Company says it’s cheaper to pay the penalty, but the move is branded as ‘undermining of the objectives’ of the renewable energy target

This article is more than 3 years old

This article is more than 3 years old

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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ERM customers were charged prices that included a component to pay for extra renewable energy generation, she said. “We believe many customers would be disappointed to know that this money has not been used for the intended purpose.”

The renewable energy target works by allowing generators of renewable energy – both large-scale and small systems such as household solar panels – to create certificates for the electricity they generate.

Electricity retailers buy those certificates and have to surrender a certain number of them to the regulator each year as a way of ensuring they use an amount of renewable energy.

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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The company said it continued to meet other green power obligations and supported the principles of the renewable energy target.

Munro said that on the whole, the energy sector took a responsible approach to its obligations and there had been a recent uptick in new projects supported by large electricity retailers.

The head of the Clean Energy Council, Kane Thornton, said he thought ERM Power customers would be disappointed by the decision.

“Failure to meet obligations under the RET is like deciding to demolish a heritage-listed building and then paying the resulting fine,” Thornton said.

He said ERM Power was a major energy retailer that held contracts to supply power to the New South Wales and Queensland governments.

“These governments and other customers should be asking why ERM has made a decision not to meet their obligations or support renewable energy projects which will deliver major economic benefits to regional parts of Queensland and NSW,” he said.