Portfolio Budget Statements 2006-07
Environment and Heritage Portfolio
Budget initiatives and explanations of appropriations specified by outcomes and outputs by agency
Budget Related Paper No. 1.7
ISBN 1 741 77538 8
Agency Budget Statements (continued)
Office of Renewable Energy Regulator (continued)
Section 4 - Other Reporting Requirements
- 4.1: Purchaser-provider arrangements
- 4.2: Cost recovery arrangements
- 4.3: Australian Government indigenous expenditure
4.1: PURCHASER-PROVIDER ARRANGEMENTS
Agencies may need to provide resources to other General Government Sector (GGS) bodies, for example in payment for services rendered or as part of cross agency initiatives. Consequently, the sum of amounts in agency resourcing tables in Budget Paper No. 4, and in the resourcing tables in this document, will not equal total resourcing at the whole of government level (as reproduced in Budget Paper No. 1).
This section summarises significant transactions between GGS agencies that are not consolidated or reported at the whole of government level.
Cross agency overview
As a small agency the Office of the Renewable Energy Regulator (ORER) has established a cross agency agreement with the Department of the Environment and Heritage (DEH) for the provision of a range of ongoing corporate services on a commercial basis.
Responsibility
Due to the nature of this agreement with DEH, there are no formal reporting requirements. The current contract covers two financial years. The agreement will be renegotiated at the end of the current contract in June 2007.
Control arrangements
The agreement sets controls in place to ensure the items covered are specific to the nature and type of services that are required by ORER. The agreement has been constructed to enable monitoring as corporate services are delivered.
Resourcing
The pricing of this agreement is based on estimates of time taken for the various administrative functions undertaken by DEH on behalf of ORER.
Performance against outcomes of purchased outputs
Performance standards are mandated in a schedule to the contract. Where minimum performance levels are not achieved an adjustment to the fee may be negotiated.
4.2: COST RECOVERY ARRANGEMENTS
The Renewable Energy (Electricity) Act 2000, administered by ORER imposes obligations on wholesale purchasers of electricity to meet individual targets each calendar year for purchasing renewable-based electricity. This is achieved by obtaining and surrendering renewable energy certificates to ORER or applying a renewable energy shortfall charge.
Components of the programme for which charges are applicable are:
- The registration of individuals, companies and agents;
- Accreditation of power stations and generators; and
- The registration and surrender of certificates.
The Mandatory Renewable Energy Target (MRET) scheme is partly administered by way of a internet based electronic registry (the Renewable Energy Certificate registry) provided under a services contract. ORER charges a flat fee (currently $0.08) for the creation and surrender of each Renewable Energy Certificate (REC). The registry also requires that individuals and companies be registered for the purpose of trading RECs and electricity generators be accredited for the purpose of creating RECs. Participation in the measure, both in terms of generation and liability is subject to audit by ORER.
The revenue received under this policy is transferred to the Official Public Account and is not available for use by the ORER.
Summary of cost recovery impact statement
ORER's cost recovery arrangements have been assessed under the Environment and Heritage Portfolio Cost Recovery Impact Statement completed in 2005-06 as complying with the Australian Government's Cost Recovery Policy.
The MRET scheme is currently implemented on a partial cost recovery basis, averaged over all applicable activities. It is intended that the programme will move toward full cost recovery as the industry develops and the scheme is fully implemented.
In late 2005-06, a new REC registry contract is due to begin. The contract for this registry involves a fixed and variable component, the latter component of which is not possible to accurately cost until it is operational.
The majority of programme revenues are derived from REC creation fees and REC surrender fees, both are currently set at $0.08 per REC. Once the operational costs of the new registry are fully known and the scheme reaches full cost recovery (around 2009-10), it is envisioned that REC fees will be revised.
Progress towards full cost recovery, as a percentage of expenditure, will take place over the next four years. The exact expenditure to be recovered, and the proposed REC charge to ensure an appropriate recovery path will be subject to a further review and negotiation in 2009-10.
The MRET scheme was reviewed in 2003, incorporating a substantial stakeholder consultation process. It is recognized through feedback from stakeholders that there is sensitivity regarding the charges applied for registration and accreditation, and that higher charges may influence some in the market to avoid participation. This is particularly the case for individual registrations (the cost of which is set just below the lowest REC value) and accreditation of small generators, who would be unable to meet the cost of fully recovered accreditation. The considerations identified in the consultation process have been taken into account when designing the existing fee structure.
4.3: AUSTRALIAN GOVERNMENT INDIGENOUS EXPENDITURE (AGIE)
There is no Australian Government Indigenous expenditure for ORER.
Budget statements
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