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Determining your use amount formula

21 October 2020
RET

Before you apply for an emissions-intensive trade-exposed (EITE) exemption certificate it is important that you understand what activities are conducted on the site, electricity metering and other elements to calculate the amount of exemption in megawatt hours (MWh).

In your application you must define a 'use amount formula' that accurately represents the electricity that is a relevant acquisition of electricity (liable electricity) consumed for all EITE activities at a site. This is defined as the 'electricity use method advice' in the Renewable Energy (Electricity) Regulations 2001 (the Regulations). The calculation of the amount of exemption in MWh then represents your certifiable amount.

What to consider when determining a use amount formula

This information will help you determine a use amount formula for your site, including meter accuracy and gives some examples.

This information should be read in conjunction with the Renewable Energy (Electricity) Act 2000 (the REE Act) and the Regulations.

We encourage you to seek your own legal advice and support.

Step one - identify if you conduct one or more EITE activities

Identify if you conduct one or more EITE activities or make EITE products by undertaking eligible EITE activities.

Step two - identify if your EITE activity forms part of one or more activity groups

Where an EITE activity occurs over several sites, with an intermediate product transferred between the sites as part production of the final product, the sites may constitute an activity group.

The certifiable amount must be calculated for each site that is part of the activity group and a separate application form submitted for each site.

Where multiple activities are carried out at a site and are an activity group you need to:

  • Specify whether each activity is part of an activity group and which other sites form part of that activity group.
  • Confirm whether more than 80 per cent of electricity used at the site is used for the purposes of carrying out the activity and provide an estimate of the electricity used at each site for each activity.

Step three - identify electricity that can be included in your use amount formula

Electricity that can be considered for your certifiable amount of exemption is outlined below.

If you are an electricity customer

If you receive liable electricity from an electricity retailer you will consider:

  • liable electricity (relevant acquisitions of electricity) consumed at the national meter identifier (NMI) or customer billing meter, and
  • liable electricity from an onsite generator if you are billed for that electricity by the owner/operator of the generator.

You will also consider:

  • non-liable electricity consumed from your onsite generator if you own and operate the generator, and
  • that the ratio of liable to non-liable electricity is the same for EITE and non-EITE activities at the site.

See Acquisitions and network exemption for more details about liable electricity.

If you are a liable entity and an EITE company

If you are the same legal entity that is eligible for an exemption certificate and reports liable electricity as a liable entity under the legislation, you will consider the following:

  • liable electricity that you consume at the NMI/customer billing meter
  • liable electricity that you consume from an onsite generator if you are not the owner/operator of that generator
  • non-liable electricity consumed from your onsite generator if you are the owner/operator of that generator and you use the electricity within 1 kilometre or transmit the electricity on a dedicated line.
  • that the ratio of liable to non-liable electricity is the same for EITE and non-EITE activities at the site, and
  • transmission and distribution line loses.

See Acquisitions and network exemption for more details about liable electricity.

Step four - identify meters for the site

You must identify what meter(s) are required for the use amount formula at the site for the EITE activities.

If you identify a meter, whether alone or as part of a formula with other elements, you must provide details of the meter. This includes, as applicable the:

  • NMI for each meter within the meaning of the National Electricity Rules or applicable network rules
  • type of meter – e.g. billing, internal meter and whether it is an interval or accumulative meter
  • liable entity that supplies electricity to the meter, and
  • meter location.

If your meter reads kilowatt hours (kWh) you must convert this measurement to MWh for the purpose of the use amount formula. This ensures that your certifiable amount represents MWh. To do this you divide kWh by 1000.

You must consider whether metering data is appropriate to identify the use amount formula and provide an explanation as to why or why not.

Step five - identify adjustments from the prior application year

If applying for the first time skip this step, continue to step six.

If you have not requested an amendment to include adjustments to the previous nominated 12 month period certifiable amount then you must include adjustments to the coming nominated 12 month period.

Review your meter readings for the previous nominated 12 month period that represents the certifiable amount to see if they were adjusted. Include adjustments to the use amount formula for the current application year.

For example, your settlement data for your nominated 12 month period (2018 or 2019 certifiable amount) may have been adjusted by you, your electricity retailer, the Australian Energy Market Operator or other market operator. This adjustment could increase or decrease the electricity you consumed to produce the relevant product for that nominated 12 month period. You must report the adjustment by including it in the use amount formula for the nominated 12 month period that covers the current application year (2020 certifiable amount).

See amending an exemption certificate for more information.

Step six - identify other elements

Meters must be used rather in preference to other elements to calculate your certifiable amount. If necessary, you can include other elements in the use amount formula where it is considered that meters are insufficient to calculate the certifiable amount. In this case you must provide a use amount formula you consider is appropriate to identify the certifiable amount of electricity. You must explain:

  • what the other elements are calculating
  • why testing or factors have been used, and
  • why including other elements is considered to be appropriate.

Step seven - identify the use amount period

You can nominate the use amount period. Meter data for this year must reflect a:

  • whole calendar year, or
  • 12 month period that uses not more than three months of the year before the application year.

For example, your nominated 12 month period may start on 1 January to 31 December or from 1 October and end on 30 September.

Step eight - identify the use amount formula accuracy

We aim to issue a certifiable amount in MWh with a confidence interval of 95 per cent or higher.

A correctly reported accuracy includes the associated confidence interval with a default confidence interval of 95 per cent most commonly used.

This means that the certifiable amount, when calculated by the use amount formula, must have an accuracy of 5 per cent or 5000 MWh, whichever is lower. For example, a site with a calculated certifiable amount of:

  • 2000 MWh must be accurate to 100 MWh or less, which is 5 per cent of the exemption.
  • 2,000,000 MWh must be accurate to 5000 MWh or less, even though this only represents 0.25 per cent of the certifiable amount.

Meter accuracy

Meter accuracy is an important aspect of the data you use to calculate your certifiable amount.

Network billing meters are considered absolutely accurate. If the use amount formula only uses billing meters then the accuracy is 0 per cent and 0 MWh.

Non billing meters (this is check meters) are also included in the rules. For these meters you need to check the meter's specifications. Most non-billing meters have an accuracy between 0.5 and 2 per cent. Consider using the following options to ensure your calculation is as accurate as it can be:

Use amount formula examples

Meters should be used rather than using other elements to calculate your certifiable amount.

We have provided the following examples to help you to determine a use amount formula. The use amount formula must be reflective of your certifiable amount for the EITE activity conducted at the site.

The following examples are related to any eligible EITE activity.

Example one - consumption of electricity

A site has one billing meter and all the site's electricity is used for an EITE activity. This meter measures relevant acquisitions of electricity (liable electricity) supplied to the site, that is electricity consumed for the site to produce the EITE activity.

The certifiable amount for the EITE activity is the sum of the meter.

Example two - consumption of electricity minus exclusions (non-emission-intensive trade-exposed activities)

A site has two meters, conducts EITE activities and conducts non-EITE activities.

Meter one is a billing meter for the site that measures liable electricity supplied to the site, that is electricity consumed at the site. There is no non-liable electricity used at the site.

Meter two is an internal meter for the site that measures non-EITE activities, that is electricity that is not eligible for your certifiable amount.

The certifiable amount for the EITE activity is the sum of meter one minus meter two.

Only the accuracy of the non-billing meter needs to be considered, that is meter two. If most of the site's electricity is used for the non-EITE activity then an alternative formula just using meter one may be more accurate.


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