1. What should the new VEET target be?
Other
Other (please specify a target and length):
[Required if 'Other' selected] *
Please see attached document
1a. Please outline why you prefer the
target you identified, or why you selected
"No response":
The recently modelling results outlined in the
Consultation Paper indicate that Option 1
(i.e. a continuation of the existing target of
5.4 million tonnes CO2-e per year for a
period of at least three years) will raise the
VEET certificate price from its long term
average of $18 to $26 (an increase of 45%)
and that the other options considered by the
modelling would increase the certificate
price even further. Alinta therefore considers
that the VEET target should not exceed its
existing level for a period of at least three
years and that the Victorian Government
should seriously consider reducing the target
to avoid ‘bill shock’ for energy consumers.
2. Comments are invited on the modelling
approach used to determine the costs and
benefits of the VEET scheme. Is there any
additional data or information that should
be considered?
Alinta is concerned that the results of the
Victorian Government Business Impact
Assessment undertaken in 2014 and the costbenefit modelling outlined in the
Consultation Paper, differ to such a
significant extent. These contradictory
outcomes demonstrate that the modelling
results are very sensitive to the inputs used,
which combined with the complexity and
uncertainty inherent in such models,
indicates that the modelling outcomes should
be treated with caution. Some of Alinta’s
specific concerns relating to the cost-benefit
modelling outlined in the Consultation Paper
are described below. Electricity demand in
Victoria is falling due to a large range of
factors that include, but are not limited to
energy efficiency improvements. Alinta
therefore believes that Victorian energy
consumers will already benefit from minimal
expenditure on network infrastructure over
the next three to five years, independent of
what the VEET target may be, and that this
should be reflected in the modelling inputs.
Climate change is a global issue and
therefore the financial benefits associated
with avoided emissions are shared across the
global economy. As such, the VEET
program is too small to have any
measureable benefit on the global economy,
or indeed any material direct benefits to the
Victorian economy. Alinta therefore
considers that including avoided emission
values in the modelling (by incorporating
these with actual, measurable and immediate
benefits such as those associated with
avoided generation) will mislead readers as
to the real benefits derived from the VEET
scheme. Although Alinta understands that
assessing how the VEET program might
contribute to the avoidance of future climate
change adaptation costs is a worthwhile
analysis, the avoided emissions values used
in the modelling are not sufficiently tangible,
certain or linked to the Victorian economy to
justify their inclusion in the cost-benefit
analysis. As a result, Alinta believes that the
benefits of avoided emissions should be
considered separately to the cost-benefit
analysis to avoid producing misleading
modelling results. Alinta also questions the
accuracy of the improved air quality benefit
values used in the model, given that power
stations operate under strict regulatory
conditions established under State
environmental law, and are subject to
operating conditions that are based on
environmental and health considerations. It is
therefore difficult to imagine that the costs
used in the model would become actual
savings to the economy if electricity
generation were to decrease by the small
amount predicted by the VEET modelling.
When economic benefits of greenhouse gas
avoidance and improved air quality are
removed from the recent cost-benefit model,
the net benefits of the VEET program
become quite marginal. Alinta therefore
cautions against raising the VEET targets
based on the outcomes of the recent
modelling.
3. Which greenhouse gas coefficient
should be used to quantify the reduction
in greenhouse gas emissions achieved by
the VEET scheme?
Updated marginal coefficient
3a. Please outline why you believe this
option is preferred, or why you selected
Alinta considers that updating the coefficient
using the same methodology as in 2007
"No response":
seems like a reasonable approach.
4. The Department has valued greenhouse
gas emissions reductions attributed to the
VEET scheme by adopting a carbon
valuation series that was produced by the
Federal Climate Change Authority as part
of its 2014 Targets and Progress
Review.Please outline whether you think
this approach is appropriate for valuing
greenhouse gas emissions reductions over
the period 2016 to 2050?
As discussed above, Alinta believes that the
avoided greenhouse gas values used in the
recent modelling are not sufficiently
tangible, certain or linked to the Victorian
economy to justify their inclusion in the
model, especially given that they are
incorporated with actual, measureable,
immediate benefits such as those associated
with avoided generation.
5. Is there a case to exclude any business
sector(s) from participation in the VEET
scheme?
No
5a. Please outline why this is your
preferred option, and comment on how
this should be implemented:
5b. Please outline why this is your
preferred option:
Alinta considers that maximising the pool of
energy consumers that can generate
certificates will help the program achieve its
objectives, and therefore supports the ability
of EREP customers to generate certificates.
6. Should the VEET scheme be amended
to better ensure support for low income
households?
No
6a. Please outline how the VEET scheme
could better support low income
households, and comment on why this
option should be preferred:
6b. Please outline why this is your
preferred option:
Alinta supports efforts to assist low income
households manage their energy costs;
however, these initiatives should be
undertaken independent of the VEET to
avoid over complicating the scheme.
7. In addition to expanding the range of
energy efficiency activities available in
VEET, should any other action be taken to
target participation by certain groups?
Yes
7a. Please outline the actions you believe
should be taken:
An inherent problem with energy efficiency
schemes such as VEET is that program costs
are shared amongst all energy consumers,
whilst the scheme’s benefits are largely
limited to energy consumers that generate
certificates, resulting in cross subsidies
between energy consumers. Alinta therefore
believes that monitoring of certificate
generation should continue to be undertaken
to ensure that the benefits of the scheme are
shared fairly amongst energy consumer
groups. For example, the Consultation Paper
states that “residential activities have to date
generated more than 90% of certificates”,
and therefore activity development should
probably focus on approving cost effective
energy efficiency activities that will be of
interest to the commercial and industrial
sectors.
7b. Please outline why no other action
should be taken, or why you selected "No
response":
8. Please suggest up to five activities that
should be prioritised for revision or
introduction to the VEET scheme. Please
outline why you believe these activities
should be prioritised.
Alinta is not directly involved in the
generation of certificates and therefore has
no specific suggestions as to activities that
should be prioritised for revision or
introduction. Alinta does, however, support
the introduction of a variety of viable new
energy efficiency activities to ensure the
VEET scheme can meet its objectives and to
avoid certificate shortfalls that would result
in unreasonably high costs for consumers.
9. Please suggest up to three changes
which should be made to improve the
VEET scheme. Please outline why you
believe these changes should be a priority.
Alinta believes that a single scheme covering
the NEM that aims to both improve energy
efficiency and reduce emissions, would be
the most efficient means of achieving these
objectives, both from a government
administration and business compliance
perspective. This approach is preferred given
that most energy retailers are national and
the cost, complexity and illiquidity created
by a number of unique schemes (all with
similar objectives) is overly burdensome on
consumers. Alinta therefore suggests that the
NEM jurisdictions work together to
implement a single scheme.