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Shortfall charges

02 March 2017
RET

​Under the Renewable Energy Target, liable entities must surrender large-scale generation certificates or small-scale technology certificates to acquit their large-scale generation certificate or small-scale technology certificate surrender liabilities. Liable entities who fail to fully acquit their certificate surrender liabilities will incur a non-tax deductible renewable energy shortfall charge at the rate of $65 per Mwh of the shortfall (which equates to the number of certificates required to be, but not, surrendered to acquit their certificate surrender liability).

Information regarding liable e​ntities with renewabl​e energy shortfalls​​ is published on the Clean Energy Regulator website.

​Intentional shortfall runs counter to encouraging generation of electricity from renewable energy sources within the electricity markets. ​Information regarding liable entities that have incurred large-scale generation certificate or small-scale technology certificate shortfalls is published by the Clean Energy Regulator on its website and in the Annual Report to Parliament on the workings of the Renewable Energy (Electricity) Act 2000​.

Liable entities may incur further charges if they fail to pay a renewable energy sh​ortfall charge. Liable entities that do not pay their shortfall charge within the allocated time may be charged penalty interest on the amount they are liable for and may be subject to debt recovery action.

Large-scale generation shortfall charge

Liable entities who acquit 90 per cent or less of their total large-scale generation certificate surrender liability for an assessment year will incur a large-scale generation shortfall charge.

Large-scale generation certificate shortfall charges are calculated, and can be paid, through the REC Registry.

The large-scale generation shortfall charge is $65 per certificate required to be, but not, surrendered.

Carrying forward large-scale generation certificate shortfalls

Liable entities who surrender more than 90 per cent of their total large-scale generation certificate surrender liability for an assessment year carry forward their large-scale generation shortfall to the next assessment year. Carried forward shortfall becomes part of the liable entity’s total large-scale generation certificate surrender liability for the next assessment year.

Large-scale generation certificate 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 large-scale generation certificate liability for an assessment year, the large-scale generation shortfall charge becomes payable.

Refunds for paid large-scale generation shortfall charges

A liable entity which has paid a large-scale generation shortfall charge for a year may be entitled to obtain a refund of the paid charge. Liable entities can obtain the refund if they surrender large-scale generation certificates during the ‘allowable refund period’ and did not have a large-scale generation shortfall for the assessment year before the year in which the certificates are to be surrendered. The allowable refund period starts on the day after the liable entity lodges its large-scale generation shortfall statement for the year after the year for which the charge was paid and ends 3 years after the liable entity paid the large-scale generation shortfall charge.

For example, if a liable entity pays a large-scale generation shortfall charge for 2015 on 14 February 2016, the allowable refund period would start from the date the liable entity lodges its large-scale generation shortfall statement for 2016 (generally, before 14 February 2017 or next business day) and would end on 14 February 2019.

A liable entity who surrenders large-scale generation certificates during the allowable refund period in accordance with the abovementioned requirements is entitled to receive a refund from the Clean Energy Regulator of the large-scale generation shortfall charge paid by it for a year. For the purposes of calculating the refund, a value is assigned to each large-scale generation certificate that is surrendered by a liable entity for obtaining a refund. This is equal to the value of large-scale generation shortfall charge that was payable for a large-scale generation certificate in shortfall during the year to which the shortfall charge being refunded relates. The total assigned value of certificates surrendered by a liable entity for obtaining a refund of large-scale generation shortfall charge paid by it for a year will not exceed the amount of the large-scale generation shortfall charge paid by it for that year. Subject to this cap, the amount refunded by the Clean Energy Regulator against each large-scale generation certificate surrendered for refund is the value assigned to that certificate minus an administration fee worked out under sub-regulation 28(5) of the Renewable Energy (Electricity) Regulations 2001.

Small-scale technology shortfall charge

Liable entities who fail to fully acquit their small-scale technology certificate surrender liability for any quarter of an assessment year will incur a small-scale technology certificate shortfall charge.

Small-scale technology certificate shortfall charges are calculated, and can be paid, through the REC Registry.

The small-scale technology certificate shortfall rate of charge is $65 per certificate required to be, but not, surrendered.

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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