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TEC Pipe Pty Ltd and Clean Energy Regulator - decision

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The Administrative Appeals Tribunal (AATA) affirmed a decision by the Clean Energy Regulator regarding a large-scale generation shortfall charge levied against TEC Pipe Pty Ltd. The central issue in the case was whether six electricity generators owned and operated by TEC Pipe at the Solomon Power Station constituted a "standby plant" as defined in the Renewable Energy (Electricity) Regulations 2000. The Solomon Power Station, located in the Pilbara, Western Australia, supplies electricity exclusively to the "Solomon Hub" mining area operated by FMG Solomon Pty Ltd.

The determination of whether these generators were "standby plant" was crucial because, according to Regulation 22, the capacity of a grid is the sum of all installed electricity generation capacity other than standby plant and privately owned domestic generators. If the generators were classified as standby plant, their capacity would not be included in the calculation of the Solomon Power Grid's capacity. TEC Pipe argued that each of its six generators produced less than 50GWh in each of the "immediately preceding 3 years" (prior to the 2014 assessment year) and therefore met the definition of standby plant in Regulation 3(1). TEC Pipe contended that because the grid's capacity would then be less than 100MW and not connected to a larger grid, its electricity acquisition in 2014 would not be a "relevant acquisition"under section 31(2)(a) of the Renewable Energy (Electricity) Act 2000 (the Act), and thus TEC Pipe would not be a "liable entity" subject to the large-scale generation shortfall charge under section 36(1).

However, the Clean Energy Regulator argued that for a generator to be considered "standby plant," it must have been installed and capable of producing electricity for each of those three preceding years. Since the six generators at the Solomon Power Station were commissioned in 2012, 2013, and 2014, the Regulator maintained they did not satisfy this condition. The Tribunal ultimately agreed with the Regulator's interpretation, holding that the phrase "immediately preceding 3 years" refers to the three calendar years before the assessment year and that the definition of "standby plant" implies the generators must have existed and been capable of producing for each of those years. Because the generators did not meet this criterion, they were not classified as "standby plant," and their capacity was included in the grid's total, which exceeded 100MW. Consequently, TEC Pipe's electricity acquisition was deemed a "relevant acquisition," making them a liable entity subject to the shortfall charge.

TEC Pipe Pty Ltd and Clean Energy Regulator

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TEC Pipe Pty Ltd and Clean Energy Regulator - decision

Policy instrument

Impacted group

Renewable energy

Fossil fuel

Greenhouse gas

Economic sector

Finance