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Shortfall and shortfall charges

08 December 2017
RET

Contents

Under the Renewable Energy Target, liable entities are required to surrender large-scale generation certificates and small-scale technology certificates in proportion to their share of the liable electricity market.

The Clean Energy Regulator expects liable entities to comply with their obligations by fully acquitting their liability through the surrender of large-scale generation certificates and small-scale technology certificates.

Liable entities that do not fully meet their surrender obligations will be in shortfall. For large-scale generation certificates, liable entities may carry forward less than 10 per cent of their liability for a particular year without incurring a shortfall charge. In all other circumstances where a liable entity does not surrender sufficient certificates, a non-tax deductible renewable energy shortfall charge of $65 per certificate not surrendered is applied.

Liable entities that acquit 90 per cent or less of their total large-scale generation certificate surrender liability for an assessment year, or acquit less than the required surrender amount of small-scale technology certificates for any quarter, will incur a renewable energy shortfall charge. A non-tax deductible renewable energy shortfall charge is applied to a liable entity’s shortfall at the rate of $65 per certificate not surrendered.

A list of liable entities that have incurred large-scale generation or small-scale technology shortfalls is published on the Scheme compliance page.

Liable entities will incur further charges and may be subject to debt recovery action if they do not pay a renewable energy shortfall charge by the due date.

Carrying forward large-scale generation shortfalls

While every effort should be made to obtain sufficient large-scale generation certificates to meet liability each year, the carry forward rule allows a liable entity to carry forward up to (but not including) 10 per cent of its required large-scale renewable energy for a particular year. An entity’s ‘required large-scale renewable energy’ for a year is:

(the total amount of its relevant acquisitions for the year - acquisitions covered by exemption) x the renewable power percentage + any carried forward shortfall – any carried forward surplus

Any shortfall that is less than 10 per cent of a liable entity’s required large-scale renewable energy is added to its liability for the following year. The large-scale generation shortfall charge does not apply in these circumstances. Carried forward shortfalls can accumulate over multiple assessment years, but once a liable entity has a large-scale generation certificate shortfall of 10 per cent or more of their total required large-scale renewable energy for an assessment year, the shortfall charge becomes payable.

In these circumstances, even though a large-scale generation shortfall charge is not applied, the liable entity is still in shortfall and the amount of shortfall in certificates and percentage of liability is published on the Scheme compliance page.

Refunds for paid large-scale generation shortfall charges

Where a liable entity has paid a large-scale generation shortfall charge, it can utilise the refund provisions in certain circumstances.

Further details on the operation of the refund provisions is available at the refunds of large-scale generation shortfall charges page.

Small-scale technology shortfall charges

Under the small-scale technology certificate scheme, liable entities have quarterly surrender obligations. Liable entities that do not fully meet their small-scale technology required surrender amount for any quarter will have a small-scale technology shortfall in relation to that year.

The small-scale technology shortfall charge is $65 x the amount of small-scale technology certificates not surrendered for each quarter of the year.

The carry forward rule and refund provisions outlined above in relation to large-scale generation shortfall and shortfall charges are not available for small-scale technology certificate shortfall charges.

Invoices for small-scale technology shortfall charges are available in the REC Registry.

When shortfall charges become payable

Shortfall charges for an assessment year become payable by a liable entity:

  • where the liable entity lodges a renewable energy generation shortfall statement for the year showing that the liable entity has a certificate surrender shortfall for the year,
    • on the day the statement is lodged (Note: if the statement is lodged after 14 February of the following year, such lodgement must occur within the extended time period for lodgement that has been allowed by the Clean Energy Regulator);
  • where the Clean Energy Regulator makes a default assessment of the liable entity’s certificate surrender shortfall for the year because the entity failed to provide an annual energy acquisition statement and/or renewable energy shortfall statement for the year,
    • 14 February of the year following the assessment year;
  • where the Clean Energy Regulator amends a notice of assessment
    • on the day the amended assessment is made – if the amendment is wholly or partly as a result of an error of the Clean Energy Regulator, or
    • on the day on which the original assessment became payable – in any other case.

Refunds for overpayment

Liable entities will be refunded any shortfall charge paid that has been subsequently reduced by an amendment to an assessment, for example, to revise the liable entity’s reduced acquisitions for an assessment year. The amount to be refunded will be paid to the liable entity or applied to any existing liability of the liable entity to the Commonwealth. The amount of refund includes the shortfall charge and any associated penalty or interest charges.

Penalty charges

The Clean Energy Regulator will impose penalty charges on liable entities where the liable entity has not met its obligations. Circumstances can include:​

  • failing to lodge a statement or information relevant to shortfall charges for a year.
    • Penalty charge = 2 x shortfall charge payable for the year ($130 per certificate not surrendered).
  • failing to keep or produce a record of details relating to the calculation of a shortfall liability for a year.
    • Penalty charge = 2 x shortfall charge payable for the year ($130 per certificate not surrendered).
  • making false or misleading statements, or omitting information from a statement rendering it false or misleading, and the renewable energy shortfall charge properly payable by the entity exceeds the charge that would have been payable if it were assessed on the basis that the statement were not false or misleading.
    • Penalty charge = 2 x the excess ($130 per certificate).
  • making an arrangement solely or principally for the purpose of avoiding or reducing a shortfall charge.
    • Penalty charge = 2 x the amount avoided or reduced ($130 per certificate).

​Penalty charge becomes due and payable on the day specified by the Clean Energy Regulator in the notice of assessment for the charge given to the liable entity.

In certain circumstances, the Clean Energy Regulator may remit all or part of a penalty charge. ​

In​terest charges

Penalty interest is charged on the whole of any amount that an entity is liable to pay that is not paid by the time it is due. This means that interest is automatically charged on any large-scale generation shortfall charge, small-scale technology shortfall charge or penalty charge that is not paid by a liable entity by the due date for the charge. Interest continues to be charged until the whole of the principal amount owing and any interest charged is paid.

Interest is calculated daily by multiplying the unpaid amount by the general interest charge rate for the day (calculated under section 8AAD of the Taxation Administration Act 1953 and set out on the Australian Taxation Office’s website​).

Interest charges may be incurred or refunded when assessments are amended. Any interest charges incurred or refunds payable are calculated through the REC Registry. The Clean Energy Regulator will refund amounts to the liable entity’s nominated bank account.

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