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Schemes, Charges and Targets

charges_exaplained 700x200Electricity charges explained.

We want to make it as easy as possible for you to manage your business energy account with us. Below we have included some explanations and some insights into your electricity charges.

Network charges

This refers to the costs involved to provide the energy infrastructure and transportation services for the transfer of electricity from the electricity generators, across the transmission and distribution networks, to your site. These costs are charged to AGL by the network service provider, and are passed through to customers. On average they account for about half of your bill and are annually reviewed by the network and adjusted to keep up with the costs of network maintenance and upgrades. The Australian Energy Regulator (AER) oversees the energy network businesses and monitors compliance within the National Electricity Law and Rules.

Review process. 

Network charges are generally reviewed annually or when special circumstances arise. From 1 July each year electricity users in New South Wales, Queensland, South Australia, ACT and Tasmania are likely to experience a change in the network component of their electricity bill. Victorian electricity users experience these changes effective 1 January each year.

Emissions and Renewable Energy Charges

Emissions and Renewable Energy Charges relate to the various charges applied by AGL in respect of regulated schemes focused on the electricity sector and aimed at promoting renewable generation, greenhouse gas emissions abatement and energy efficiency.

What is the Renewable Energy Target (RET)?

The Renewable Energy Target (RET) is split into two parts: The Large-scale Renewable Energy Target (LRET) and the Small-scale Renewable Energy Scheme (SRES). These national schemes create a financial incentive for investment in renewable energy sources through the creation and sale of certificates. Each of these schemes is described below.

LRET

The LRET stands for the Large-scale Renewable Energy Target. The Large-scale Renewable Energy Target is a national scheme that creates a financial incentive for the establishment and growth of renewable energy power stations, such as wind and solar farms, or hydro-electric power stations. It does this by legislating demand for Large-scale Generation Certificates (LGCs). Demand for LGCs is created by the LRET specifying the amount of renewable energy to be generated by renewable energy power stations, for every year up to 2030. Energy retailers such as AGL must procure these certificates and surrender them to the Clean Energy Regulator annually.

SRES

The SRES stands for the Small-scale Renewable Energy Scheme which creates financial incentives to install eligible small-scale installations such as solar water heaters, heat pumps, solar panel systems, small-scale wind systems, or small-scale hydro systems. It does this by legislating demand for Small-scale Technology Certificates (STCs), which energy retailers such as AGL must procure and surrender to the Clean Energy Regulator quarterly.

What impact does the RET have on my business?

AGL’s liability to surrender LGCs is determined by the Renewable Power Percentage (RPP), which is updated by the government every year. Similarly, AGL’s liability to surrender STCs is determined by the Small-scale Technology Percentage (STP), which is also set annually. These liabilities in turn drive the cost that AGL passes through to customers in form of the LRET charge and the SRES charge.

What is the Victorian Energy Efficiency Target (VEET) scheme?

The Victorian Energy Efficiency Target (VEET) is a Victorian Government initiative designed to make energy efficiency improvements more affordable, contribute to the reduction of greenhouse gases, encourage investment, employment and innovation in industries that supply energy efficiency goods and services. Energy retailers such as AGL must procure and surrender Victorian Energy Efficiency Certificates (VEECs) to satisfy their liabilities under the VEET, with costs passed through to Victorian customers. AGL applies this to customer bills in the form of a VEET charge.

What is the NSW Energy Saving Scheme (ESS)?

The NSW ESS is a scheme that aims to reduce electricity consumption in NSW by creating financial incentives for businesses to invest in energy saving activities. Energy retailers such as AGL must procure and surrender Energy Savings Certificates (ESCs) to satisfy their liabilities under the ESS, with costs passed through to NSW customers. AGL applies this to customer bills in the form of an ESS charge.

Other Charges

What are the AEMO Pool Fees?

The Australian Energy Market Operator (AEMO) charges AGL certain fees calculated per kWh of AGL customer usage for the cost of managing the national electricity market. These costs are passed through to customers.

What is the AEMO ancillary service charge?

The Australian Energy Market Operator (AEMO) obtains ancillary services to manage the physical risks to the electricity market. They pass through a per kWh charge to AGL to cover the cost of purchasing ancillary services to ensure the safety, security and reliability of the electricity network. This in turn is passed through by AGL to customers.

What are Approved Energy Loss Factors?

Energy losses occur on the transmission and distribution networks as a result of electrical resistance and the heating of conductors. Loss Factors are approved by the Australian Energy Regulator and published by AEMO each year in accordance with the National Electricity Rules, to ensure that more electricity is generated than is measured at the end user to account for these energy losses. Changes to Loss Factors have a flow on effect to your Energy Charges and Emissions and Renewable Energy Charges.

Gas charges explained.

We want to make it as easy as possible for you to manage your business energy account with us. Below we have included some explanations and some insights into your gas charges.

Contracted Customers

Energy Charges

What are CPI Charges?

CPI is a measure of changes, over time, in retail prices of a constant basket of goods and services across all groups, using the weighted average of eight capital cities, published by the Australian Bureau of Statistics. AGL will vary charges where a Reference Date is specified in Part 3, 4 or 5 of the Agreement for the Sale of Gas. Changes will take effect from the Review Date each year after the Reference Date and use the CPI Escalation Formula found in the Agreement. .

Network Charges

Network Charges are direct pass through charges from distributors and are approved by the relevant State Regulator or the Australian Energy Regulator as applicable. Gas users in New South Wales, Queensland and South Australia may experience a price change in the network components effective from 1 July each year. Victorian gas users may experience a price change in the network components effective from 1 January each year.

Regulated Charges (VIC customers only)

The Australian Energy Market Operator (AEMO) passes through several charges which contribute to the cost of operating in a contestable market. The Australian Energy Market Operator AEMO reviews its costs annually. Victorian customers may experience changes in these Regulated Charges effective from 1 July each year.

Other Charges

STTM Activity Fee (NSW QLD & SA customers only)

The Australian Energy Market Operator (AEMO) passes through a charge for the cost of managing the Short Term Trading Markets for wholesale gas in Queensland, NSW and South Australia. AEMO reviews this charge annually. Gas users in New South Wales, Queensland and South Australia may experience a change in this Charge effective from 1 July each year.

VEET Scheme (VIC customers only)

The Victorian Energy Efficiency Target (VEET) is a Victorian Government initiative designed to make energy efficiency improvements more affordable, contribute to the reduction of greenhouse gases, and encourage investment, employment and innovation in industries that supply energy efficiency goods and services.

Gazetted Customers

Energy Charges may change effective 1 January for Victorian customers and effective 1 July for customers in New South Wales and Queensland. Please click here then select the relevant state to view the current charges.

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