Greens are outraged that ERM Power, an Australian electricity company, has chosen to pay a penalty for not buying green energy certificates, rather than “supporting” green energy companies.
ERM Power criticised for choosing $123m fine over renewable energy certificates
Company says it’s cheaper to pay the penalty, but the move is branded as ‘undermining of the objectives’ of the renewable energy target.
The Clean Energy Regulator has castigated a major electricity company for choosing to pay a $123m penalty rather than build or contract new wind or solar power.
It said the move was “hugely disappointing” and customers would rightly be outraged to know the company wasn’t using money collected for investing in renewables in the proper way.
ERM Power has announced it will pay the regulator rather than buy certificates of green power generation to meet its renewable energy target obligations for 2016, citing tax reasons.
“We view the intentional failure to surrender certificates as a failure to comply with the spirit of the law and an undermining of the objectives of the scheme,” the regulator’s chair, Chloe Munro, said. “It’s our view that an investment in a growing industry is money better spent than a financial penalty that has no return.”
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In a statement to the stock exchange, ERM said the price for the large-scale generation certificates had more than doubled to nearly $90 each, while the penalty to the regulator was valued at $65 per certificate.
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What this sorry affair exposes is how hideously expensive green energy really is, and the impact forcing electricity companies to buy useless green energy is having on the cost of electricity.
That $123 million which ERM paid to the regulator, in a fair market driven regime, would never have left the pockets of electricity consumers.
ERM’s courageous decision to pay a penalty rather than buy outrageously overpriced green energy will hopefully help expedite the demise of this nasty scheme to divert cash into the pockets of green rent seekers.
Where are the courageous lawyers when we need them to challenge all these government diktats? High time Australia developed “Legal Foundations” as we have here in the U.S. to go after government excesses (across the board) in the courts. Forcing power companies to choose between outrageously expensive green so-called “investments” and paying a fine is environmental dictatorship of the first order!
Bill, the problem is that the US constitution set out to protect the people from a colonial “tyranny” like the British Empire. The Australian constitution is more about the technicalities of dividing Australia from the British empire. From a legal standpoint we inherited our legal framework from Britain. One of the downsides is that the “Crown” gets to decide when and if she can be challenged/sued. We don’t have a bill of rights or constitutional framework that prevents this sort of monopoly interference in a market.Best we could do is civil disobedience, if every coal generator did what ERM did AND refused to pay the fine then perhaps this could actually be overthrown in the courts, especially if the LGCs was found to be a “Penalty” or a “Tax”, because by law only a legitimate government here can legally levy a fine, or a Tax. Problem is that customers don’t trade LGCs so CUSTOMERS don’t have standing, the power companies need to do it, we have to pay our bills, so why should they care about us enough to tough out expensive court battles with the regulator?.
You talk about Obamacare for example, we have our own version of this where you get fined 0.5 % of your income if you don’t buy private health insurance. For many people the penalty is far less than the cost of the insurance so millions decide to use our public health system instead for which we contribute another percent or so.
Another way to look at the penalty/fine is that the company ERM Power Ltd (ASX code EPW) has 252 million issued shares – so they could have paid a 48c (AU$) dividend with the wasted money.
There is a company in Queensland employing 120 people that is about to close down because it cannot afford the price spikes in electricity, stories like this are unfolding across the country and now we know why.
The only people that could possibly have viewed this plan and thought “thats a good idea” would be those guided by faith, dogma and ideology not by fiscal planning.
Australia is on the verge of collapse from a manufacturing perspective, next to go will be the services sector and unemployment will sky rocket, we are not quite at our nadir but close. Eventually a leader will emerge to guide us out of this mess unfortunately we dont have any Ron Paul or Donald Trump look alikes in this country so we may have to wait for a while.
Who’ that guy from the Ann Rand books?
Crakar
My wife and I are seriously considering a move our of Oz for just this reason- too expensive because of government greed.
It’s ok crakar24, it’s all ok. The housing market will save us. Not sure how people on welfare can afford the median house price of about AU$1mil.
Ford and Holden announced in 2013 to shut shop in 2016/2017, citing labour and energy costs as the main drivers. That has come to pass. Now Toyota is considering shutting down too.
Did you mean Ayn Rand?
Well done them, good business decision. Pay the tax , no overheads , no BS, simples if thats the way it has to be.
Dont spend it on CO2 nonsense, it only encourages the bastards
The obvious solution is for the oz government to increase the size of the fines in the future!.
That way, it will be cost effective for the power company to buy the certs instead of the fine.
Do I need to add a /sarc?
“It said the move was “hugely disappointing” and customers would rightly be outraged to know the company wasn’t using money collected for investing in renewables in the proper way.”
More likely customers are outraged to know their energy bills rising.
This is a good example of a tax setting a cap on the certificates. Any responsible manager would pay the tax if it was less than the cost of the certificates. Two effects are likely now. First, the price of certificates will drop to slightly under $65 and second, the green industry will lobby to increase the penalty tax.
The logical response by those fed up with all this nonsense should be to lobby to reduce the penalty tax to something close to zero. To aid that effort the company should publish a cost to the average household of their share of the $123m penalty, as well as the additional cost to the household had they purchased certificates instead.
This is a perfect opportunity to publicize the cost per household of the green scheme because it’s not buried in obscure accounting numbers. The cost of green is right there for all to see. The company’s decision has made it obvious. This assumes, of course, that the company isn’t earning any green credits with its own operations.
BillTheGeo
January 26, 2017 at 1:38 pm said – [Where are the courageous lawyers when we need them to challenge all these government diktats? High time Australia developed “Legal Foundations” as we have here in the U.S. to go after government excesses]
Oh we have plenty public funded lawyers and some “legal foundations” in the Wide Brown Land but all I can think of fight for the GreenLeft. Also – your US based legal foundations are active downunder – for example fighting against our coal industry with “lawfare”.
UK generator SSE decided to pay £25m to break a government contract to keep a coal power station online because it was cheaper than the losses they would rack up in continuing with the supply contract. The end result both here and with ERM must be cheaper prices to customers.
“We view the intentional failure to surrender certificates as a failure to comply with the spirit of the law and an undermining of the objectives of the scheme,”
Not to state the obvious but the law allows either and leaves the choice to the company.