Page 4450 - Week 12 - Thursday, 26 October 2017
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been granted and, most importantly, how long it would take the territory to secure an alternative source of renewable electricity of equivalent quantity to the entitlement being surrendered.
The intent of these changes is not to empower the minister to deny any entitlement surrender—the right of the FiT entitlement holder remains—but rather to allow the territory enough time to secure an alternative supply of renewable electricity equal to that being surrendered. That way the territory can protect the integrity of its 100 per cent by 2020 renewable electricity target and ACT residents can rest assured that the target is safe. Because the renewable electricity target provides nearly all of the emission reduction required for the territory to reach its greenhouse gas target of 40 per cent reduction on 1990 level emissions by 2020, it is important that it is not jeopardised by FiT entitlement surrenders. This change provides greater clarity for government and industry regarding the operation of section 14 of the act.
The parts of the amendment bill that relate to FiT surrenders—new section 14(4) and the new Electricity Feed-in (Large-scale Renewable Energy Generation) Regulation 2017—have effect from 14 September 2017, while the other provisions of the amendment bill commence on the day after the act’s notification day. This is because there is a small risk that a FiT entitlement holder may seek to surrender its entitlement before the amendment bill is passed and notified. This is a precautionary measure and will ensure that all surrenders will be treated equally and operate under the new regulation that prescribes matters the minister must consider when fixing the day and time that the surrender of a FiT entitlement takes effect.
As detailed in the explanatory statement the retrospective provisions in this bill are reasonable and justified, and I refer members to that discussion. All other provisions of the amendment bill commence on the day after the act’s notification day.
One of the remarkable outcomes of the contract for different FiT mechanism is that it provides a hedge for the ACT community against rising wholesale electricity costs. As market wholesale prices go up, our feed-in tariff costs go down. In the first half of 2017 Australia’s wholesale market achieved record average prices following the closure of Hazelwood power station in Victoria. Average pool prices in Victoria and South Australia, where our current wind farms are operating, rose from $40 to $60 to $80 to $100 per megawatt hour. When this occurs, rather than the ACT paying money to our contracted wind farms, they pay us and this filters back through to the consumer. This was the outcome for the second quarter of 2017 and this is an occurrence that Jacobs, through its independent review, expects to become more frequent in the medium to long term.
The ACT electricity distributor, currently ActewAGL Distribution, pays the FiT support payments to FiT entitlement holders once they begin generation. The first ACT FiT-supported generator, the 20-megawatt Royalla Solar Farm, began generating in August 2014 and there are now six wind and solar farms generating FiT-supported output, with four more to come online by October 2019. As our renewable electricity percentage increases, so will the value of the FiT support payments paid to or by the electricity distributor. As the value of the FiT support payments increase, so does the need for the ACT government to have a strong oversight of them.
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