Carbon Tax Repeal

Repeal Legislation

The Clean Energy Legislation (Carbon Tax Repeal) Bill 2014 passed through the Senate on 17 July 2014 and received Royal Assent on the same date with an effective date of 1 July 2014.

The legislation includes the amendments negotiated by the Palmer United Party relating to price exploitation. Price exploitation will occur if a retailer (or other relevant entity) fails to pass through all of the its cost savings that are directly or indirectly attributable to the repeal of the carbon tax. Failure to pass through savings could result in significant penalties.

Implications for Energy Customers

The impact of the repeal of the carbon tax on business customers depends upon the nature of their energy supply contract. There are generally three types of energy supply contract:

Bundled Contracts (Small Business)

These contracts are for customers that typically use less than 160 MWh pa (or 100 MWh pa in Queensland). The tariffs under these contracts are “bundled” and include the applicable carbon tax-related charges.

For these contracts, it may take retailers some time to accurately calculate the savings from the repeal of the carbon tax and to modify their systems to pass through savings to customers. Customers may not see a change in their energy costs for some months, however, when savings are passed through, they will need to be backdated to 1 July 2014.

Unbundled Contracts – Carbon Exclusive

Larger customers (i.e. customers using more than 160 MWh pa, or 100 MWh pa in Queensland) typically have unbundled contracts, with separately identified charges for wholesale energy, network use of system, renewable energy, market fees and retailer fees.

Customers with carbon exclusive contracts will also have separately identified carbon-tax-related charges on their energy invoice. For these customers, the removal of the carbon tax component of the contract is relatively straight forward. These customers should see carbon charges removed from their bills in July or August 2014. If the removal of carbon charges is delayed for any reason, the eventual pass through of savings will need to be back-dated to 1 July 2014. Please note, all e4b customers are on carbon exclusive contracts.

Unbundled Contracts – Carbon Inclusive

For customers with carbon inclusive contracts, carbon charges are included in the wholesale energy rates under the contract (i.e. the peak, shoulder and off-peak c/kWh rates).

The position in relation to these contracts is much less clear, and will depend upon a range of factors including the specifics of the contract, the retailer’s contractual arrangements with energy wholesalers and interpretation of the new laws. It may take some time for these issues to be resolved.

It may be the case that customers with Carbon Inclusive contracts do not see any reduction in their costs until the expiry of their current energy supply contract.

What do I need to do?

e4b customers do not need to do anything at this stage. We will be checking your bills to make sure that they reflect the new legislation and if we identify over-charging, we will contact you to discuss a process for recovery of those costs.

If you are not a current e4b customer and you have a bundled carbon inclusive contract, please contact us to discuss possible options for securing a reduction in your costs. e4b will also keep you updated on the impact of the legislation as applied by your retailer and the market in general.

Contact Us

If you have questions regarding the carbon tax repeal, please contact e4b to discuss how we can assist.

Further information on the carbon tax repeal can be found at:

ACCC – Carbon tax price reduction obligation
Department of Environment – Repealing the Carbon Tax
Ashurst Lawyers: Greenhouse Update – 18 July 2014
Ashurst Lawyers: Greenhouse Update – 17 July 2014