electricity distributor, the difference between the premium price and the normal cost of electricity.
The act currently equates the normal cost with the transitional franchise tariff which is about 15.2c per kilowatt hour. Using this definition, electricity retailers would be obliged to purchase ACT generated renewable electricity at a cost about three times that offered in the competitive market, which is currently between 5c and 7c per kilowatt hour. This creates a guaranteed loss position on every unit of electricity purchased which, compounded by the act requirement to participate in the scheme for 20 years, strongly discourages participation or support from industry.
In response to this, I am proposing an amendment to the act to allow the minister to set, by notifiable instrument, a more realistic market figure. Again, based on advice received from ICRC, I propose to make an instrument under clause 9 of the new bill setting the normal cost at 6c per kilowatt hour for the period 1 March 2009 to 30 June 2010.
Finally, members would be aware that the bill also contains a number of minor amendments of a technical or definitional nature. Most of these relate to the alignment of common industry terms with nationally recognised definitions under the national electricity market. This helps remove any possible grounds for confusion. We also clarify the issue around kilowatt hours and kilowatts, which is an important clarification.
I am confident that the amendments I have proposed in the bill will make the ACT electricity feed-in scheme a more equitable and durable mechanism for promoting the growth of local renewable generation and I commend the bill to the Assembly.
Finally can I indicate to members that, on the advice of the Clerk, I will be proposing a small amendment that gives effect to this bill from 1 March. I understand that commencement will otherwise be difficult in terms of the verification procedures required in the Clerkâs office; so I will be circulating shortly an amendment that makes clear that the bill takes effect from 1 March.
Question resolved in the affirmative.
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