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Reduced acquisitions

06 December 2017
RET

Reduced acquisitions are the most important calculation that a liable entity preforms to determine their annual large-scale generation certificate (LGC) and quarterly small-scale technology certificate (STC) liability under the Renewable Energy Target. This page provides information about reduced acquisitions for the current and previous assessment years and how to apply or vary them.

What are reduced acquisitions?

Liable entities must report reduced acquisitions on an annual basis through the energy acquisition statement and renewable energy shortfall statement. Reported reduced acquisitions are used by the Clean Energy Regulator to calculate annual LGC and STC liabilities.

Reduced acquisitions = relevant acquisitions – exemption certificates

To determine and calculate relevant acquisitions, see acquisitions and networks exemption.

Exemption certificates reduce the amount of relevant acquisitions reported by liable entities.

Reduced acquisitions for STC liabilities are used for two calculations.

The purpose of the first calculation is to estimate the number of STCs required to surrender for quarters one to three of the assessment year. In this case reduced acquisitions are known as the 'previous year's reduced acquisitions' [refers subsection 38AA(3) of the Renewable Energy (Electricity) Act 2000]. Previous year's reduced acquisitions apply if a liable entity:

  • lodges an energy acquisition statement for an assessment year on or 14 February or before 1 April. In this case the previous year's reduced acquisitions are used to estimate the STC required surrender amounts for the assessment year [refer subsection 38AA(4) and 40C(1) of the Renewable Energy (Electricity) Act 2000].
    • For example: your 2014 reduced acquisitions, as lodged in your energy acquisition statement for the 2014 assessment year on or before 14 February 2015, are used to determine your STC required surrender amounts for quarters one to three for the 2015 assessment year.
  • becomes liable for the first time, or is intermittently liable for an assessment year, and applies for an amount to apply as if it were the previous year's reduced acquisitions, before 31 December of the assessment year [under section 38AG of the Renewable Energy (Electricity) Act 2000].
    • For example, if you became liable during the 2015 assessment year you will need to apply before 31 December 2015 to determine your STC required surrender amounts for quarters one to three for the 2015 assessment year.
  • applies for an proposed amount to be used instead of the previous year's reduced acquisitions under section 38AF of the Renewable Energy (Electricity) Act 2000. In this case the proposed reduced acquisitions are used to estimate the STC required surrender amounts for the assessment year. Liable entities may choose to apply for a proposed amount for number of reasons:
    • For example: you decide that the estimate used to determine your STC required surrender amounts for quarter one to three for the assessment year of 2015 are higher or lower than what your reduced acquisitions will be for the assessment year of 2015. You apply to vary the estimate and the Clean Energy Regulator approves or refuses your application. If the Clean Energy Regulator approves your proposed reduced acquisitions for the assessment year of 2015 then you will have varied your STC required surrender amounts for the assessment year of 2015.

The second is to back-date the number of STCs which were calculated for surrender in quarters one to three for the assessment year. In this case reduced acquisitions are known as the assessment year's reduced acquisitions, and are used to impose STC required surrender amount shortfalls and charges for quarters one to three if a liable entity:

  • became liable for the first time or is intermittently liable for an assessment year and did not apply for an amount to apply as if it were the previous year's reduced acquisitions under section 38AG of the Renewable Energy (Electricity) Act 2000. In this case the current assessment year's reduced acquisitions are used to calculate the assessment year's reduced acquisitions for quarters one to three [refers section 38AH of the Renewable Energy (Electricity) Act 2000].
    • For example: if you became liable during the 2015 assessment year, and did not apply before 31 December 2015 to determine your STC required surrender amounts for quarters one to three for the assessment year of 2015, then your energy acquisition statement reported or assessed reduced acquisitions for the assessment year of 2015 will be used to calculate required surrender amounts for quarter one to three of 2015.
  • did not lodge an energy acquisition statement, then the current assessment year's reduced acquisitions are used to calculate the assessment year's reduced acquisitions for quarters one to three [refers section 38AH of the Renewable Energy (Electricity) Act 2000].
  • applied for an proposed amount to apply instead of the previous year's reduced acquisitions under section 38AF of the Renewable Energy (Electricity) Act 2000, and the assessment year's reduced acquisitions exceeded the proposed reduced acquisitions by 10 per cent. In this case the reduced acquisitions for the assessment year are used to calculate the assessment year's required surrender amounts for quarters one to three.
    • For example: your reduced acquisitions for the assessment year 2015 exceeded the proposed reduced acquisitions for the assessment year 2015, as approved by the Clean Energy Regulator, by 10 per cent. In this case the reduced acquisitions for 2015, as reported and/or assessed by Clean Energy Regulator for the purpose of the energy acquisition statement for the assessment year of 2015, are used to calculate the required surrender amounts for the assessment year of 2015.

Exemption certificates

Liable entity customers that conduct eligible emission-intensive trade-exposed activities may apply to the Clean Energy Regulator to receive exemption certificates. To apply for exemption certificates, the companies who conduct eligible emission-intensive trade-exposed activities must nominate the person who will be entitled to use the exemption certificate for liability purposes. Only the liable entity nominated on the exemption certificate can use the exemption certificate.

  • Exemption certificates can also be amended—either increased or decreased against the amount which was originally applied for.

Liable entities may purchase exemption certificates from companies conducting emissions trade exposed activities. It is the liable entity's responsibility to determine when a benefit can be provided to exemption certificate customers, assuming the exemption certificate customer provided exemption certificates to a liable entity. The benefit of an exemption certificate can be:

  • provided to the customer at any time whether or not the Clean Energy Regulator has verified or amended the energy acquisition statement lodged for the assessment year, and
  • in any form including a once off payment, reduction in electricity invoice or a contractual agreement.

If a liable entity’s exemption certificates are greater than their relevant acquisitions for a particular year, any surplus can be carried forward and used to cover liability in future years. For the 2017 assessment year onwards, any such carried forward surplus will be automatically calculated and displayed in relevant liable entities’ REC Registry accounts.

Applying for previous year's reduced acquisitions (new or existing intermittent liable entities)

Companies or individuals who become liable for an assessment year for the first time, or are intermittently liable for assessment years, under the Renewable Energy Target should apply for a reduced acquisition amount to apply as if it were the previous year's reduced acquisitions, so that STCs can be surrendered for quarters one to three of an assessment year [refers section 38AG of the Renewable Energy (Electricity) Act 2000 (the Act)].

Companies and individuals are liable if they are the first person to acquire electricity, therefore making a relevant acquisition for the purposes of the Act. It is the responsibility of the Clean Energy Regulator to determine another amount to apply, and approve or refuse the amount applied for.

If the person fails to lodge an application, the Clean Energy Regulator will impose STC shortfalls and small-scale technology shortfall charges, including interest charges, for quarters one to three of the assessment year.

Example: a person became liable on 25 January 2016, as the first person to acquire electricity. To minimise potential shortfall charges, the person should lodge an application as soon as the person becomes liable and before 31 December 2016. However, if the person lodges an application after 28 April 2016 then the person may not have surrendered STCs through a REC Registry account for quarter one for the assessment year of 2016 and shortfall charges can be imposed by Clean Energy Regulator.

If you are a new liable entity complete the following steps:

If you are an intermittent liable entity complete the following steps:

Apply to vary previous year's reduced acquisitions (existing liable entities)

Liable entities who lodged an energy acquisition statement and renewable energy shortfall statement on or before 14 February or before 1 April may apply to vary their previous year's reduced acquisitions and propose an amount to apply instead of the previous year's reduced acquisitions for quarters one to three [refers section 38AF of the Renewable Energy (Electricity) Act 2000].

Liable entities may choose to apply for a variety of reasons including: a loss or gain of customers, including those who conduct eligible emission-intensive trade-exposed activities.
To apply to vary the previous year's reduced acquisitions:

  • Complete the documentasset:Application to have an amount apply instead of the previous years reduced acquisitions CER-RET-009
  • lodge your application before 1 October for the assessment year
    • For example: if you wish to apply to change the previous year's reduced acquisitions for quarters one to three for the assessment year of 2015. Then you must apply before 1 October 2015.
  • the Clean Energy Regulator will use section 38AE of the Renewable Energy (Electricity) Act 2000 to determine, approve or refuse the reduced acquisitions for quarters one to three. Liable entities are encouraged to carefully consider their application to vary their previous year's reduced acquisitions:
    • An application can only be submitted once per compliance year. If circumstances change after a liable entity's application is approved the application cannot be revised.
    • Liable entities may need to pay the small-scale technology shortfall charge for quarters one to three for the assessment year. This assumes the assessment year's reduced acquisitions exceeded the Clean Energy Regulator's determined or approved amount by 10 per cent, and insufficient STCs were surrendered for the individual quarterly required surrender amounts recalculated. 

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