Electricity Accounts are Taxing!

Guess what? Something new and a little bit fancy is coming to your market contract electricity bill and it is not a McDonalds add. As of the 1st Jan 2011 another tax has been applied to your account with a fancy new name like LRET and SRES.

It is like an episode of Rocky and Bullwinkle “Hey presto watch me pull a rabbit out of my hat” well surprise a new tax is upon us very cleverly introduced. Have you been wondering how all these renewable incentive schemes are paid for that the government is promoting like rebates on solar and housing insulation and our big push towards renewable energy?

To me these programs are perceived as government incentives to help you pay for installing energy efficient technology so you don’t get burdened with the total cost. It is to help you take some of the concern when deciding to convert , it sounds like the government is giving you a good deal doesn’t it? Look under the sheets or to be more accurate look in the terms of your electricity contracts. Government are not paying for it, you are, out of your electricity accounts. Governments give with one hand and take with the other.

A number of amendments have been made to the Renewable Energy (Electricity) Act 2000 which commenced on 1st January 2011. The new changes being brought into play are supposed to make it easier to understand. It is now more confusing and I actually know this industry yet I feel like I am back in the Army with all these swirling acronyms.

As a consumer who pays the accounts do you know what the following taxes are :

REC Charge – “Renewable Energy Certificates” This Federal Government environmental charge applied to market customers in all states.
QLD - GEC Charge – “Gas Electricity Certificates”
ACT - NGAC – ACT Greenhouse Gas Abatement Scheme.
NSW - ESC – Energy Savings Credit
NSW NGAC – NSW Greenhouse Gas Abatement Scheme Charge.
VREC – Victorian Renewable Energy Charge - applies to Victorian customer sites only.

Yes that is correct these are state and federal taxes applied to all electricity users, including specifically users with market contracts in every state.

Now you have to add to the list LRET and SRES. The LRET scheme covers renewable sources such as wind farms and the new SRES scheme covers domestic hot water systems and solar panels.

What does this change mean for your business?

As of the 1st of January the REC charge on your bill has been replaced by 2 charges. The LRET charge appears to be the same or slightly less than your former REC rate. The SRES charge will be an additional charge to your business of approx. 0.550c - 0.640c per kWh depending on the retailer and their pass through charges. It is supposed to be regulated.

Bottom line this is a 5-8% increase to your bill. So make sure you budget it in.

An example of the impact on one of our clients - the new SRES charge is an extra $1179.20 incl GST for the month, or an addition to the account of 7.6%. That’s on a consumption of 153,586 kWh for the month. Not a bad little increase.

These new changes being brought into play are supposed to make it easier for us to understand and break out the charges on our bill.

If you ring the various departments to ask how it will impact the bill paying customer good luck getting any logical answer. They are so far removed from the impact it has on the end-user that they think the electricity retailers are paying for it. Well I can assure you the electricity retailers are in business and if the government is imposing a new collection scheme it won’t be coming out if the retailers’ pockets, it is us the payers of electricity accounts who will be lumped with it.

Written by Michael Newton – Watt Utilities