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Clean Energy Regulator—Report for 2016-17


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ANNUAL REPORT

2016-2017

CLEAN ENERGY REGULATOR

Accelerating carbon abatement for Australia

2016-2017 Annual Report

2016-17 Annual Report | Clean Energy Regulator 2

ABOUT THIS REPORT

This report describes our performance from 1 July 2016 to 30 June 2017. As required, we report on results achieved against our intended purpose, outcome, deliverables and performance criteria detailed in our Portfolio Budget Statements 2016-17 and Clean Energy Regulator Corporate Plan 2016-20.

We also include details of our management and accountability structures, our workforce and financial performance, including audited financial statements.

As an aid to readers, our report includes a list of reporting requirements with page references, a glossary, abbreviations and an alphabetical index.

Our annual reports are available on our website www.cleanenergyregulator.gov.au.

Measuring our performance

We are committed to being transparent and accountable for the regulatory functions we undertake on behalf of government.

Our Portfolio Budget Statements 2016-17 outline the proposed allocation of resources to government outcomes and our annual appropriations and net cost services. In addition, it details the performance criteria for each program associated with the outcome to government. The Clean Energy Regulator Corporate Plan 2016-20 describes how we continue to develop our capabilities and measure our performance against our objectives and purpose. The corporate plan outlines performance indicators for each of our four objectives, which collectively demonstrate how effectively we have met our purpose.

Other public information

We release other information on our activities through updates, publications, media releases, speeches and reports.

This information is also available on our website, along with more details about our agency and the schemes we administer.

3 2016-17 Annual Report | Clean Energy Regulator

WHAT WE DO

Purpose

Accelerate carbon abatement for Australia.

Role

Administer national schemes for measuring, managing, reducing or offsetting Australia’s carbon emissions. The schemes work together to provide incentives, backed by robust data, to reduce greenhouse gas emissions and increase the use of renewable energy.

Objectives

• Engaged, active and compliant clients

• Efficient and effective administration

• A trusted, relevant and expert institution

• Secure and enduring infrastructure

Schemes

Emissions Reduction Fund and safeguard mechanism

National Greenhouse and Energy Reporting scheme

Renewable Energy Target

Image acknowledgement: Clean Energy Regulator. Straits mine, New South Wales, National Greenhouse and Energy Reporting scheme.

5 2016-17 Annual Report | Clean Energy Regulator

CONTENTS

Letter of transmittal 6

1 YEAR IN REVIEW 7

2016-17 highlights 8

Chair’s forewor

d 9

Milestones from our first five years 10

2 OVERVIEW 11

Roles and functions 12

Portfolio and Minister 15

Organisation structure 15

Performance framework 15

Portfolio budget statements 16

Corporate plan 17

3 ANNUAL PERFORMANCE STATEMENT 19

Introductory sta

tement 20

Our purpose 20

Performance results 21

Analysis of our performance against purpose 33

4 SCHEME PERFORMANCE 35

Emissions Reduction Fund 36

Safeguard mechanism 48

National Greenhouse and Energy Reporting scheme 50

Renewable Energy Target 59

5 MANAGEMENT AND ACCOUNTABILITY 71

Structure 73

Corporate governance 74

External scrutiny 87

Management of human resources 88

Purchasing and procurement 96

Information and communications technology 98

6 FINANCES 99

Financial overview 100

Summary of financial performance 101

Financial statements 106

7 APPENDICES 151

Appendix A: List of requirements 152

Appendix B: Other mandatory reporting 158

Appendix C: Regulator Members 160

Appendix D: Regulator meeting dates 163

Appendix E: Agency senior executive 164

Appendix F: Governance structure 166

Appendix G: Workforce profile 168

Appendix H: Agency resource statement 172

List of tables, figures and graphs 173

Glossary, abbreviations and acronyms 175

Alphabetical index 179

2016-17 Annual Report | Clean Energy Regulator 6

LETTER OF TRANSMITTAL

The Hon Josh Frydenberg MP Minister for the Environment and Energy Parliament House Canberra ACT 2600

Dear Minister

I am pleased to submit the Clean Energy Regulator 2016-17 Annual Report in accordance with subsection 40(1) of the Clean Energy Regulator Act 2011 for presentation to the Parliament.

The report covers the operations of the Clean Energy Regulator for the financial year ended 30 June 2017. It was prepared for the purposes of section 46 of the Public Governance, Performance and Accountability Act 2013 in accordance with the Public Governance, Performance and Accountability Rule 2014.

The report includes the Clean Energy Regulator’s audited financial statements as required by section 43 of the Public Governance, Performance and Accountability Act 2013.

As the Accountable Authority of the Clean Energy Regulator, I can also advise that no significant issues have been identified or reported to the Minister under paragraph 19(1)(e) of the Public Governance, Performance and Accountability Act 2013 in relation to non-compliance with the finance law in relation to the entity.

In addition, I certify that the Clean Energy Regulator has prepared fraud risk assessments and fraud control plans, has in place appropriate fraud prevention, detection, investigation and reporting mechanisms that meet the agency’s specific needs, and has taken all reasonable measures to appropriately deal with fraud.

Yours sincerely,

7

1 YEAR IN REVIEW

2016-17 highlights 8

Chair’s foreword 9

Milestones from our first five years 10

Image acknowledgement: Clean Energy Regulator. Capital Wind Farm, New South Wales, Renewable Energy Target.

2016-17 Annual Report | Clean Energy Regulator

2016-17 HIGHLIGHTS

YEAR IN REVIEW

1

8

314

projects issued with ACCUs

10.9m

megawatt hours generated or displaced by small-scale systems

2

enforceable undertakings entered into

334m

tonnes of scope 1 greenhouse gas emissions reported

98%

of entities submitted their energy and emissions report on time

45.6m tonnes of carbon abatement contracted at auction

101%

of contracted carbon abatement delivered

84

new Emissions Reduction Fund projects registered

210 659 small-scale systems validated

19.4m

megawatt hours of additional electricity generated by accredited renewable energy power stations 90

new renewable energy power stations accredited

338

baseline determinations under the safeguard mechanism

81%

of clients surveyed say our agency is doing a good job

100% required National Greenhouse and Energy Reporting data

published on time

15

investigations opened

and 37 closed

9 2016-17 Annual Report | Clean Energy Regulator

CHAIR’S FOREWORD

It is with pleasure I present the 2016-17 Annual Report for the Clean Energy Regulator that covers the achievements and outcomes of the past year.

The agency is well respected by stakeholders, clients and government. This is largely due to the stewardship of my predecessor Chloe Munro, and the hard work and dedication of the agency’s employees.

I would also like to acknowledge Jody Swirepik, who ably led the agency in the interim of Chloe’s departure and my arrival.

2016-17 has been a year of delivery. Each of the schemes we administer - the Emissions Reduction Fund, Renewable

Energy Target and National Greenhouse and Energy Reporting scheme - is in a transition.

Investment in renewable energy is at an all-time high and the Large-scale Renewable Energy Target of 33,000 gigawatt hours by 2020 is likely to be met. The Emissions Reduction Fund, after three years of operation, has supported a carbon abatement industry and, with more than 300 projects being issued with Australian carbon credit units this year, is attracting international interest. The National Greenhouse and Energy Reporting data underpinned the development of the safeguard mechanism baselines.

The maturity of our schemes mean we have been processing more transactions and are sharpening the focus on compliance. For the first time, we have published our compliance priorities on our website.

A number of reviews related to our business began in 2016-17. We contributed staff and skills to the Independent Review into Future Security of the National Electricity Market, the Department of the Environment and Energy’s climate policy review and the Climate Change Authority’s review of the Carbon Credits (Carbon Farming Initiative) Act 2011.

Our focus on delivery against objectives will continue. This means we have the capacity to deliver the objectives of new government carbon abatement programs. We have a highly skilled and agile workforce that has a proven track record in policy implementation. We have established systems and processes for reporting, auditing and crediting. We have good working relationships with our clients and an understanding of their business needs.

As an economic regulator, we look for what is best for our clients to achieve compliance with our schemes. Policy stability will deliver the foundation for long-term engagement in carbon abatement schemes.

I look forward to the year ahead, and the challenges and opportunities it will bring for the agency. It is an honour to lead an agency widely respected in industry and government, and to work alongside colleagues of such experience and skill.

David Parker AM Chair, Clean Energy Regulator (from 3 July 2017)

YEAR IN REVIEW

1

10

MILESTONES FROM OUR FIRST FIVE YEARS

2 APR 2012 Clean Energy Regulator established 1 JUL 2012

Carbon pricing mechanism introduced (repealed in July 2014) Carbon Farming Initiative introduced

28 FEB 2013 Clean Energy Regulator first publishes National Greenhouse and Energy Reporting data

YEAR IN REVIEW

1

17 JUN 2013

99.74% carbon price liable entities acquitted liability

9 JAN 2014 2 million small-scale systems installed

13 DEC 2014

Emissions Reduction Fund introduced replacing the Carbon Farming Initiative

23 APR 2015 First Emissions Reduction Fund auction held

1 JUL 2015

Renewable Energy Target revised from 41 000 gigawatt hours to 33 000 gigawatt hours by 2020

26 FEB 2016 Representation of more complete picture of Australia’s emissions profile with the expanded National Greenhouse and Energy Reporting data publication

1 JUL 2016

Safeguard mechanism introduced

31 MAR 2017 Inaugural Chair, Chloe Munro, completes five-year term

2 APR 2017

Clean Energy Regulator celebrates five year anniversary

30 JUN 2017 2.7 million small-scale systems installed on homes and businesses19.4 million megawatts hours of generation from 625 accredited power stations21.8 million tonnes contracted carbon abatement delivered with over 300 projects creating abatement

11 Image acknowledgement: Clean Energy Regulator. Australian Capital Territory

2 OVERVIEW

Roles and functions 12

Portfolio and Minister 15

Organisation structure 15

Performance framework 15

Portfolio budget statements 16 Corporate plan 17

2016-17 Annual Report | Clean Energy Regulator 12

ROLE AND FUNCTIONS

Purpose

Our purpose is to accelerate carbon abatement for Australia.

Functions

We administer the Australian Government’s legislated schemes that work together to measure, manage, reduce or offset Australia’s carbon emissions and encourage investment in renewable energy.

During 2016-17 we administered the:

• Emissions Reduction Fund. This voluntary scheme provides incentives for organisations and individuals to adopt new practices and technologies to reduce emissions or store carbon. The aim is to help Australia meet its emissions reduction targets. For more details, see page 36. The associated safeguard mechanism is designed to ensure emissions reductions are not offset by significant emissions increases above business as usual levels in other sectors of the economy. For more details, see page 48.

• National Greenhouse and Energy Reporting scheme. This scheme provides a national framework for reporting and disseminating company information about greenhouse gas emissions, energy production and energy consumption. This informs national policy and program development, and international reporting. The scheme also provides the reporting framework and historical greenhouse gas emissions data for the safeguard mechanism. For more details, see page 50.

• Renewable Energy Target. This scheme encourages the supply of additional electricity from renewable sources to reduce greenhouse gas emissions from the electricity sector. It provides an incentive for investment in renewable energy power stations and smaller systems, such as household solar, while ensuring the energy sources are ecologically sustainable. For more details, see page 59.

Responsibilities

We are responsible for:

• providing education and information on the schemes we administer

• assessing and crediting scheme participants

• collecting, analysing, assessing, providing and publishing information and data

• accrediting auditors for schemes we administer

• monitoring, facilitating and enforcing compliance with each scheme, and

• working with other law enforcement and regulatory bodies.

OVERVIEW

2

13 2016-17 Annual Report | Clean Energy Regulator

Objectives

Our objectives describe the type of regulator we aspire to be, the relationships we need to build, and our approaches to allocating resources, investment and operations.

Engaged, active and compliant clients

Participation in some of our schemes is voluntary. To be effective, the schemes need to have a strong base of clients who meet the requirements successfully and benefit from the schemes’ incentives. The schemes also impose obligations which must be met. We want our clients to be informed, capable and willing to comply.

Efficient and effective administration

As an agency operating for the public good we have an obligation to be efficient and effective. In response to the government’s deregulation agenda, we continuously look for ways to do things more efficiently for us and our clients.

A trusted, relevant and expert institution

To address the challenge of reducing carbon emissions, we need to operate for many years as a capable, trusted agency relied on to make sound decisions based on excellent knowledge and data.

Securing and enduring infrastructure

Our changing policy environment and client base, and the need to operate efficiently, mean that we need resilient and adaptable long-term processes and systems, as well as reliable data.

OVERVIEW

2

Values

We uphold the Australian Public Service values of impartiality, commitment to service, accountability, respect and ethical behaviour. We also value integrity, professionalism, responsiveness and empowerment. These value sets are complementary and underpin how we work with each other, as well as with clients, partners and stakeholders across government and industry.

2016-17 Annual Report | Clean Energy Regulator 14

OVERVIEW

2

Clients, partners and stakeholders

We work with:

• clients—scheme participants and their professional advisers

• partners—the Department of the Environment and Energy, other Commonwealth, state and territory regulatory bodies and law enforcement agencies, and

• stakeholders—Commonwealth departments and agencies, industry associations and other bodies.

For more details on partnerships, see page 85. For this year’s client survey findings, see page 85.

Legislation

The Clean Energy Regulator was established on 2 April 2012 as an independent statutory authority under the Clean Energy Regulator Act 2011. Climate change laws we administer include:

• Carbon Credits (Carbon Farming Initiative) Act 2011 (Emissions Reduction Fund and former Carbon Farming Initiative)

• Clean Energy Act 2011 (as kept in force by Clean Energy Legislation (Carbon Tax Repeal) Act 2014)

• National Greenhouse and Energy Reporting Act 2007 (National Greenhouse and Energy Reporting scheme and enabling legislation for the safeguard mechanism)

• Renewable Energy (Electricity) Act 2000 (Renewable Energy Target), and

• Australian National Registry of Emissions Units Act 2011.

15 2016-17 Annual Report | Clean Energy Regulator

OVERVIEW

2

PORTFOLIO AND MINISTER

During 2016-17 we operated within the Environment and Energy portfolio, reporting to the Minister for the Environment and Energy, the Hon Josh Frydenberg MP.

ORGANISATION STRUCTURE

The Clean Energy Regulator is a non-corporate Commonwealth entity for the purposes of the Public Governance, Performance and Accountability Act 2013.

The term Clean Energy Regulator refers to:

• the independent statutory authority, comprising the Chair and Members, that sets the strategic direction for our work in administering the schemes we are responsible for—referred to as the Regulator, and

• the agency that supports the Regulator—referred to as the agency.

Our agency executive staff report to the Chair, who is the head of our agency and the Accountable Authority as defined by the Public Governance, Performance and Accountability Act 2013.

Our organisation is structured into three divisions—Scheme Entry and Entitlement, Regulatory Obligation and Coordination and Business Operations—and the Office of the General Counsel. For more details, see Section 5: Management and accountability, from page 71.

PERFORMANCE FRAMEWORK

All Commonwealth entities are required to report on their performance under the Commonwealth performance framework. The core elements of the Commonwealth performance framework are portfolio budget statements, corporate plans and annual performance statements.

2016-17 Annual Report | Clean Energy Regulator 16

PORTFOLIO BUDGET STATEMENTS

Our outcome and our program structure are summarised below, from the Department of the Environment Portfolio Budget Statements 2016-171.

Outcome and program structure in 2016-17

OVERVIEW

2

Outcome 1

Contribute to a reduction in Australia’s net greenhouse gas emissions, including through the administration of market based mechanisms that incentivise reduction in emissions and the promotion of additional renewable electricity generation.

Strategies for delivering this outcome and achieving our purpose of accelerating carbon abatement for Australia:

• Invest in knowing our clients and communicating with them in a way that meets their needs. Use education and guidance materials to help clients understand how to participate in and comply with our schemes. Use targeted enforcement to act as a deterrent to non-compliance.

• Use risk-based and continuous improvement approaches to deploy agency resources to best effect. Maintain and enhance the skills and expertise of our people and encourage innovation.

• Build and sustain the Clean Energy Regulator’s reputation and impact through sound stakeholder relationships and partnerships and authoritative data. Promote the value of our assets, the quality of our results and the strength of our capabilities.

• Ensure our infrastructure is reliable, resilient and able to be reused in response to policy change. Protect the integrity and utility of the core elements of our schemes, including greenhouse and energy data, contracts, units and certificates.

Program 1.1

Effective and efficient regulation of greenhouse and energy reporting and market based schemes that contribute to a reduction in Australia’s net greenhouse gas emissions and promote investment in renewable energy.

Performance criteria

Our agency performance criteria is outlined in the Portfolio Budget Statements 2016-17 and also articulated in the Clean Energy Regulator Corporate Plan 2016-20.

1. www.environment.gov.au/about-us/publications/budget/portfolio-budget-statements-2016-17

17 2016-17 Annual Report | Clean Energy Regulator

CORPORATE PLAN

The Clean Energy Regulator Corporate Plan 2016-20 outlines our purpose, objectives, strategic priorities and performance indicators. It discusses our operating context and capabilities and details our regulatory posture, which embeds our risk appetite into our approach to compliance, education and enforcement.

We have implemented a key performance indicator (KPI) framework that provides the basis for measuring our agency’s performance against our objectives and purpose. The KPI framework contains a set of underlying principles that reflect the agency’s core functions as a regulator, within which the KPIs were developed to report on our performance. This approach provides flexibility to respond to changes in our administered schemes and allows us to measure our performance through a range of qualitative and quantitative measures.

ANNUAL PERFORMANCE STATEMENT

The annual performance statement reports on our key performance indicators in both our Portfolio Budget Statements 2016-17 and Clean Energy Regulator Corporate Plan 2016-20 as required under Section 39 of the Public Governance, Performance and Accountability Act 2013.

For more details of results achieved against our purpose, objectives and performance indicators, see Section 3: Annual Performance statement from page 19 and Section 4: Scheme performance from page 35.

For more details about our planning and reporting, see Section 5: Management and accountability from page 71.

OVERVIEW

2

Image acknowledgement: Clean Energy Regulator. Snowtown Wind Farm, South Australia, Renewable Energy Target.

19

3

ANNUAL PERFORMANCE STATEMENT

Introductory statement 20

Our purpose 20

Performance results 21

Analysis of our performance against purpose 33

Image acknowledgement: Clean Energy Regulator. Vegetation project, Emissions Reduction Fund.

2016-17 Annual Report | Clean Energy Regulator 20

INTRODUCTORY STATEMENT

I, David Parker AM, as the accountable authority of the Clean Energy Regulator, present the agency’s 2016-17 annual performance statement, as required under paragraph 39(1) (a) of the Public Governance, Performance and Accountability Act 2013 (PGPA Act). In my opinion, this annual performance statement is based on properly maintained records, which accurately reflect the performance of the entity, and comply with subsection 39(2) of the PGPA Act.

David Parker AM Chair, Clean Energy Regulator

September 2017

OUR PURPOSE

Accelerating carbon abatement for Australia

Our purpose statement distils our agency’s reason for being. Carbon abatement is a unifying theme that runs through everything we do. Our activities are all connected to measuring, managing, reducing or offsetting Australia’s carbon emissions.

As outlined in our Corporate Plan 2016-20 we define four objectives that describe the type of regulator we aspire to be, the relationships we need to build, and our approaches to allocating resources, investment and operations that underpin the achievement of our purpose. Our performance is laid out against these four objectives. We assess our performance against these objectives. Collectively, the performance indicators for each of our four objectives measure our performance against our purpose.

ANNUAL PERFORMANCE STATEMENT

3

21 2016-17 Annual Report | Clean Energy Regulator

PERFORMANCE RESULTS

Objective: Engaged, active and compliant clients

Participation in some of our schemes is voluntary. To be effective, the schemes need to attract and retain a strong base of clients who meet the requirements successfully and benefit from the schemes’ incentives. The schemes also impose obligations which must be met. We want our clients to be informed, capable and willing to comply.

To measure our performance against this objective, we consider our engagement, guidance and communications activities as well as activities related to collecting information for registration and accreditation. We report our performance against the following specific key performance indicators.

ANNUAL PERFORMANCE STATEMENT

3

Performance indicator Level of client satisfaction with the engagement and guidance provided

Source Corporate Plan 2016-20

2016-17: 76 per cent of clients surveyed agreed or strongly agreed that the Clean Energy Regulator effectively engages clients.

2015-16: 76 per cent of clients surveyed agreed or strongly agreed that the Clean Energy Regulator effectively engages clients.

We use a client survey as the primary indicator of how effective our agency’s engagement, guidance and communications activities are. Feedback from these surveys is used to improve our approach to engaging with clients.

In 2016 a total of 329 clients responded to our annual client survey. Key results have remained consistent from the 2015 survey with 76 per cent of respondents again agreeing we effectively engage with clients. As with last year, more than 90 per cent of respondents reported satisfaction with our subscription email service.

Other results indicate we have matured across the board as an agency, with 30 per cent of clients reporting that it has become ‘much easier’ to deal with the agency over the last 12 months.

Clients who participated in workshop sessions we organised rated them particularly highly, with 95 per cent reporting they were an effective way to get the information they needed. Our communication channels - direct and subscriber emails, website and telephone enquiries - were used by 96 per cent of our clients.

For more details about our client survey see page 85.

2016-17 Annual Report | Clean Energy Regulator 22

ANNUAL PERFORMANCE STATEMENT

3

Performance indicator Proportion of client contacts resolved at first interaction

Source Corporate Plan 2016-20

2016-17: 82 per cent of client contacts via phone were resolved at first interaction.

2015-16: 78 per cent of client contacts via phone were resolved at first interaction.

We have a dedicated in-house contact centre to support clients. The proportion of client contacts resolved at first contact is considered to be a good indicator of the efficiency of handling enquires and the quality of our service to clients.

The proportion of client contacts resolved at first contact has continued to increase to 82 per cent in 2016-17 up from 78 per cent in 2015-16 and 74 per cent in 2014-15. We also seek qualitative feedback from clients on our contact centre’s performance through our client survey.

The result demonstrates the continuous growth in our contact centre’s capability and knowledge of our schemes.

For more details about our contact centre see page 84.

Performance indicator Volume of Australian Carbon Credit Units (ACCUs) issued

Source Corporate Plan 2016-20

2016-17: A total of 13 151 991 ACCUs were issued under the Emissions Reduction Fund.

2015-16: A total of 10 713 498 ACCUs were issued under the Emissions Reduction Fund.

The number of ACCUs we issue indicates the level of carbon abatement that has been achieved and therefore the participation of clients in the Emissions Reduction Fund. One ACCU is issued for each tonne of carbon dioxide equivalent (CO2-e) stored or avoided by an Emissions Reduction Fund project.

The volume of ACCUs issued in 2016-17 has increased by 23 per cent from 2015-16, bringing the overall total since 2012-13 to 39 320 484.

Of the 692 projects registered under the scheme, 314 claimed ACCUs during 2016-17. Over 60 per cent of ACCUs were issued to vegetation projects and over 24 per cent to waste projects. ACCUs were also issued to savanna burning, energy efficiency and agriculture projects.

For more details about ACCUs issued under the Emissions Reduction Fund see page 40.

An interactive map on our website also provides details of the Emissions Reduction Fund.

23 2016-17 Annual Report | Clean Energy Regulator

ANNUAL PERFORMANCE STATEMENT

3

Performance indicator Volume of renewable energy certificates registered

Source Corporate Plan 2016-20

2016-17: A total of 37 793 726 renewable energy certificates were registered2

through the Renewable Energy Target’s Small-scale Renewable Energy Scheme and Large-scale Renewable Energy Target.

2015-16: A total o

f 31 272 092

renewable energy certificates were registered through the Renewable Energy Target’s Small-scale Renewable Energy Scheme and the Large-scale Renewable Energy Target.

The number of renewable energy certificates registered is an indicator of the volume of electricity generated from renewable energy sources under the Renewable Energy Target.

This indicates the level of participation of clients in the Renewable Energy Target. One large-scale generation certificate represents one megawatt hour of additional electricity generated by an accredited renewable power station. One small-scale technology certificate equates to one megawatt hour of electricity generated or displaced (reduced demand from the electricity grid).

• Small-scale Renewable Energy Scheme

A total of 18 561 781 small-scale technology certificates were registered in 2016-17. This is an increase of 20.9 per cent compared to 2015-16.

Solar photovoltaic installations accounted for 90 per cent of the small-scale technology certificates registered in 2016-17, while solar water heaters (including air source heat pumps) accounted for 10 per cent, and wind and hydro systems combined accounted for less than one per cent of total registered small-scale technology certificates.

For more details about the Small-scale Renewable Energy Scheme and small-scale technology certificates see pages 63-67.

• Large-scale Renewable Energy Target

A total of 19 231 945 large-scale generation certificates were registered in 2016-17. This reflects 19 231 945 megawatt hours of additional electricity generated by accredited renewable energy stations and is an increase of 21 per cent on the number of large-scale generation certificates registered in 2015-16.

For more details about the Large-scale Renewable Energy Target and large-scale generation certificates see pages 60-61.

2 Registered certificates are certificates which have been created, validated and have their fee item paid.

2016-17 Annual Report | Clean Energy Regulator 24

ANNUAL PERFORMANCE STATEMENT

3

Performance indicator Proportion of applications processed within statutory timeframes

Source Corporate Plan 2016-20

2016-17: Across all schemes, we processed 99.1 per cent of applications within statutor

y or administrative

timeframes. Where statutory timeframes do not exist, we apply internal administrative timeframes for application processing.

2015-16: Across all schemes, we processed 99.6 per cent of applications within statutory or administra

tive

timeframes. Where statutory timeframes do not exist, we apply internal administrative timeframes for application processing.

The proportion of scheme applications processed within statutory or administrative timeframes is an indicator of our agency’s efficiency, ensuring that we meet our statutory or administrative timeframes.

• Emissions Reduction Fund

We assessed 100 per cent of auction qualification and auction registration applications, that met the requirements, prior to the relevant auction.

We assessed 100 per cent of contract delivery invoices, that met the requirements, within the 20 days provided for under the contract.

We processed 100 per cent of project applications within 90 days. The volume of project applications processed during 2016-17 decreased by over 76 per cent compared to 2015-16 from 368 to 88.

We processed 99 per cent of project crediting applications within 90 days. The volume of project crediting applications processed during 2016-17 increased by over 61 per cent compared to 2015-16 from 299 to 483. Adjustments to processes were made to account for the increased number of applications resulting in a small number of applications being processed outside of the 90 day timeframe.

For more details about the Emissions Reduction Fund see pages 36-47.

• National Greenhouse and Energy Reporting scheme

We assessed and processed 100 per cent of National Greenhouse and Energy Reporting applications within the 30 day administrative timeframe. The majority of applications received were from new controlling corporations seeking registration under the National Greenhouse and Energy Reporting Act 2007 (mainly due to corporate restructures) and deregistrations within 90 day administrative timeframe (due to either corporate restructures or entities falling below reporting thresholds). We also received a small number of registrations of responsible emitters (under the safeguard mechanism) which were processed within the 60 day statutory timeframe. The majority of these applications are expected in 2017-18.

For more details about the National Greenhouse and Energy Reporting scheme see pages 50-58.

• Small-Scale Renewable Energy Scheme

The volume of applications processed during 2016-17 increased slightly. We processed 100 per cent of applications received for registration as a registered agent, registered person or general account holder within the six week administrative timeframe.

For more details about the Small-scale Renewable Energy Scheme see pages 63-67.

25 2016-17 Annual Report | Clean Energy Regulator

ANNUAL PERFORMANCE STATEMENT

3

• Large-scale Renewable Energy Target

The volume of applications processed during 2016-17 increased by 25 per cent from 72 in 2015-16 to 90 in 2016-17. We processed 100 per cent of applications for power station accreditation under the Large-scale Renewable Energy Target within the six week administrative timeframe.

For more details about the Large-scale Renewable Target see pages 60-70.

• Australian National Registry of Emissions Units (ANREU)

The volume of applications processed during 2016-17 increased by nearly six per cent, from 158 in 2015-16 to 167 in 2016-17. We processed 94.6 per cent of ANREU account applications within the statutory timeframe of 90 days in 2016-17. Applications to replace an authorised representative for an existing ANREU account continue to represent the majority of ANREU-related applications. The remaining 5.4 per cent of applications were progressed shortly after the statutory timeframe.

For more details about the ANREU see page 47.

• Safeguard mechanism (calculated baselines)

Six out of a total of seven applications for calculated baselines were processed within the statutory timeframe, within 60 days of receipt of an application or the applicant’s response to a request for information required to finalise assessment of the application. One application was processed just outside the statutory timeframe.

For more details about the safeguard mechanism see pages 48-49.

2016-17 Annual Report | Clean Energy Regulator 26

ANNUAL PERFORMANCE STATEMENT

3

Objective: Efficient and effective administration

As an agency operating for the public good, we have an obligation to be efficient and effective. In response to the government’s regulatory reform agenda, we continuously look for ways of doing things more efficiently for us and our clients.

To measure our performance against this objective we consider our business operations, people services, investigations and enforcement, and report our performance against the following specific key performance indicators.

Performance indicator Positive assessments of the agency’s performance under the Regulator Performance Framework

Source Corporate Plan 2016-20

2016-17: The first self-assessment report of our agency’s performance under the Regulator Performance Framework was published in December 2016. We achieved positive ratings against each of the specific measures under the Regulator Performance Framework.

2015-16: The first self-assessment report of our agency’s performance under the Regulator Performance Framework will be published by 31 December 2016.

As a regulator, we work to ensure that we uphold the Government’s principles for regulatory practice to foster good relationships with our clients. A positive assessment against this Regulatory Performance Framework helps to confirm the effectiveness of our agency’s processes and practices.

We published our first annual self-assessment report, covering 2015-16, on our website on 15 December 2016. The self-assessment report demonstrated achievements against each measure under the Regulator Performance Framework. The Chief Executive Officers of the Carbon Markets Institute, the Australian Industry Greenhouse Network and the Clean Energy Council validated our report. The majority of their responses either strongly agreed or agreed that the material in the report demonstrated performance against the measures.

We used the self-assessment process as a means of assessing how we can continue to improve our regulatory performance, and identified 20 opportunities for continuous improvement or ongoing focus.

For more details about our Regulator Performance Framework self-assessment report see our website.

27 2016-17 Annual Report | Clean Energy Regulator

Performance indicator No significant breaches of government administrative, legal and policy requirements

Source Corporate Plan 2016-20

2016-17: No significant breaches of government, administrative, legal or policy requirements.

2015-16: No significant breaches of government, administrative, legal or policy requir

ements.

This performance measure indicates our agency’s compliance with governance and control frameworks ensuring that we operate within the Australian Government administrative, legal and policy boundaries.

For 2016-17, there were no significant breaches of government, administrative, legal or policy requirements.

For more details about our compliance approach see Section 5: Management and accountability on page 71.

Performance indicator Level of client satisfaction with staff interactions

Source Corporate Plan 2016-20

ANNUAL PERFORMANCE STATEMENT

3

2016-17: 79 per cent of clients surveyed were satisfied with their interactions with our staff

.

2015-16: 84 per cent of clients surveyed were satisfied with their interactions with our staff.

We survey our clients as an indicator of client satisfaction with staff interactions and to assess the effectiveness of agency staff in supporting our clients. This helps us to evaluate service delivery and identify areas for future staff development.

Our 2016 client survey found 79 per cent of clients were satisfied or very satisfied with their interactions with the agency’s staff. This has decreased slightly from the 2015 survey results which recorded an 84 per cent satisfaction rate.

Clients reported high ratings for personal attributes of staff (including that our staff are approachable) and for process attributes of staff, particularly that clients don’t have to repeat themselves with each person they speak to. The slight decrease in satisfaction was attributed to a decline in overall satisfaction from Emissions Reduction Fund clients. We have taken actions to address this feedback including an organisational restructure and a move to online forms to address particular areas of concern raised within the survey.

For more details about our client survey see page 85.

2016-17 Annual Report | Clean Energy Regulator 28

ANNUAL PERFORMANCE STATEMENT

3

Performance indicator Proportion of successful court actions

Source Corporate Plan 2016-20

2016-17: No court actions were finalised. 2015-16: 100 per cent of court actions completed in 2015-16

were successful.

The proportion of successful court actions we undertake is used to assess the effectiveness of our agency’s investigations and enforcement functions.

The Commonwealth Director of Public Prosecutions (CDPP) has carriage of two matters from our agency. Neither were brought before a court during the reporting period. In one case, this is due to the defendant avoiding court attendance notices. A warrant for the defendant’s arrest has been issued. In the other, the matter was under assessment by the CDPP during the period and following requests for additional material to be provided to them, the matter is expected to be resolved in 2017-18.

For more details about our investigations see page 79.

Performance indicator Proportion of enforceable undertakings completed on time

Source Corporate Plan 2016-20

2016-17: 0 per cent (0 of 1) of enforceable undertakings were completed on time.

2015-16: 50 per cent of enforceable undertakings were completed on time.

This performance measure reports on our clients’ completion of enforceable undertakings in cases of potential or actual non-compliance with our schemes.

There was only one enforceable undertaking due for completion in the reporting period, but it was completed outside the required timeframes. The Clean Energy Regulator was aware of the reasons for the delay and no further action was taken.

Three enforceable undertakings remain open (initiated in 2013-14) but not yet completed. In all three cases, the relevant parties are no longer active in the industry and the offending behaviour has stopped.

While enforceable undertakings are not always fully completed, or completed on time, they are an effective tool to stop the offending behaviour, to ensure remedial action is taken and to send an indication to industry and consumers that inappropriate behaviour will not be tolerated. They remain an important tool in setting standards of acceptable behaviour.

For more details about our investigations see page 79.

29 2016-17 Annual Report | Clean Energy Regulator

Objective: A Trusted, relevant and expert institution

To address the challenge of reducing carbon emissions, the Clean Energy Regulator will need to operate for many years as a capable trusted agency, relied upon to make sound decisions based on excellent knowledge and data.

To measure our performance against this objective, we consider activities related to monitoring and encouraging compliance and providing market services functions. We report our performance against the following specific key performance indicators.

Performance indicator Proportion of contracted abatement delivered

Source Corporate Plan 2016-20

Portfolio Budget Statements 2016-17

ANNUAL PERFORMANCE STATEMENT

3

2016-17: 101 per cent of carbon abatement contracted under the Emissions Reduction Fund was delivered as originally scheduled.

2015-16: 93 per cent of carbon abatement contracted under the Emissions Reduction Fund was delivered as originally scheduled.

The proportion of carbon abatement delivered against the original schedule of projects provides an indicator of the effectiveness of the agency’s administration of the Emissions Reduction Fund and its contract management function.

During 2016-17, 13 294 184 Australian carbon credit units were delivered compared to the original delivery schedule of 13 217 245 Australian carbon credit units (slightly over 100 per cent).

Participants are permitted to re-schedule deliveries with our agreement, and the net position for 2016-17 reflects some early deliveries balanced by some deliveries that have been scheduled to occur later.

A total of 21 828 317 Australian carbon credit units have been delivered under the Emissions Reduction Fund to 30 June 2017.

For more details about the Emissions Reduction Fund see pages 36-47.

2016-17 Annual Report | Clean Energy Regulator 30

ANNUAL PERFORMANCE STATEMENT

3

Performance indicator Compliance levels by regulated and liable entities

Source Corporate Plan 2016-20

Portfolio Budget Statements 2016-17

2016-17: 99.6 per cent of regulated and liable entities were compliant. 2015-16: 99.1 per cent of regulated entities were compliant.

The level of compliance by regulated and liable entities with statutory obligations is an indicator of performance related to our agency’s engagement, education and guidance approach and materials.

• National Greenhouse and Energy Reporting scheme

A total of 98.1 per cent of expected reporters submitted their 2015-16 emissions and energy reports by the statutory deadline of 31 October 2016. All outstanding reporters (15 in total) submitted their reports within four days of the deadline, resulting in 100 per cent reporting for the period.

Of the reporters that failed to meet the statutory deadline, none had previously submitted a late report. We will continue to monitor compliance of these reporters and recommend compliance action for future breaches of the legislation.

For more details about the National Greenhouse and Energy Reporting scheme see pages 50-58.

• Renewable Energy Target

A total of 97.5 per cent of liable entities submitted their energy acquisition statements for 2016 by the statutory deadline of 14 February 2017.

A total of 93.8 per cent of liable entities met their Large-scale Renewable Energy Target and Small-scale Renewable Energy Scheme certificate liability through a combination of surrendering certificates and using carried-forward surplus from over-surrender in earlier years.

Of the 22 liable entities that incurred a shortfall in relation to 2016, 15 were required to pay shortfall charges.

For more details about the Renewable Energy Target see pages 59-70.

• Emissions Reduction Fund

Contract compliance activity was focussed on education and liaison with contract holders. This contributed to contracts delivering ahead of expected abatement.

For more details on the Emissions Reduction Fund see pages 36-47.

31 2016-17 Annual Report | Clean Energy Regulator

Performance indicator Integrity and level of usage of National Greenhouse and Energy Reporting scheme data

Source Corporate Plan 2016-20

2016-17: Reporters resubmitted a total of 92 National Greenhouse and Energy Reporting scheme reports for prior years.

2015-16: Reporters resubmitted a total o f 90 National Greenhouse

and Energy Reporting scheme reports for prior years.

This performance measure indicates the integrity and level of demand for data we publish. Data is resubmitted to address inaccuracies identified by us or by our clients. Resubmission assists with ensuring the integrity of National Greenhouse and Energy Reporting scheme data.

• Integrity of National Greenhouse and Energy Reporting data

A total of 809 National Greenhouse and Energy reports were submitted in relation to the 2015-16 reporting year. Of these, 54 reports were subsequently resubmitted during 2016-17 to correct data errors. An additional 38 reports covering previous years were also resubmitted.

• Level of usage of National Greenhouse and Energy Reporting data

During 2016-17 a total of 2103 energy and emissions reports were downloaded by Commonwealth and state/territory based users. The peak period for report downloads during 2016-17 was quarter three (January to March), due to the release of the 2015-16 National Greenhouse and Energy Reporting scheme data set on 28 February 2017. In addition, we made 22 one-off disclosures of National Greenhouse and Energy Reporting data to Commonwealth and state/territory based agencies.

For more details on the National Greenhouse and Energy Reporting scheme see pages 50-58.

Performance indicator Level of client satisfaction with registries and reporting systems

Source Corporate Plan 2016-20

ANNUAL PERFORMANCE STATEMENT

3

2016-17: 78 per cent of clients surveyed were satisfied with our registries and reporting systems.

2015-16: We did not report on this measur e in 2015-16 because this

question was not part of our client survey that year.

To gauge the level of satisfaction and seek feedback from our clients on our registry, we included this additional reporting metric in our annual client survey for 2016 for the first time.

Our 2016 client survey found 78 per cent of clients were satisfied or very satisfied with the agency’s registries and reporting systems. We will continue to use feedback from these surveys to improve client usability.

For more details about our REC Registry see page 70.

2016-17 Annual Report | Clean Energy Regulator 32

Objective: Secure and enduring infrastructure

Our changing policy environment and client base and the need to operate efficiently mean that we need resilient and adaptable long-term processes and systems as well as reliable data.

To measure our performance against this objective, we consider activities related to the provision of ICT services, and report our performance against the following specific key performance indicators.

ANNUAL PERFORMANCE STATEMENT

3

Performance indicator Availability of online systems

Source Corporate Plan 2016-20

2016-17: Our online systems had an average availability of 98.7 per cent, including scheduled downtimes.

2015-16: Our online systems had an a verage availability of 98.5

per cent, including scheduled downtimes.

The availability of our online systems indicates our agency’s ability to create and foster client confidence in the market through the reliable operation of our systems and registries.

We currently administer five online systems for use by our clients and stakeholders, including our website, the Australian National Registry of Emissions Units (ANREU), the Emissions and Energy Reporting System, the REC Registry and the Client Portal.

These systems fell below 99 per cent average availability in Quarter one of 2016-17 due to an unplanned outage of the ANREU system, and in Quarter four of 2016-17 due to an unplanned outage of our externally provided internet gateway. Both outages were promptly managed and we implemented permanent corrective actions following post incident reviews.

33 2016-17 Annual Report | Clean Energy Regulator

Performance indicator Online systems are compliant with Australian Government standards

Source Corporate Plan 2016-20

ANNUAL PERFORMANCE STATEMENT

3

2016-17: All online systems we administer complied with Australian Government standards.

2015-16: All online systems we administer complied with Australian Government standards.

Our compliance with Australian Government Standards is an indicator of our agency’s ability to deliver quality ICT systems to our clients and maintain compliance with the Government’s requirements.

As noted on page 94, we have maintained compliance with the mandatory requirements of the Protective Security Policy Framework and will report such details for 2016-17 in our compliance report to the Minister.

We are implementing an iterative risk-based assessment of compliance with the Protective Security Policy Framework and Information Security Manual through a series of independent assessments focusing on maintaining agency compliance with changes to mandatory and recommended cyber security controls.

For more details about our Security Management Committee see Appendix F, for more details about our security approach see page 94, and for more details about our information and communications technology see page 98.

ANALYSIS OF OUR PERFORMANCE AGAINST PURPOSE

For 2016-17 we continued to accelerate carbon abatement in Australia though the administration of our schemes. During the year more than 45.6 million tonnes of carbon abatement were contracted. In addition, 19.4 million megawatt hours of electricity was generated by large-scale renewable power stations.

The performance of our individual schemes as outlined in the following sections, demonstrates their contribution to our purpose of accelerating carbon abatement for Australia.

Image acknowledgement: Clean Energy Regulator. Vegetation project, Gunning, New South Wales, Emissions Reduction Fund.

35

4 SCHEME PERFORMANCE

Emissions Reduction Fund 36

Safeguard mechanism 48

National Greenhouse and Energy Reporting scheme 50 Renewable Energy Target 59

Image acknowledgement: Clean Energy Regulator. Snowy Hydro, New South Wales, Renewable Energy Target.

2016-17 Annual Report | Clean Energy Regulator 36

This section reports on performance reporting included in the annual performance statement in section 3. It includes additional reporting points and analysis to that provided in the annual performance statement.

EMISSIONS REDUCTION FUND

Context

The Emissions Reduction Fund is a key element of the Australian Government’s carbon abatement policy. The scheme was introduced in late 2014, following the repeal of the carbon pricing mechanism. It provides an incentive for industry, businesses, land owners, state, territory and local governments and other organisations to adopt new practices and technologies to reduce emissions or store carbon. The Emissions Reduction Fund is an expansion of the former Carbon Farming Initiative, encouraging participation across the whole economy.

The Emissions Reduction Fund has three elements.

The first is crediting. We issue one Australian carbon credit unit (ACCU3 ) f or each tonne of carbon abatement achieved through an Emissions Reduction Fund project using an approved method. Scheme participants can sell these A

CCUs to generate income, either

to the government through a carbon abatement contract or on the secondary market4.

The second element is pur

chasing. We enter into contracts with participants, agreeing to purchase the ACCUs earned through eligible carbon abatement activities. To date this has been through reverse auctions, where we purchase the least cost abatement offered.

The third element is the safeguard mechanism. This is designed to ensure emissions reductions are not offset by significant emissions increases above business as usual levels in other sectors of the economy.

We are joint stewards of the Emissions Reduction Fund with the Department of the Environment and Energy. The Department’s role is to set policy direction and develop methods for project activities, as well as manage other legislative matters. Our role is to administer the scheme including register projects, issue ACCUs, process reports and audits, manage contracts and ensure compliance.

The Emissions Reduction Fund is making a significant contribution to Australia’s international emissions reduction commitments.

SCHEME PERFORMANCE

4

3. See Glossary for definition. 4. See Glossary for definition.

2016-17 Annual Report | Clean Energy Regulator

Focus in 2016-17

This year, our focus for the Emissions Reduction Fund moved from scheme implementation to a stronger emphasis on contract management, monitoring and compliance.

The scheme was designed to allow for easy entry, with measures in place to ensure compliance and eligibility once projects are running. An example is conditional registration of projects, where a project participant can finalise consent and approval requirements at a later time, but prior to being issued ACCUs. This feature is intended to encourage participation, and the high number of project registrations and contracts awarded demonstrates this has been successful.

With more than 690 registered projects and 370 contracts, our priority has evolved from encouraging participation to ensuring participants comply with obligations to report and to deliver carbon abatement in line with contractual requirements. To do this, we have focused on ensuring scheme participants understand their obligations, including adhering to agreed timeframes.

Our work in this regard has included increased education and awareness activities to encourage voluntary compliance.

SCHEME PERFORMANCE

4

37

2016-17 Annual Report | Clean Energy Regulator 38

SCHEME PERFORMANCE

4

Highlights in 2016-17

4 contracts delivered all their contracted carbon abatement

314 projects issued with ACCUs

23% increase in carbon abatement achieved from 10.7 million in 2015-16 to 13.2 million in 2016-17

58% increase in ACCUs delivered against contracts from 8.4 million in 2015-16 to 13.3 million in 2016-17

63% of total ACCUs issued to vegetation projects

First ACCUs issued to an energy efficiency project

2 auctions held, contracting a total of 45.6 million tonnes of carbon abatement

2 enforceable undertakings entered into to protect scheme integrity

Emissions Reduction Fund projects

In 2016-17 we registered 84 new projects under the Emissions Reduction Fund, compared with 361 last year. The rate at which projects were registered in the first two years of the scheme exceeded all expectations and has since matured to a more sustainable level. Most new projects continued to occur in the land sector, involving vegetation regeneration activities for native forests. As at 30 June 2017, there were 692 Emissions Reduction Fund projects.

SNAPSHOT

84 projects registered in 2016-17, 692 Emissions Reduction Fund projects in total

39 2016-17 Annual Report | Clean Energy Regulator

SCHEME PERFORMANCE

4

This year, 21 projects were revoked. The majority of these were voluntary revocations. There are several reasons for revocations, including larger project participants consolidating their projects into single projects to reduce administrative costs. There has been little change in carbon abatement potential as a result of these revocations.

Table 1: Number of projects registered under the Emissions Reduction Fund 2016-17

Method category

New projects registered in 2016-17

Cumulative projects registered to 30 June 2017

Percentage of total projects registered (%)

Agriculture5 12 45 6.2

Energy Efficiency 10 50 6.9

Industrial fugitives 4 14 1.9

Savanna burning 9 80 11.1

Transport 0 8 1.1

Vegetation 39 391 54.1

Waste 9 134 18.5

Facilities 1 1 0.2

Total 84 7236 100

5. Including livestock and soil carbon. 6. Includes 31 revoked projects.

2016-17 Annual Report | Clean Energy Regulator 40

Project activity

In 2016-17 there was an increase in overall activity as the Emissions Reduction Fund moved into its third year. There was a 55 per cent increase in the number of crediting applications received, from 325 in 2015-16 to 504 in 2016-17. The scheme is evolving as expected, as the emphasis moves from encouraging new participation to delivering carbon abatement.

This year we introduced online forms for a range of Emissions Reduction Fund applications, available through our client portal. This has streamlined processes including project registration, project variation and crediting. In this way, we have improved efficiency and data quality for our clients, and also improved the way we administer the scheme.

In 2016-17 a total of 84 project registration applications were approved and 20 were withdrawn, incomplete or refused. We met our obligation to process all project registration applications within the 90 day statutory timeframe, and 99 per cent of all crediting applications were also processed within that 90 day timeframe. This is consistent with 2015-16, despite a large increase in crediting applications in 2016-17.

Table 2: Number of project applications received and/or processed 2016-17

Type

On hand at 30 June 2016 Received Approved

Withdrawn, incomplete or refused

Processed within 90 days (%)

On hand at 30 June 2017

Project applications

11 106 84 20 100 13

Abatement statements

18 504 481 13 99 28

SCHEME PERFORMANCE

4

Australian carbon credit units issued

One ACCU represents the equivalent of one tonne of carbon dioxide prevented from entering the atmosphere. Emissions Reduction Fund projects either avoid emissions or sequester carbon to earn ACCUs.

We issued 13 151 991 ACCUs in 2016-17. This is an increase from 10 719 735 ACCUs7 issued in 2015-16.

As seen in graph 1, carbon abatement is accelerating year-on-year as the number of ACCUs issued each year increases. This is a consequence of an increasing number of projects reaching the stage of achieving abatement, with ACCUs issued to 314 projects in 2016-17. Many projects will take time to achieve carbon abatement, and we expect the acceleration to continue in future years.

Total carbon abatement achieved since December 2011 is nearly 40 million tonnes of carbon dioxide equivalent, including under the preceding Carbon Farming Initiative.

7. The number of ACCUs reported in 2015-16 did not include relinquishments. It has been updated to include ACCU relinquishments for 2015-16.

41 2016-17 Annual Report | Clean Energy Regulator

SNAPSHOT

More than 13 million tonnes of carbon abatement achieved this year, with almost 40 million tonnes abated to date

ACCUs (millions)

40

35

30

25

20

15

10

5

0

ACCUs issued in 2012-13 ACCUs issued in 2013-14

ACCUs issued in 2014-15 ACCUs issued in 2015-16

ACCUs issued in 2016-17

Yearly Cumulative

Graph 1: Number of ACCUs issued 2011-128 to 2016-17

8. No ACCUs were issued in 2011-12 because the Carbon Farming Initiative had not matured to the point of delivery.

SCHEME PERFORMANCE

4

2016-17 Annual Report | Clean Energy Regulator 42

SCHEME PERFORMANCE

4

Australian carbon credit units issued by method

In 2016-17 more than 60 per cent of all ACCUs were issued to projects under vegetation methods. Energy efficiency projects were credited with ACCUs for the first time, with 120 425 ACCUs issued to three projects.

Table 3: Number of ACCUs issued by method category 2016-17

Method category

Projects issued with ACCUs Number of ACCUs issued

% of ACCUs issued in 2016-17

Agriculture 7 111 651 0.8

Energy Efficiency 3 120 425 0.9

Savanna burning 40 1 520 389 11.6

Vegetation 175 8 231 646 62.6

Waste 89 3 167 880 24.1

Industrial fugitives 0 0 0

Transport 0 0 0

Facilities 0 0 0

Total 314 13 151 991 100

43 2016-17 Annual Report | Clean Energy Regulator

Emissions Reduction Fund auctions

We have used reverse auctions to award carbon abatement contracts9 to Emissions Reduction Fund participants seeking to sell carbon abatement to the government. We have run five auctions so far, each as a single-round, pay-as-bid, sealed-bid format.

We purchase abatement based on bid price, consistent with our statutory requirement to purchase least cost abatement. We advise that participants’ bids should reflect their most competitive price.

We held two auctions during 2016-17, on 16-17 November and 5-6 April, where 45 million tonnes of abatement was contracted across 78 contracts worth more than $500 million combined. We purchased 84.1 per cent and 98.6 per cent of carbon abatement offered below the benchmark price 10 at each auction (respectively).

Across all five auctions held to date, the total contracted abatement is 189 million tonnes. The majority is from vegetation projects, totalling more than 122 million tonnes of abatement. This is a reflection of the sector’s experience in undertaking carbon abatement projects, and also demonstrates the volume of abatement available within the land sector. No new methods were made available ahead of the fourth and fifth auctions. Diversity of abatement across the sectors remained consistent with previous auctions.

SNAPSHOT

189 million tonnes of carbon abatement contracted to date

Overall, we have awarded 387 contracts for 435 projects, with a standard duration of seven to 10 years. Contracted abatement amounts range from 5000 tonnes to 15 million tonnes.

The average price per tonne of abatement at the fourth auction was $10.69 and $11.82 at the fifth auction.

To protect the integrity of the scheme we do not publish individual contract values, individual contract price per ACCU or the benchmark price. However, we do publish summary statistics for each auction on our website.

Delivery against contracts

Each carbon abatement contract includes a delivery schedule of the times that the seller will deliver ACCUs to us. This schedule is nominated by the seller in a contract offer. Payment occurs on delivery for the price agreed in the contract. This delivery schedule can be varied by negotiation as the actuality of project implementation and administration evolves. These activities are shown in graph 2 on page 45.

9. See Glossary for definition. 10. See Glossary for definition.

SCHEME PERFORMANCE

4

2016-17 Annual Report | Clean Energy Regulator 44

According to the delivery schedules agreed at the time of the auction, we expected to receive 13 217 245 ACCUs during 2016-17. Total deliveries to our agency were 13 294 184 ACCUs, representing 101 per cent of the expected volume11.

The overall volume delivered under Emissions Reduction Fund contracts since the scheme began is 110 per cent o f the volume expected at 30 June 2017. This aggregate

position reflects a diversity of individual contract situations with early delivery of abatement across financial years from a number of contracts currently outweighing a number of delivery schedules which have been moved to a later date. Purposefully designed flexibility within carbon abatement contracts means some participants will deliver early and others may request to vary delivery milestones. Sellers choosing to bring forward deliveries early may be an indicator that some project portfolios are performing better than expected, while delays may indicate other projects may be taking longer to proceed to implementation. For more details see Feature: Contract delivery under the Emissions Reduction Fund on page 46.

We will continue to monitor compliance with the original volume agreed at the time of establishing the contract, as well as revised delivery schedules.

Four of the 387 Emissions Reduction Fund contracts have completed all delivery obligations.

SNAPSHOT

4 contracts have already delivered their total carbon abatement commitment

SCHEME PERFORMANCE

4

If a contract has satisfied all conditions pr

ecedent, delivery obligations under the

contract commence. If a contract fails to meet or waive any conditions precedent, the contract is terminated or lapsed and the delivery and payment obligations of the contract cease. All funds are paid on delivery of carbon abatement only.

In 2016-17 there were also four terminated and lapsed contracts. The amount of contracted abatement involved in these contracts is 790 028 tonnes, or less than 0.5 per cent of the total contracted portfolio.

11. As scheduled at 1 July 2017.

45 2016-17 Annual Report | Clean Energy Regulator

(ACCUs million)

Original scheduled deliveries-cumulative Current scheduled deliveries-cumulative

Actual deliveries-cumulative

Jan 2015

May 2016

Sep 2015

Jan 2017

May 2015

Sep 2016

Jan 2016

May 2017

Mar 2015

Jul 2016

Nov 2015

Mar 2017

Jul 2015

Nov 2016

Mar 2016

Feb 2015

Jun 2016

Oct 2015

Feb 2017

Jun 2015

Oct 2016

Feb 2016

Jun 2017

Apr 2015

Aug 2016

Dec 2015

Apr 2017

Aug 2015

Dec 2016

Apr 2016

25

20

15

10

5

0

Graph 2: Total delivery of carbon abatement delivered under Emissions Reduction Fund contracts as at 30 June 2017

SCHEME PERFORMANCE

4

FEATURE ARTICLE

Contract delivery under the Emissions Reduction Fund

Through the Emissions Reduction Fund the government purchases least cost abatement from a wide range of sources—providing an incentive to businesses, households and landowners to actively reduce their emissions.

While most contracted projects deliver abatement on time, some projects may have delayed deliveries. This may be due to factors outside the participant’s control. For example, bad weather, delays in gaining necessary approvals, or natural disasters such as bushfires may affect a project’s ability to deliver abatement on time.

Conversely, some projects may deliver more abatement than originally expected or deliver abatement earlier than anticipated.

The scheme’s design allows for a degree of flexibility to manage both these situations with contracts being varied accordingly.

We closely monitor all contracts and work with sellers to identify potential problems early, including where necessary timeframes for auditing, reporting and processing have not been considered in the development of delivery schedules. By taking this approach, we can manage delays that are considered reasonable.

Where abatement is achieved early, sellers can generally deliver that abatement early and receive payment. This approach has proved successful and, at the end of 2016-17, early payments outweighed delayed payments.

In fact, due to some contracts delivering abatement early, at this stage we are 10 per cent ahead of the overall scheduled volume of carbon abatement.

Image acknowledgement: Clean Energy Regulator. Plantation, Bundaberg, Queensland, Emissions Reduction Fund.

47 2016-17 Annual Report | Clean Energy Regulator

Scheme integrity

A key focus during 2016-17 was to protect the integrity of the scheme by ensuring compliance with participation requirements.

This year, we entered into two enforceable undertakings with Emissions Reduction Fund participants who improperly supplied information during the project application stage. Enforceable undertakings are written statements from a person or organisation that they will do, or refrain from doing, certain things in order to resolve breaches or improve compliance with the legislation.

Following consultation with the participants in question, we issued directions for them to review their internal processes and record keeping to our satisfaction.

We also published our 2017 Compliance Priorities across all schemes. For the Emissions Reduction Fund, our focus was on the integrity of client declarations and their ability to meet contractual obligations. We check this by using data analytics to detect non-compliance.

Australian National Registry of Emissions Units

The Australian National Registry of Emissions Units (ANREU) is the system where ACCUs are tracked and traded. It enables the carbon unit market to operate.

In 2016-17 the ANREU was available for public access 98.1 per cent of the time (including scheduled maintenance).

Looking forward

After building a contract portfolio quickly during the Emissions Reduction Fund’s first year, abatement volumes coming forward in auctions during 2016-17 were at more sustainable levels. This was expected, as the market levelled out following contracting of pent up supply from the Carbon Farming Initiative at the first few auctions. The market has demonstrated continued capacity to bring forward projects that deliver least cost abatement.

Currently, more than $300 million remains uncommitted under the Emissions Reduction Fund which will continue to support the growing carbon market.

While we prepare for future purchasing processes and manage an expanding portfolio of contracts, we will also continue to enhance the capabilities that support the Emissions Reduction Fund. The potential introduction of new methods for projects will broaden opportunities within the scheme for industry.

SNAPSHOT

More than $300 million remains available to contract additional abatement in the Emissions Reduction Fund

SCHEME PERFORMANCE

4

2016-17 Annual Report | Clean Energy Regulator 48

SAFEGUARD MECHANISM

This year marked the first full year of operation for the safeguard mechanism, which came into effect on 1 July 2016.

The aim of the safeguard mechanism is to ensure purchased emissions reductions under the Emissions Reduction Fund are not offset by significant emissions increases above business as usual elsewhere in the economy.

The safeguard mechanism applies to facilities with scope 1 greenhouse gas emissions12 of more than 100 000 tonnes of carbon dioxide equivalent per year. This requires Australia’s lar

gest emitters to keep their emissions below a set baseline. They can do this by reducing their emissions, for example through an Emissions Reduction Fund project, or they may purchase ACCUs and surrender them to offset their emissions.

Where emitters have, or expect to, exceed their baseline, they may apply for a calculated baseline or access other management options in certain circumstances (see Setting baselines below).

The safeguard mechanism covers a broad range of industry sectors including electricity generation, mining, oil and gas, manufacturing, transport, construction and waste. Collectively, the facilities covered account for about half of Australia’s emissions.

Setting baselines

During 2016-17 we set most baselines using data reported under the National Greenhouse and Energy Reporting scheme. For more details, see page 50.

While most facilities are covered by an individual baseline, electricity generators connected to the grid are covered by a sector-based approach. This is because the electricity sector behaves more like a single entity, where the output produced is centrally coordinated to meet real time demand. If the sectoral baseline is exceeded, individual baselines will apply to each generator.

We have made two types of baseline determinations to date:

• reported baseline determinations—issued to facilities with sufficient historical emissions data that we can use to set the baseline, and

• calculated baseline determinations—issued to facilities without sufficient historical emissions data, or where historical data is a poor indicator of future emissions. Calculated baselines are made on application only.

During 2016-17 we made 338 baseline determinations, comprising 331 reported baseline determinations and seven calculated baseline determinations.

SNAPSHOT 338 baselines set for the safeguard mechanism

SCHEME PERFORMANCE

4

12. See Glossary for definition

49 2016-17 Annual Report | Clean Energy Regulator

FEATURE ARTICLE

Safeguarding emissions reductions

During 2016-17 we continued the necessary groundwork to ensure the smooth introduction of the safeguard mechanism.

Our main focus has been on targeted client engagement to identify, explain and set emissions baselines for facilities that meet legislated thresholds. These baselines represent the level of emissions that will trigger corrective action if exceeded.

In this first year of the safeguard mechanism, facilities with sufficient data received a reported baseline and, in the case of grid-connected generators, were also covered by the sectoral baseline. Some facilities have also applied for a calculated baseline.

We establish reported baselines using historical emissions data. We determine calculated baselines on application, if historical data is insufficient or does not reflect future emissions. If a facility exceeds the safeguard threshold, but does not have any of these baselines, a default baseline of 100 000 tonnes of carbon dioxide equivalent applies.

Throughout the year, we proactively engaged with our clients to explain, and inform, the baseline setting process—either seeking comments on reported baselines or assessing calculated baseline applications. Client feedback has been positive and by the end of June 2017 we had set more than 99 per cent of reported baselines, and were finalising the remaining few.

Reports on 2016-17 emissions are due in October 2017 as part of the normal National Greenhouse and Energy Reporting cycle on facilities’ energy use and emissions. We will use these reports to determine which facilities were covered by the safeguard mechanism for 2016-17 and which of those covered facilities exceeded their baselines. Responsible emitters have until 1 March 2018 to address any excess emissions situations at their facilities.

We have also been working to set up the necessary technical infrastructure and systems we need to track each facility’s position against their baseline and to use various emissions management options.

The success of our schemes depends on strong client engagement, and the introduction of the safeguard mechanism is no exception.

We will continue to engage with clients directly and through workshops to explain the next part of the safeguard mechanism which will focus on emissions management and actions clients can take if their emissions exceed their baseline.

2016-17 Annual Report | Clean Energy Regulator 50

NATIONAL GREENHOUSE AND ENERGY REPORTING SCHEME

Context

The National Greenhouse and Energy Reporting scheme was introduced in 2007 as a single national framework for reporting and disseminating company information about greenhouse gas emissions, and energy production and consumption. Corporations that meet legislated thresholds must register and report annually. Reported data informs government policy, programs and activities, avoids duplication of similar reporting requirements in the states and territories, and helps meet Australia’s international reporting obligations.

Data from the scheme was used to determine carbon pricing mechanism liability and is now used to determine baselines for the safeguard mechanism and measure emissions against those baselines. For more details, see page 48. The National Greenhouse and Energy Reporting data is a national asset for its comprehensive coverage of Australia’s energy production, energy consumption and greenhouse gas emissions.

Focus in 2016-17

In 2016-17 we continued to focus on compliance levels by regulated entities and the integrity of reported data.

We also continued to expand the level and type of National Greenhouse and Energy Reporting scheme data shared and publicly released for use by a range of stakeholders.

Highlights in 2016-17

98% of reports submitted on time

394 corporations reported a total of:

- 334 million tonnes of scope 1 greenhouse gas emissions

- 90 million tonnes of scope 2 greenhouse gas emissions

- 3956 petajoules of net energy consumption

100% of required data published on time

SCHEME PERFORMANCE

4

51 2016-17 Annual Report | Clean Energy Regulator

Publication of information

Companies report annually on their previous 12 months’ data, which means reports received in 2016-17 provided details for sources of emissions during 2015-16.

We are required by legislation to publish certain information by 28 February each year, including:

• The National Greenhouse and Energy Reporting scheme data—the total scope 1 and scope 2 greenhouse gas emissions and net energy consumption data reported by registered corporations that exceed the publishing threshold.

• Data for all facilities with a principal activity of electricity generation—the primary fuel source, emissions intensity and grid connection data for each electricity generator, as well as aggregated emissions and production data reported by the sector. This helps inform the community about the performance of electricity generators and how the sector is tracking in relation to the sectoral baseline set under the safeguard mechanism. For more details see page 48.

• An extract of the National Greenhouse and Energy Register—names of all controlling corporations13 and reporting transfer certificate holders 14 listed on the register during the previous financial year.

As with every year since 2012 we published all required data for 2015-16 on 28 February 2017 on our website.

There were 771 organisations listed on the National Greenhouse and Energy Register in 2016-17.

As well as the legislatively required data publication, we are progressively releasing additional emissions and energy data as part of our continued effort to improve the availability and accessibility of National Greenhouse and Energy Reporting information. For more details see Feature: A closer look at emissions and energy data on page 57.

SNAPSHOT

All required emissions and energy data published on time since 2012

13. See Glossary for definition. 14. See Glossary for definition.

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2016-17 Annual Report | Clean Energy Regulator 52

Sources of emissions

Once again, the main source for reported scope 1 greenhouse gas emissions was electricity generation, followed by mining, manufacturing and transport.

Graph 3: Australia’s sources of reported scope 1 emissions by industry for 2015-16

Transport, postal and warehousing 2.9% Other 2.3%

Electricity supply 24.9% Mining 35.8%

Manufacturing 34%

Energy production and consumption

In 2015-16 the majority of energy was produced by coal and other solid fossil fuels. Other high energy production fuels included gaseous fossil fuels, uranium, petroleum based products and electricity.

Graph 4: Energy production by fuel type for 2015-16

Electricity 3.6% Other 0.7%

Petroleum based products 7.1%

Uranium 9%

Coal 53%

Gaseous fossil fuels 26.6%

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53 2016-17 Annual Report | Clean Energy Regulator

In 2015-16 the electricity supply industry consumed the most energy in the production of electricity (represented by net energy consumption). Other high net energy consuming industries for this period were manufacturing, mining and transport. The remaining industries collectively represent less than five per cent of net energy consumption.

Graph 5: Net energy consumption 2015-16

Transport, postal and warehousing 6.8%

Other 4.9%

Electricity supply 37.5%

Mining 21.3%

Manufacturing 29.4%

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State and territory emissions profile

Companies reported 334 million tonnes of greenhouse gas emissions for 2015-16. Queensland and New South Wales/Australian Capital Territory accounted for the largest percentage of emissions at 26.8 per cent and 26.7 per cent respectively, followed by Victoria at 21.5 per cent and Western Australia at 18.0 per cent.

In all states except the Northern Territory and Tasmania, electricity supply accounted for the greatest proportion of emissions.

2016-17 Annual Report | Clean Energy Regulator 54

Figure 1: State and territory emissions profile 2015-16 15

15. Percentages do not add to 100 per cent due to rounding.

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55 2016-17 Annual Report | Clean Energy Regulator

Use of National Greenhouse and Energy Reporting scheme data

Key uses of scheme data include meeting Australia’s international reporting obligations, informing and assisting with Commonwealth, state and territory policy and program development, and reducing duplication in reporting.

In particular, the National Greenhouse and Energy Reporting scheme data provides a foundation for international reporting work by the Department of the Environment and Energy. For example, scheme data contributes approximately 60 per cent of the emissions data for the National Greenhouse Gas Inventory Report, which is part of the National Greenhouse Accounts produced by the Department of the Environment and Energy. These accounts are required to meet Australia’s reporting commitments under the United Nations Framework Convention on Climate Change.

National Greenhouse and Energy Reporting scheme data also contributes around 80 per cent of the energy data for the Australian Energy Statistics. The Australian Energy Statistics is the authoritative and official source of energy data for Australia, and forms the basis of Australia’s reporting obligations to the International Energy Agency.

Figure 2: Key uses of National Greenhouse and Energy Reporting data

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Meet Australia's international reporting obliga

tions

• Australian National Greenhouse Accounts (national greenhouse gas inventory)

• Australian Energy Statistics (authoritative handbook on energy resources)

Inform Commonwealth policy

, programs

and activities

Inform the Australian public

• National Emissions Projections

• Safeguard mechanism (linked to Emissions Reduction Fund)

• Greenhouse and energy data required reporting

• National Energy Productivity Plan

• Energy, Water and Environment Survey

• Energy Account Australia

• Australian Energy Statistics

• Carbon Dioxide Equivalent Intensity Index (Australian Energy Market Operator)

• Policy and program formulation and analysis by Commonwealth agencies

Inform state and territory policy, programs and activities

• Policy and program formulation and analysis by state and territory agencies

• Avoid duplication of state and territory reporting requirements

56 2016-17 Annual Report | Clean Energy Regulator

Forums for information sharing

We provide the secretariat for the Commonwealth Information Sharing Network and the State and Territory Information Sharing Network, which are forums to discuss National Greenhouse and Energy Reporting scheme data.

Attendees at the 2016 and 2017 meetings confirmed the network is strengthening relationships with data users from Commonwealth, state and territory jurisdictions.

The networks will continue to assist governments to identify opportunities for further use of National Greenhouse and Energy Reporting scheme data.

Emissions and Energy Reporting System

Clients prepare and submit their reports using the Emissions and Energy Reporting System. We have designed this system to minimise the administrative burden for reporting, while maintaining the integrity of the data. We release a new version each year to align with new legislative requirements and improve its usability based on client feedback.

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FEATURE ARTICLE

A closer look at emissions and energy data

To increase the value of the National Greenhouse and Energy Reporting scheme data we collect each year, we have increased the amount of data we publish, either on our website or to partner agencies.

During 2016-17 we published more data, graphs and information than we have in the past on a dedicated section of our website called A closer look at emissions and energy data.

This dedicated section of the website provides a different perspective on National Greenhouse and Energy Reporting scheme data, by aggregating the data to reveal points of interest and trends.

Aggregating the data ensures we maintain client confidentiality, while providing insights into the data for the Australian public, researchers and other government agencies.

This year we released new aggregated data for national scope 1 emissions by industry, the highest emitters of scope 1 emissions, and state and territory scope 1 emissions by industry.

We have also provided National Greenhouse and Energy Reporting scheme data to the CSIRO to trial including it in the Energy Use Data Model. The model will provide meaningful and accessible energy data through a central online platform—capturing measured consumption as well as key demographic and technological features of Australian consumers, while maintaining the confidentiality of sensitive information.

In addition, National Greenhouse and Energy Reporting scheme data has been incorporated into the Australian Bureau of Statistics Business Longitudinal Analysis Data Environment (BLADE). This database is a company level statistical asset that will enable researchers and analysts to explore relationships between energy, emissions and other business variables held in the database. The National Greenhouse and Energy Reporting scheme data is supplied with strict adherence to security and confidentiality protocols.

Image acknowledgement: Clean Energy Regulator. Adelaide Brighton Cement, South Australia, multiple scheme participant.

2016-17 Annual Report | Clean Energy Regulator 58

Looking forward

We are planning to release additional data in 2017-18 to provide a more in depth look at net energy consumption by industry sector.

The National Greenhouse and Energy Reporting scheme will continue to support the safeguard mechanism by providing the data to check compliance with baselines.

A project with the CSIRO’s Data61 is also underway, with funding support from the Australian Renewable Energy Agency. The Data61 project will explore how National Greenhouse and Energy Reporting scheme data could potentially be incorporated into the Australian Renewable Energy Mapping Infrastructure Project in a way that retains confidentiality of reporter level data. The project is seeking to consolidate data relating to renewable energy resources, demand and infrastructure into a single, freely accessible online mapping portal16.

16. www.nationalmap.gov.au/renewables

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59 2016-17 Annual Report | Clean Energy Regulator

RENEWABLE ENERGY TARGET

Context

The Renewable Energy Target aims to encourage additional renewable energy and reduce greenhouse gas emissions in the electricity sector.

The scheme was introduced in 2001, and then split into two in 2011:

• Large-scale Renewable Energy Target—requires a certain amount of additional electricity to be generated from renewable sources by 2020.

• Small-scale Renewable Energy Scheme—creates incentives for households and businesses to install small-scale systems.

In 2015 the Parliament passed legislation to revise the Large-scale Renewable Energy Target from 41 000 gigawatt hours to 33 000 gigawatt hours.

The Renewable Energy Target works by creating a market for renewable energy certificates 17, which drives investment in the renewable energy sector.

Focus in 2016-17

This year saw a notable increase in the capacity of accredited renewable energy power stations. This indicates continued market interest and returning investor confidence in the renewable energy industry. We also saw an increase in the number of small-scale systems installed, reversing the gradual downward trend since 2011. The average size of systems being installed continues to rise.

Highlights in 2016-17

114% increase in accredited generation capacity of new renewable energy power stations compared to 2015-16

19.4 million megawatt hours of additional electricity generated by accredited renewable energy power stations in 2016-17 compared to 15.9 million megawatt hours 2015-2016

24% more small-scale systems were validated in the first half of 2017 compared to the same time last year

10.6 million megawatt hours generated or displaced by small-scale systems compared to 9.5 million megawatt hours in 2015-16

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17. See Glossary for definition.

2016-17 Annual Report | Clean Energy Regulator 60

Renewable Energy Target administrative report

We publish details about the operation of the Renewable Energy (Electricity) Act 2000 in an annual administrative report, as required by the legislation. These reports present data and information about scheme operation and achievements from the previous calendar year. The 2016 report, Tracking towards 2020: Encouraging renewable energy in Australia, was tabled on 3 May 2017 and is available on our website. More information about meeting the target is available in the Looking forward section on page 70.

Large-scale renewable energy power stations

The Large-scale Renewable Energy Target creates a financial incentive to encourage investment in renewable energy power stations like wind and solar farms or hydroelectric power stations.

The number of power stations accredited under the scheme has steadily increased since 2001. In 2016-17 we accredited 90 new power stations, bringing the total since the scheme began to 625. All applications for accreditation were processed within the required six weeks.

SNAPSHOT

90 new renewable energy power stations accredited in 2016-17, bringing the total to 625

This year saw an increase in investment in large-scale renewable power stations with a capacity of more than one megawatt, and we accredited several power stations with capacity ranging from 11 megawatts to 242 megawatts.

The high number of power stations with capacity of less than one megawatt is evidence of continued growth in participation from commercial and industrial renewable projects participating in the Large-scale Renewable Energy Target.

Generation capacity has increased significantly. The total capacity of all power stations accredited during 2016-17 was 615.5 megawatts. This indicates more new large-scale renewable power stations started generating in 2016-17 than in any other previous year.

Around 84 per cent of the increase in overall capacity has come from three power stations that have capacities in excess of 100 megawatts.

Table 4: Number of power stations accredited and capacity 2014-15 to 2016-17

2014-15 2015-1618 2016-17

Cumulative total since 2001

Number of power stations accredited

38 80 90 625

Capacity (megawatts)

494.4 288.2 615.5 14 488.5

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18. Note: 2015-16 data has been adjusted to reflect two additional power stations that were eligible to be accredited from June 2016 onward, and incremental capacity increases recorded for other power stations.

61 2016-17 Annual Report | Clean Energy Regulator

Power station energy sources

There are around 20 eligible renewable energy sources under the Renewable Energy Target. The most common sources are solar, wind, hydro, biomass19 and waste coal mine gas.

Solar continued to be the dominant fuel source in terms of the number of accredited renewable energy power stations in 2016-17, as it was in 2015-16. This represents a continuing trend in commercial and industrial scale power stations using solar in the 100 to 500 kilowatt (0.1 to 0.5 megawatt) range.

Table 5: New accredited power stations by energy source and capacity 2016-17

Energy source Number Capacity (megawatts)

Biomass 3 6.2

Hydro 1 0.6

Solar 81 80.1

Wind 5 528.6

Total 90 615.5

Large-scale certificates validated

Large-scale generation certificates are created based on the amount of electricity generated by accredited power stations using renewable energy sources. Each certificate represents one megawatt hour of renewable energy generation.

In 2016-17 we validated 19 374 654 large-scale generation certificates compared with 15 949 840 validated in 2015-16. This represents around 19.4 million megawatt hours of additional electricity generated by accredited renewable energy power stations, enough to power about three million homes per year20.

More than 65 per cent of the certificates validated in 2016-17 were from power stations using wind as the energy source, 15 per cent were from hydro, and the remaining were from across biomass, solar and waste coal mine gas energy sources.

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19. See glossary for definition. 20. Household Energy Consumption Survey, Australia: Summary of Results, 2012, Australian Bureau of Statistics.

FEATURE ARTICLE

Increasing transparency through data release

Investment activity in renewable energy projects is gathering pace. Investors make informed decisions by analysing the available market data. To assist market participants we have increased the transparency of information by publishing monthly supply and demand information on our website. Our data is one of several sources that investors can rely on to make informed decisions.

Supply data includes details of the development pipeline for large-scale renewable energy projects. This is provided to assist market participants to identify potential investment opportunities.

Supply data also details the number of large-scale generation certificates held in renewable energy certificate registry (REC Registry) accounts. The release of this data helps buyers and sellers to identify each other.

The demand data provides an overview of liable entities and liability information for the previous assessment

period21. As well as increasing transparency, releasing this data helps the market monitor the pace of investment over time and track progress towards meeting the 2020 Renewable Energy Target.

21. The Renewable Energy Target operates on calendar years for assessment periods.

Image acknowledgement: Clean Energy Regulator. Wind Farm, Albany, Western Australia, Renewable Energy Target.

63 2016-17 Annual Report | Clean Energy Regulator

Small-scale systems

The Small-scale Renewable Energy Scheme creates a financial incentive for individuals and small businesses to install eligible small-scale solar, wind and hydro systems, as well as solar water heaters and air source heat pumps22.

In 2016-17 210 659 small-scale systems were validated, bringing the overall total number of validated systems in Australia to 2 755 506.

Since 2011, the number of validated small-scale systems had been declining each year. In 2016-17 this trend reversed, with a 24 per cent increase in the number of systems validated in the first half of 2017, compared with the same time last year. Factors that may be contributing to the recent increase could include the falling cost of solar systems and the rising cost of electricity.

SNAPSHOT

Increase in the number of small-scale systems bringing the total to more than 2.7 million

In total, small generation units now had a cumulative capacity of 5826 megawatts, as at 30 June 2017. This equates to approximately 10.6 million megawatt hours of electricity generated or displaced23 each year based on estimated system performance—enough to power over 1.6 million average Australian households24.

Table 6: Validated small-scale systems as at 30 June25

Solar water heater

Air source heat pump

Solar panel system

Wind system

Hydro system

Annual total

2016-17 46 147 17 827 146 678 7 0 210 659

2015-16 44 497 11 152 130 941 14 0 186 604

2014-15 51 670 9 962 175 822 11 3 237 468

2013-14 46 611 10 680 192 963 5 1 250 260

Cumulative total (since 2001)

831 960 217 783 1 705 332 413 18 2 755 506

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22. See Glossary for definition. 23. See Glossary for definition. 24. Australian Bureau of Statistics data: average electricity used by one household is 122.3 kilowatt hours per week. 25. In previous years we have reported on systems that were installed and validated in the reporting year. This year we are

reporting on the number of systems validated only as it better reflects relativity between years given applications may be received up to 12 months after a system has been installed.

2016-17 Annual Report | Clean Energy Regulator 64

Small-scale technology certificates validated

Under the Small-scale Renewable Energy Scheme, participants can create small-scale technology certificates following the installation of an eligible system. The number of certificates is based on the amount of electricity a system is estimated to produce or displace depending on the technology.

Small-scale technology certificates can be created up to 12 months after the system is installed. This means during 2016-17 we validated small-scale technology certificates created for systems installed in both 2015-16 and 2016-17.

We validated 18 620 810 small-scale technology certificates in 2016-17. This is a significant increase from 15 303 013 small-scale technology certificates validated last year. This is despite a reduction in the deeming period, which reduced the amount of certificates small-scale solar systems received. The reasons for the increase include a higher number of systems installed and an increase in the average capacity of systems.

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FEATURE ARTICLE

Smart data use enhances compliance

This year we have implemented a data matching program with the Australian Energy Market Operator (AEMO) and state and territory energy efficiency regulators.

We have been collaborating with AEMO to cross-check data for compliance across all our schemes. This year, for the first time, we automated our data exchange capability to detect and prevent ineligible claims for small-scale technology certificates using electricity meter data. This data is automatically updated every three hours.

Matching similar electricity metering data maintained by AEMO helps us determine the probability that a small-scale solar system was installed. By enhancing compliance measures in this way, we can more easily prevent, detect and respond to non-compliance and fraud, and more effectively allocate resources to higher risk installations. Adding this capability is timely, given the increase in small-scale installations during the reporting year.

Industry has welcomed the initiative, which supports broader integrity of the renewable energy industry.

Additionally, to ensure the abatement achieved under the Emissions Reduction Fund is credible and the integrity of the scheme is not undermined we have implemented a data exchange mechanism with state and territory agencies. Emissions Reduction Fund applications for energy efficiency projects are checked against state and territory energy efficiency programs to ensure participants have not already received an entitlement.

Both data matching mechanisms do not rely on additional data from our clients. Rather, the data matching program is about smarter use of the data already available to government to improve compliance.

Image acknowledgement: Clean Energy Regulator. Small-scale solar panel installation, Melbourne, Victoria, Renewable Energy Target.

2016-17 Annual Report | Clean Energy Regulator 66

Inspections of small generation units

Each year, we inspect a statistically significant number of installed small generation units to verify compliance with the Small-scale Renewable Energy Scheme.

To be eligible to create small-scale technology certificates, the small generation unit’s solar panels and inverter must be on the Clean Energy Council list of approved components, and the system must be installed by a Clean Energy Council accredited electrician.

Responsibility for electrical safety is a matter for state and territory electrical safety regulators. As part of our role, we publish regular updates on inspection results on our website and provide reports to state and territory electrical safety regulators and the Clean Energy Council.

We received 3380 reports on solar photovoltaic system inspections conducted in 2016-17. The proportion of systems assessed as unsafe 26 has steadily decreased from 4.7 per cent in 2014-15 to 4.0 per cent in 2015-16 and 1.9 per cent in 2016-17.

This significant reduction in unsafe systems reflects the collaboration of industry and regulators to address the DC isolator issue that made up the majority of unsafe systems. Previous compliance inspections found that a majority of unsafe and substandard installations are attributed to water ingress of DC isolator switches. This group worked together to improve the Clean Energy Council installer training and guidelines and drove changes to the Australian standards and improvements to consistency of inspections. As the inspection program looks at installs over the past year, we are now seeing the results through lower levels of unsafe systems.

If an inspector finds an unsafe system they are required to render it safe and notify all interested parties, including the homeowner, the installer, the Clean Energy Council and the relevant state or territory electrical safety regulator to take appropriate action. Systems found to be sub-standard27 are reported to the relevant state or territory electrical safety regulator and the Clean Energy Council.

SNAPSHOT

The proportion of systems assessed as unsafe has steadily decreased, from 4.7 per cent in 2014-15 to 4.0 per cent in 2015-16 and 1.9 per cent in 2016-17

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26. See Glossary for definition. 27. See Glossary for definition.

67 2016-17 Annual Report | Clean Energy Regulator

SRES scheme integrity

This year our compliance focus area for the Small-scale Renewable Energy Scheme was ‘enhanced monitoring of integrity of claims for small-scale renewable energy certificates’.

During 2016-17 we completed a number of projects to strengthen the Small-scale Renewable Energy Scheme compliance capability, including the following examples:

• We delivered a data-sharing initiative with the Australian Energy Market Operator (AEMO). See Feature: Smart data use enhances compliance on page 65.

• We led a new solar panel validation mechanism. This is a collaborative approach between us, the solar industry and peak bodies to address the installation of unapproved solar panels under the Small-scale Renewable Energy Scheme. We will pilot this new mechanism in the second half of 2017 before being rolled out more broadly across industry.

Certificate prices

In Tracking towards 2020: Encouraging renewable energy in Australia it was noted that supply and demand for large-scale generation certificates would be tightly balanced for the 2018 compliance year28. The trends we observed in the first half of 2017 suggest that this is likely to remain the case.

The large-scale generation certificates spot price started July 2016 at $85.50 and climbed to a new record high of $89.50 during mid-October 2016 ending the financial year at $79. The monthly average spot price for 2016-17 is shown in the graph below 29.

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$20.00

1 Jul 16

1 Aug 16

1 Sep 16

1 Oct 16

1 Nov 16

1 Dec 16

1 Jan 17

1 Feb 17

1 Mar 17

1 Apr 17

1 May 17

1 Jun 17

$30.00

$40.00

$50.00

$60.00

$70.00

$80.00

$90.00

$100.00

Graph 6: Large-scale generation certificate spot price 1 July 2016-30 June 2017

28. See Glossary for definition. 29. The Clean Energy Regulator sources wholesale prices from TFS Green and Mercari.

2016-17 Annual Report | Clean Energy Regulator 68

At the end of 2016-17, the small-scale technology certificate clearing house went into surplus for the first time since early 2016. The clearing house provides a mechanism when liquidity is low and facilitates a mechanism for small-scale technology certificates to be traded at a capped price of $40. If the high rate of small-scale technology certificate creation continues, the surplus is likely to remain for an extended period.

The increased level of small-scale technology certificate creation means there is more supply in the market outside the clearing house, which has led to a slight reduction in the spot price for small-scale technology certificates that finished the 2016-17 financial year at $37.25.

Both small-scale technology and large-scale generation certificate prices will change based on supply and demand and no future trends should be assumed from prices published in this report.

Market demand

Under the Renewable Energy Target, liable entities (mainly electricity retailers) have an obligation to purchase and surrender large-scale generation certificates and small-scale technology certificates based on the volume of electricity they purchase each year.

Each entities’ liability is determined by the Renewable Power Percentage (RPP) and Small-scale Technology Percentage (STP) set by the Minister for the Environment and Energy. The 2017 RPP and STP are available on our website.

The Renewable Energy Target operates on a calendar year basis, with liable entities required to acquit their liability for the previous year by 14 February. They surrender large-scale generation certificates annually and surrender small-scale technology certificates quarterly to meet any actual or anticipated liability for the year.

Certificates surrendered

By 14 February 2017, liable entities had surrendered a total of 19 676 342 large-scale generation certificates and 16 678 285 small-scale technology certificates against their 2016 liability.

Surrender compliance

If liable entities fail to surrender the required number of renewable energy certificates by the due date they are required to pay a shortfall charge of $65 per certificate, which is not tax deductible. Liable entities can generally carry forward a large-scale generation certificate shortfall that is within 10 per cent of their total certificate liability before they are required to pay the large-scale generation shortfall charge.

Of the 119 liable entities for 2016, seven had a large-scale generation shortfall within the 10 per cent margin. These shortfalls will be carried forward to those liable entities’ 2017 large-scale generation certificate liability.

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69 2016-17 Annual Report | Clean Energy Regulator

A total of 15 liable entities had a large-scale generation shortfall above the 10 per cent margin and were required to pay the large-scale generation shortfall charge.

Two liable entities had a small-scale technology shortfall and were required to pay the small-scale generation shortfall charge. All entities who do not surrender 100 per cent of their liability in certificates are listed on our website.

Liable entities’ combined surrender rate for large-scale generation and small-scale technology certificates for 2016 was 93.8 per cent. This is a decrease on surrender rates in earlier years.

This drop in the surrender rate is attributed to two of the 15 retailers mentioned above that incurred significant shortfalls under the Large-scale Renewable Energy Target. They paid a combined total of $131 million in shortfall charges, representing 9.5 per cent of the total obligation for 2016.

We prompt, assist and provide information for liable entities to meet their obligations under the scheme. In the lead up to the surrender deadline we were clear with liable entities that intentional payment of the shortfall charge does not meet the objectives of the scheme as it does not support new renewable energy generation.

Table 7: Renewable Energy Target liability discharged30

Description 2014 2015 2016

Number of liable entities 116 120 119

% of large-scale generation certificate liability discharged 99.9 99.4 89.3

% of small-scale technology certificate liability discharged 99.9 99.9 99.9

% combined certificate liability discharged 99.9 99.7 93.8

Industry assistance (exemptions)

We issue exemption certificates for emissions-intensive trade-exposed entities that are eligible for exemption under the Renewable Energy (Electricity) Act 2001.

We received 162 applications for exemption certificates for the 2017 compliance year. As at 30 June 2017 we had issued 100 per cent of exemption certificates. This was significantly higher than the same time in 2016 when 84 per cent of exemption certificates had been issued. The total amount for 2017 exemption certificates was approximately 40 million megawatt hours.

We reissued 17 exemption certificates from 2016 because of liable entity changes or a facility using multiple liable entities at the same time. We issued a further three exemption certificates due to production ceasing at the site.

30. As the Renewable Energy Target operates on a calendar year basis, liabilities discharged are presented in calendar years.

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2016-17 Annual Report | Clean Energy Regulator 70

REC Registry

We provide the REC Registry as the secure online system for all Renewable Energy Target transactions. The REC Registry enables the market to operate—supporting both supply and demand by providing secure, convenient, user-friendly and efficient processes to create, register, sell, trade and surrender certificates. In 2016-17 the REC Registry was available to clients 99.9 per cent of the time, including scheduled maintenance.

Looking forward

Tracking towards 2020: Encouraging renewable energy in Australia stated that the target is achievable provided the pace of investment at the end of 2016 continued in 2017. For satisfactory progress towards the 2020 target, we consider 3000 megawatts will need to be committed in 2017, in addition to the 2069 megawatts that was committed or probable in 2016. A further 1000 megawatts will be needed in 2018. The earlier this capacity is built, the more certificates available to electricity retailers to meet their obligations in future years.

Since Tracking towards 2020: Encouraging renewable energy in Australia was published in May 2017, investment has continued to firm and the target is likely to be met.

During 2016-17, 40 large-scale renewable energy projects with a combined capacity of 2458 megawatts were committed. The momentum in new project commitments observed in late 2016 continued in the first half of 2017. Committed projects grew by 1013 megawatts in the last half of 2016 and by a further 1445 megawatts in the first half of 2017.

In addition, during the first half of 2017 we identified a further 1184 megawatts in utility-scale projects that are probable, where we have a high degree of confidence they will proceed.

SNAPSHOT

2020 Large-scale Renewable Energy Target remains achievable

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71

5 MANAGEMENT AND ACCOUNTABILITY

Structure 73

Corporate governance 74

External scrutiny 87

Management of human resources 88 Purchasing and procurement 96 Information and communications technology 98

Image acknowledgement: Clean Energy Regulator. Clean Energy Regulator staff members, Australian Capital Territory.

2016-17 Annual Report | Clean Energy Regulator

Context

The Clean Energy Regulator was established by the Clean Energy Regulator Act 2011. Our agency began operations on 2 April 2012.

We are responsible for administering schemes legislated by the Australian Government for measuring, managing, reducing or offsetting Australia’s carbon emissions.

Focus in 2016-17

As an agency, our focus has been on ensuring compliance in each of our schemes. This objective has been supported by our corporate services areas, with improved reporting and monitoring infrastructure and education and awareness programs.

72

MANAGEMENT AND ACCOUNTABILITY

5

Highlights in 2016-17

335 employees

50% men and 50% women

5 APS graduates

81% clients agree we are doing a good job

380 audits completed

73 2016-17 Annual Report | Clean Energy Regulator

STRUCTURE

Members of the Regulator

The term Clean Energy Regulator refers to:

• the independent statutory authority, comprising the Chair and Members—referred to as the Regulator, and

• the agency that supports the Regulator—referred to as the agency.

Members of the Regulator are appointed by the responsible minister under the Clean Energy Regulator Act 2011, and are required to have substantial experience or knowledge in relevant fields. The Chair holds office on a full-time basis. All other Members hold office on a part-time basis.

The Regulator determines our strategic direction and policies, and is accountable for our regulatory decisions according to the legislation we administer. In addition to their collective responsibilities, Members of the Regulator each apply their expertise to a specific area of focus. This adds depth to the Regulator’s appreciation of the operating environment and enables agency staff to draw directly on Members’ knowledge and experience. Members provide an update on their area of focus at each Regulator meeting. The Regulator Members for 2016-17 were:

• Ms Chloe Munro, who completed her five-year term as Chair on 31 March 2017

• Ms Virginia Malley, who was re-appointed for an additional three-year term on 4 June 2017

• Ms Anne Brown, who was re-appointed for an additional three-year term on 4 June 2017

• Mr Michael D’Ascenzo

• Dr Peter Davis, and

• Ms Jody Swirepik, who was acting Chair from 1 April-1 July 2017

Information about our Members is at Appendix C.

Regulator meetings

Under the Clean Energy Regulator Act 2011, the Chair of the Regulator may convene a meeting at any time. Between 1 July 2016 and 30 June 2017, the Regulator met 10 times. See Appendix D for details of meeting dates and apologies.

Agency senior executive staff

At 30 June 2017 our agency comprised the Business Operations Division, Regulatory Obligation and Coordination Division, Scheme Entry and Entitlement Division and the Office of the General Counsel. Information about our agency senior executive staff is at Appendix E.

MANAGEMENT AND ACCOUNTABILITY 5

2016-17 Annual Report | Clean Energy Regulator 74

MANAGEMENT AND ACCOUNTABILITY

5

Market Engagement and Client Support Chris Branson

Scheme Coordination and Policy Mary-Anne Wilson

Business Investment and Performance Jo Stone

Technical Assessment and Support Jay Hender

Regulatory Obligation Management and Auctions Jackie Raynor

Human Resources Melanie Herpen

Participation and Compliance Michelle Crosbie

Assurance and Information Strategy Tas Sakellaris

Technology and Digital Services Tom Penders

Investigations and Regulatory support Peter Bache

Chair

Jody Swirepik

Scheme Entry and Entitlement Mark Williamson

Regulatory Obligation and Coordination Geoff Purvis-Smith

Business Operations Chris Ramsden

Office of the General Counsel Rizwan Akhund

Figure 3: Organisational structure as at 30 June 2017

CORPORATE GOVERNANCE

Our corporate governance framework assists agency staff to plan and manage activities and deliver on the expectations of government and the community. The framework articulates the lines of authority, accountability, direction and control within our agency. It is designed to ensure our staff understand their accountabilities and our agency delivers outcomes in a controlled, transparent and accountable manner, in line with relevant legislation and government policy.

Governance processes

Our governance processes and policies include:

• risk management

• protective security management

• business planning

• financial management

• performance and conformance monitoring and reporting

• staff performance agreements

• internal auditing

• fraud prevention, and

• Chief Executive Directions and Instructions.

Our governance framework supports our agency culture which promotes and upholds the Australian Public Service Values and Code of Conduct and enables us to monitor and improve our performance.

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Governance structure

Our committee structure supports our agency’s governance and provides leadership and oversight of agency operations and performance. Information about these committees is at Appendix F.

Figure 4: Our committee structure as at 30 June 2017

Emissions Reduction Fund Joint Agency Executive Steering Committee

Emissions Reduction Fund Programme Steering Committee

ACCOUNTABLE AUTHORITY

STRATEGIC LEADERSHIP TEAM

AUDIT REGULATOR CHAIR

Position of Accountability

Business Leadership Team Chair

Business Leadership Team

BUSINESS STRATEGIC INTERNAL EXTERNAL

Project Portfolio Board

Security Management Committee

WHS

Consultative Committee

Staff

Consultative Committee

Remuneration Committee

Position of Accountability

Chief Operations Officer

Executive Committee

Business planning and reporting

Our business planning considers the allocation of human resources, investment, risk management and performance measurement and incorporates our agency’s performance reporting framework.

The Clean Energy Regulator Corporate Plan 2016-20 is one of several documents that contribute to our business planning. It sets out our purpose, objectives and strategic approach. Updated and published annually, our corporate plan articulates the strategies we use to achieve our objectives and provides a framework for us to measure our performance, in accordance with paragraph 35(1)(a) of the Public Governance, Performance and Accountability Act 2013.

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The key performance indicators in our corporate plan are designed to measure achievements against our purpose. They are part of our agency’s key performance indicator framework. We have developed this framework to meet our external and internal reporting requirements, while ensuring the flexibility to incorporate changes in government policy and our operating environment against our core activities as a regulator. Our key performance indicators link our planning and reporting framework at the strategic, operational and individual level as represented in Figure 5.

Figure 5: Planning and performance reporting frameworks

As required under section 39 of the Public Governance, Performance and Accountability Act 2013 we report on our performance against the key performance indicators in our corporate plan and the performance criteria in our portfolio budget statements in Section 3: Annual performance statements from page 19.

Risk management

Our approach to risk takes into account the legislative framework, Australian Government policy and our available resources. Our risk appetite reflects the nature of the schemes we administer.

In administering legislation on behalf of the Australian Government, we understand what might undermine our ability to achieve our objectives and meet our statutory obligations. Identifying and managing risks to these objectives at the strategic and operational level enables us to:

• streamline regulatory processes across and within the schemes we administer

• target resources towards areas of highest risk

• achieve organisational efficiencies, and

• deliver the specific objectives of relevant legislation effectively and efficiently.

Key Performance Indicators Scheme, Regulator and Operational

Strategic

Individual

P L A N N I N G

Impact statement

Development plans

Portfolio Budget Statements

Regulator Performance Framework

Agency Annual Plan

Divisional Business Plans

Branch Business Plans

Section Business Plans

Corporate Plan

Strategic

Scheme and Operational

Scheme and Operational

R E P O R T I N G

Annual Performance Statement

Annual Regulator Performance Framework Assessment

Annual Report

Individual

Quarterly Performance Reports

Quarterly Performance Statements

Chair quarterly reviews

Monthly Performance Reports

Mid-year review

End-of-cycle assessment

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We continue to embed and enhance our risk management framework into day-to-day operations, adopting a strong risk management culture where all staff understand how their daily work fits into our agency’s capability to mitigate risk across our full range of functions.

The aim is to maximise return on investment against our purpose, while managing material risks, drawing on agency knowledge and evidence to inform decisions, processes and client engagement.

Our strategic risks

We have identified the following strategic high level risks to achieving our purpose.

• Uncertainty impedes us from achieving our purpose.

• Our role is misunderstood or changes with substantial consequences.

• We are not an effective regulator.

• We cannot free resources or lack critical capability to meet core objectives.

We actively manage and review these strategic risks, as well as our operational risks.

Fraud prevention and control

We take a holistic approach to fraud control to ensure we have robust governance, strong controls, effective risk assessment and management complemented by clear policies and procedures.

Our fraud control plan fosters continued legislative compliance, reflects the overall agency and fraud control structure and provides information on preventing, detecting and responding to internal and scheme related fraud. It also aligns risk management with business planning and agency roles and responsibilities.

We can receive allegations of fraud from internal or external sources by several means. We treat all allegations of fraud seriously and we are committed to maintaining confidentiality and protecting those who provide information concerning alleged fraud. We record and address any alleged, apparent or potential fraud and non-compliance incidents in accordance with the Australian Government Investigations Standards.

Compliance approach

Our Compliance, Education and Enforcement Policy is designed to optimise voluntary compliance with the schemes we administer.

We recognise that engagement, education and support are critical to ensuring scheme participants meet their obligations and avoid inadvertent non-compliance. We publish various guidance materials and resources to advise our clients of their obligations.

If we do need to address non-compliance, our response is proportionate to the potential or actual harm posed by non compliance, and takes into account the behaviour and motivation of the relevant party.

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We publish details of enforcement actions taken when clients do not comply with their obligations, demonstrating to our clients that we will take enforcement action in appropriate circumstances and providing an added incentive for our clients to voluntarily comply.

Where necessary, we pursue civil penalties and criminal prosecutions in more serious cases of deliberate non-compliance.

Compliance priorities 2017

For the first time, we have published our complete set of 2017 compliance priorities on our website. They identify our focus areas for compliance and approach to regulation as shown in Figure 6.

We target activities in areas of high risk, while also aiming to increase voluntary compliance through early intervention and education. By focusing on high levels of compliance and sharing this information, we increase agency transparency and accountability to clients and the public. The aim is to further increase levels of voluntary compliance and identify areas for improvement.

Figure 6: Focus areas for compliance

Data analytics to detect non-compliance

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Emissions Reduction Fund

Integrity of client declarations and ability to meet contractual obligations

Safeguard mechanism

Scrutinise integrity of initial baselines

National Greenhouse and Energy Reporting scheme

Enhance data integrity

Auditor compliance with standards

Small-scale Renewable Energy Scheme

Enhanced monitoring of integrity of claims for small-scale renewable energy certificates

Large-scale Renewable Energy Target

Increased scrutiny of annual acquittal of large-scale generation certificate liability

Increased scrutiny of data provided

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Investigations

During 2016-17 we opened 15 investigations. These investigations were all external and all related to the Renewable Energy Target—seven for fraudulent activity and eight for systems breach/non-compliance.

We closed 37 investigations in 2016-17. As a result of the completed investigations, 120 small-scale technology certificates were surrendered. As at 30 June 2017 a total of 17 investigations remained open, compared with 39 investigations underway at the same time last year.

SNAPSHOT 15 investigations opened, 37 closed in 2016-17

Table 8: Investigations closed in 2016-17 by type and scheme

Outcome

Renewable Energy Target

National Greenhouse and Energy Reporting

scheme

Emissions Reduction Fund (Carbon Farming

Initiative31) Total

No further action required 8 0 0 8

Administrative action (including voluntary surrender of certificates/units, suspension/closure of registry account) 5 0 0 5

Referred to an external agency 1 0 0 1

Referred to an internal team 4 0 0 4

Warning or advisory letter 8 0 0 8

Agreed enforceable undertaking 0 0 1 1

Successful prosecution 0 0 0 0

Merge with existing investigation32 10 0 0 10

Total 36 0 1 37

31. The Carbon Farming Initiative transferred to the Emissions Reduction Fund during 2014-15. 32. These matters individually have been found to relate to a broader investigation, which identify numerous persons of interest and victims. Specific cases have been closed, however incorporated into a bigger inquiry.

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Table 9: Total investigations in 2016-1733

Outcome

Renewable Energy Target

National Greenhouse and Energy Reporting

scheme

Emissions Reduction Fund (Carbon Farming

Initiative34) Total

On hand as of 1 July 2016 38 0 1 39

Received 2016-17 15 0 0 15

Closed 2016-17 36 0 1 37

On hand as of 30 June 2017 17 0 0 17

Audits

The National Greenhouse and Energy Reporting audit framework helps ensure the integrity of data reported to us under this scheme, as well as the Emissions Reduction Fund, safeguard mechanism and Renewable Energy Target.

Audits provide confidence in reported National Greenhouse and Energy Reporting scheme data, and identify factors that helped prioritise report assessment, compliance, intelligence and client education activities. Audits also provide assurance to issue ACCUs under the Emissions Reduction Fund. For more details, see pages 40- 41. They also award exemption certificates under the Renewable Energy Target scheme. For more details, see page 69.

Figure 7: Audit activities

Calculated baseline applications

Emissions Reduction Fund projects

73

completed

audits 380 Voluntary auditsfrom National Greenhouse and Energy Reporting reporters Exemption certificate

applications

85 141

TYPES OF AUDITS

14 MANAGEMENT AND ACCOUNTABILITY 5

33. The carbon pricing mechanism was repealed from 1 July 2014. The carbon pricing mechanism totals have been removed from this table as there are no related referrals. 34. The Carbon Farming Initiative transferred to the Emissions Reduction Fund during 2014-15.

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Of the audits conducted in 2016-17, a total of 88 per cent returned a clean opinion, which indicates the client is compliant with scheme requirements (although they may have a small number of non-material findings) and 10 per cent returned a qualified opinion, which means the client is largely compliant except for a small number of material matters that are not pervasive. The remaining two per cent either returned an adverse finding where there was at least one material issue of significant non-compliance or the auditor was unable to form an opinion.

SNAPSHOT

380 audits completed, 88% returned clean opinion

In 2016-17, for the first time, we commissioned audits by registered greenhouse and energy auditors to examine the compliance of power stations and liable entities participating in the Renewable Energy Target. We previously reviewed compliance of power stations using internal agency resources.

Registration and compliance of auditors

We register greenhouse and energy auditors and monitor their performance. As at 30 June 2017, there were 116 registered auditors, down from 137 registered at 30 June 2016. This reduction was predominantly due to self-removal and auditors not remaining active—therefore not meeting ongoing registration requirements.

We assessed 65 auditors as part of the routine registration review program during 2016-17. The number of registered auditors remains sufficient to support and provide audits for our schemes and clients.

Compliance by registered auditors is an area of focus for us, given its importance to the integrity of the schemes we administer. In 2016-17, we conducted nine inspections of registered auditors. These inspections provided us with in-depth insights into auditor performance. The inspection program has also assisted us to enhance our own procedures and improve guidance.

Where we identified non-compliance through inspections, we initiated compliance action. This compliance action ranged from specific improvements that auditors need to undertake, through to considering suspension or deregistration. In 2016-17, one auditor was deregistered due to issues with the conduct of their audits (identified during inspection). Two other auditors chose to deregister voluntarily following inspection. We publish decisions to deregister auditors on our website. MANAGEMENT AND ACCOUNTABILITY

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Audit framework enhancements

In response to inspection findings and regulatory decisions, we started a program of enhancements to the audit framework. In June 2017, the Audit Determination and Auditor Registration Instrument were updated to:

• introduce requirements for auditors to apply auditing and assurance standards

• require the disclosure of audit and non-audit fees in audit reports

• increase the qualification requirements for auditors engaged in peer review, and

• increase the audit experience requirements for people applying to be Category 2 auditors (audit team leaders).

We are examining further potential changes to the National Greenhouse and Energy Reporting regulations in 2017-18.

Conflict of interest

We inform our staff about their obligations under the Public Service Act 1999, which requires staff to avoid actual, perceived or potential conflicts of interests. Staff and Regulator Members are required to complete an annual declaration of interest form. Compliance with this requirement is reported to the audit committee.

Business continuity management

During 2016-17 we continued to mature our agency’s business continuity management framework through our training and annual testing program, which assesses our preparedness for a business disruption event. We incorporate necessary improvements to continually build our resilience to a business disruption.

Internal audit

The Internal Auditor is responsible for the efficient and effective operation of our internal audit function, reporting to the chair through the Chief Operations Officer and the Audit Committee.

During 2016-17 the Audit Committee held quarterly regular meetings and a special meeting to discuss the agency’s financial statements. The Audit Committee endorsed the 2017-18 Strategic Internal Audit Work Program and internal audit reports on performance and compliance issues. It also reviewed our agency’s financial and performance reporting, risk oversight systems and management and internal controls.

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Oakton Services Pty Ltd provided internal audit services to our agency during 2016-17 and completed internal audits on:

• Emissions Reduction Fund automated auction processes

• Emissions Reduction Fund safeguard baselines—making baseline determinations

• functional controls project review (including client risk profiling review)

• risk management

• information technology security

• greenhouse and energy auditor inspections

• compliance with confidentiality requirements, and

• contractor management.

Regulatory reform

The Australian Government’s regulatory reform agenda aims to reduce unnecessary or inefficient regulation imposed on individuals, business and community organisations.

As part of the everyday administration of our schemes, we assess the potential burden on clients and implement practical, flexible regulatory approaches that appropriately balance both regulatory and client needs.

Since last year, we have also been required to report annually against the Commonwealth’s Regulator Performance Framework key performance indicators. We published our first annual self-assessment in December 2016, demonstrating achievement against each of our specific measures under the Regulator Performance Framework. We also recognised opportunities to continue to improve our performance as a regulator, such as maximising coordination and consistency in the way we administer our schemes, understanding the impact of our activities on our clients, and maximising the value from the data we collect.

SNAPSHOT

Our first self-assessment of regulatory performance was published in December 2016

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We will publish our second annual self-assessment in the last quarter of 2017. Details are on our website.

FEATURE ARTICLE

Contact centre recognised in industry sector awards

Our contact centre has been recognised as one of the best in the country, winning the Auscontact Association ACT/NSW Contact Centre award for centres with less than 20 full-time equivalent staff.

The contact centre is the first point of call for clients and others seeking information about our schemes. During 2016-17 staff received 15 342 calls and 2105 emails, and achieved an 82.2 per cent average resolution rate, up from 78 per cent last year. The team also assisted with administration of the Renewable Energy Target, by confirming small-scale solar system installations through 7880 aerial map checks and 11 133 phone audits to ensure the installations had taken place.

While most enquiries (74 per cent) relate to the Renewable Energy Target, contact centre staff need to understand all our schemes as well as have a corporate overview. Our contact centre ensures that they understand scheme priorities, our clients’ needs, and how to provide quality responses.

In providing quality responses, our contact centre helps educate clients, encourage compliance and build confidence in our agency.

Image acknowledgement: Clean Energy Regulator. Clean Energy Regulator staff member, Australian Capital Territory.

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Partnerships

We work closely with our regulatory partners to share information to ensure the integrity of the schemes we administer. We also provide information to assist other Commonwealth, state and territory government organisations to discharge their responsibilities under respective legislation.

A range of formal agreements, lawful disclosure arrangements and staff secondments underpin our partnerships with other agencies. These mechanisms facilitate cooperation and information exchange to assist each agency to fulfil its regulatory responsibilities. This includes sharing relevant information, gathering intelligence and referring matters to the appropriate body, such as Commonwealth, state and territory agencies, including law enforcement if necessary.

Client survey

We conduct client surveys to understand client perceptions about our overall agency performance, staff performance, regulatory burden and preferred communication channels. This is the third year of our client communications survey, enabling us to compare results.

Table 10: Key client survey findings

Question

2014-15 % agree or strongly agree

2015-16 % agree or strongly agree

2016-17 % agree or strongly agree

The agency is doing a good job 80 84 81

Client organisation has an effective working relationship with the agency staff

84 84 79

The agency performs functions effectively 82 82 80

The agency effectively engages with clients 76 76 76

The agency has a clear direction and purpose 72 75 76

The agency has a sound focus on important issues 68 70 70

Overall, client satisfaction remained relatively steady with past results. Findings highlighted:

• Strong overall performance. A similar percentage of clients surveyed agree that we are doing a good job, 81 per cent compared with 84 per cent last year. Around 80 per cent believe they have an effective working relationship with us. Strong and steady results in 2016-17 indicate our agency is developing a level of maturity.

• Areas to sustain. We want to maintain strong results for having clear direction and purpose, and staff performance.

• Areas to improve. We will work on improving effective relationships with clients, and performing our functions as effectively as possible.

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FEATURE ARTICLE

New and improved intranet supports our work

During 2016-17 we redeveloped our agency’s intranet to make it easier and faster for staff to access the information they need to do their jobs.

Known as ‘REGi’, our intranet had grown since the agency began operating in April 2012. As we neared our five-year anniversary, it was time to review and refresh this important staff resource.

The project began with workshops with staff to discuss how people used the intranet, what worked on the current system and what could work better. Feedback from these workshops informed the project’s business requirements, which included an upgraded platform, improved search functionality, a new structure and navigation, updated content, and additional features to make it easier for people to interact with the content.

While the upgraded REGi has a new look, most of the improvements happened behind the scenes. This included a major content review, writing or reviewing more than 400 pages of content and 300 documents, to retain only the most current documents and advice. New inbuilt smart processes include automated prompts to check content accuracy and currency every three months, online forms to make common requests and processes faster and easier, and improved site analytics to track usage and inform continual improvement. We have improved the search functionality, driven by metadata topic tags, to allow staff to more easily find information.

To create a more intuitive structure, we restructured content around common user needs that remain consistent, rather than around organisational structure, which can change. Key content areas now include information related to ‘who we are’, ‘my employment’ and ‘working in the agency’. A new ‘our community’ section focuses on workplace culture, events and staff recognition, and is helping to improve agency culture by creating more of a community atmosphere.

Our new intranet was delivered on time and on budget in June 2017. Initial feedback has been positive, with staff saying it is easier to find information and do their work.

Image acknowledgement: Clean Energy Regulator. REGi interface, Australian Capital Territory.

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EXTERNAL SCRUTINY

Our agency is accountable to the Parliament through the Minister for the Environment and Energy. Other external scrutiny includes examination by parliamentary committees, the Commonwealth Ombudsman and Australian National Audit Office (ANAO).

External decision and reports

In 2016-17 there were no relevant judicial decisions.

The Administrative Appeals Tribunal confirmed a decision made by our agency in relation to the liability of an entity (TEC Pipe Pty Ltd) under the Renewable Energy (Electricity) Act 2000 for the 2014 compliance year35.

There were no matters referred to the Australian Information Commissioner.

Our operations were not the subject of any reports by the Auditor-General (other than the financial statements), parliamentary committees or the Commonwealth Ombudsman.

Parliamentary committees

In 2016-17 we appeared before the Senate Environment and Communications Legislation Committee on three occasions. We responded to 57 questions on notice, including whole of portfolio questions on corporate matters as well as questions on the operations of the schemes we administer.

Australian National Audit Office performance audit

The ANAO undertook an audit titled ‘Emissions Reduction Fund—Abatement Crediting and Purchasing’. The audit objective was to assess the effectiveness of our crediting and selection of carbon abatement to purchase under the Emissions Reduction Fund.

The ANAO found our arrangements and processes are sound. The audit findings confirm we have created an appropriate awareness of Emissions Reduction Fund processes and have established effective arrangements to inform potential participants. This is evident in the high levels of participation and in the quality of feedback we receive through our annual client survey.

We welcome the findings of the ANAO audit, which concluded that the first two Emissions Reduction Fund auctions were conducted effectively and in accordance with published auction guidance.

Our full response to the ANAO audit is on our website.

35. TEC Pipe Pty Ltd and Clean Energy Regulator [2017] AATA 48.

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MANAGEMENT OF HUMAN RESOURCES

We regard the skills and commitment of our people as an important part of our ‘secure and enduring infrastructure’, one of our agency objectives.

To this end, our approach to managing our people reflects the importance of attracting, retaining and developing a skilled and diverse workforce.

We foster an environment where resources and expertise are shared to maximise business outcomes and manage increased volume and complexity. We achieve this by providing opportunities for growth and development to our staff and by deploying the current workforce in a way that makes best use of their skills.

Talent identification and management

Each April, we hold the Awards of Excellence to recognise the work and achievements of staff who excelled in achieving our agency’s objectives. For more details about our objectives, see page 13. For more details about award winners, see Feature article: Awards of excellence for going above and beyond on page 89.

Our Chair also presents an additional award to an individual or team that exemplifies Australian Public Service values and has made a significant contribution to the work of the agency.

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FEATURE ARTICLE

Awards of Excellence for going above and beyond

The 2017 Chair’s awards were presented to Nicole Patterson and the Communications Section.

Nicole Patterson

Ms Patterson was recognised for the trust she has built across the agency, which enables us to build trust with our external stakeholders. Ms Patterson approaches her work in the Planning, Performance and Parliamentary section ethically and professionally, with enthusiasm and energy. She provides exceptional services to internal clients and navigates some of the agency’s most challenging processes expertly, helping us maintain our reputation as a trusted, relevant and expert institution that provides efficient and effective administration. Her knowledge and willingness to assist others makes Ms Patterson an exemplary and highly valued member of the agency.

Communications Section

The Communications Section supports our agency’s purpose by adding value to everyday business activities through strategic communications advice and direction, and by maintaining effective internal and external communication channels. Over the past five years the team has developed solid processes and sound channels for communication, while working daily across all areas of the agency to deliver targeted communication. From agency culture to high profile scheme developments, the Communications Section ensures staff, clients and stakeholders are engaged and informed.

The other 2017 Awards of Excellence for achieving our agency’s objectives were presented to:

Efficient and effective administration

Engaged, active and compliant clients

Secure and enduring infrastructure

A trusted, relevant and expert institution

• Cherie Ellison

• Emissions Reduction Fund Crediting Coordination team

• Renee Snowden-Coleman

• Small-scale Renewable Energy Scheme Operations team

• Anthea Murphy

• Cross-agency Geospatial Data Analysis team

• Jessica Feeney

• Deregulation, Legislation and Governance team

Image acknowledgement: George Novinc, for Clean Energy Regulator. Awards of Excellence ceremony, Australian Capital Territory.

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Training and development

Training and developing our staff is important to us. Learning and development opportunities allow staff to build on their competency and capability to effectively perform their role and deliver on agency objectives.

In 2016-17 we provided financial support and study leave to 21 staff completing tertiary qualification study that is relevant to their employment at our agency and the wider Australian Public Service. We also supported two employees to undertake the Executive Masters of Public Administration through the Australia and New Zealand School of Government.

We continue to support staff participation in numerous external workshops, seminars and conferences to further their understanding of specific industries, our clients or areas of professional interest. In addition, a range of technical and business training occurred across our agency to support the rollout of new business processes and systems.

Regulatory officer development

In 2016-17 we continued our regulatory officer development program. As at 30 June 2017, 158 staff had participated in the program. The program builds fundamental knowledge and capability for staff in regulatory officer roles, to enable them to successfully perform their duties and contribute to achieving business outcomes specifically in a regulatory context.

This year we piloted a recognition pathway to an industry-recognised qualification. We anticipate this will contribute to an improved regulatory capability within our agency.

Workforce profile

As at 30 June 2017 our agency had 335 employees, comprising 315 ongoing and 20 non-ongoing employees.

Appendix G provides details of our workforce profile by level, gender, full-time and part-time, ongoing and non-ongoing, and diversity.

Graph 7: Workforce profile by level and gender as at 30 June 2017 (by headcount)

100

80

40

60

20

0

GRAD APS2 APS3 APS4 APS5 APS6 EXE1 EXE2 SES1 SES2

Female Level 2015-16 Male

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Graduate recruitment and development

Our Graduate Development Program provides a range of professional and personal development opportunities to attract graduates with qualifications and experience highly relevant to our work.

In 2017 we employed five graduates. We partnered with the Australian Public Service Commission to deliver our graduate training programs. This, coupled with on the job experience, provides our graduates with the skills, knowledge and experience for future leadership roles in the Australian Public Service.

Access and equity

Workplace diversity

We are committed to supporting diversity in our workplace, and providing an environment free from discrimination, patronage and favouritism.

We support this by:

• implementing our Indigenous Traineeship Program

• participating in the Department of the Environment and Energy Indigenous Network

• establishing our Women in Clean Energy Regulator Network

• establishing the LGBTIQ and non-Anglo background staff reference groups

• holding specific events to celebrate and engage with workplace diversity (such as Harmony Day)

• participating in events such as the International Women’s Day luncheon

• encouraging flexible working arrangements, including reduced hours and job-sharing

• providing reasonable adjustment to support people with a disability

• providing appropriate facilities, including a prayer room and parent’s room

• providing mandatory training for bullying and harassment prevention, and

• maintaining our network of workplace harassment contact officers.

Appendix G details the representation of equal opportunity employment target groups in our workforce profile. MANAGEMENT AND ACCOUNTABILITY 5

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Access to information

We make our online services and information accessible to as many people as possible regardless of ability. As per the Digital Service Standard, defined by the Digital Transformation Agency, we focus on ensuring our systems and content are accessible.

Over time all internal and external web-based systems will be upgraded, to conform to the Web Content Accessibility Guidelines (WCAG) 2.0 Level AA standard, or will be replaced with new systems that conform. We have divided our approach into four categories. Within each of these categories we will focus on the four principles of WCAG 2.0 (text alternatives, keyboard access, readability and input assistance).

The four categories are:

• System/platform—our business and technical owners of current web-based applications are required to assess accessibility compliance, and define ways to support people whose specific accessibility needs are not met. They are also required to consider accessibility in future development work.

• Content—all new or revised content published in existing agency systems will be accessible, where possible, and within the limitations of the given web-based system/platform.

• Documents—all new or revised documents will be provided in multiple formats, where possible, with enhanced accessibility.

• Media—we make transcripts available for new or revised multimedia presentations where possible. This includes videos, sound recordings or other multimedia presentations.

Employment conditions

Terms and conditions for agency employees are governed by our Enterprise Agreement (including individual flexibility arrangements made in accordance with the Fair Work Act 2009 that vary conditions of the agreement), individual section 24(1) determinations in accordance with the Public Service Act 1999, and decisions of the Remuneration Tribunal.

Enterprise Agreement

Our employees are covered by the Clean Energy Regulator Enterprise Agreement 2016-19, which commenced on 13 January 2016, with a nominal expiry date of 5 January 2019.

This is the first single Enterprise Agreement to cover our employees, replacing our two previous legacy agreements from the former Department of Climate Change and Energy Efficiency and the former Office of the Renewable Energy Regulator.

This agreement covers all employees except those on individual flexibility arrangements, our Senior Executive Service (SES) and Chair.

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Individual determinations under the Public Service Act

At 30 June 2017, terms and conditions for our 11 Senior Executive Service (SES) officers were outlined in individual determinations under section 24(1) of the Public Service Act 1999, made by the Chair.

Individual flexibility arrangements

At 30 June 2017, 11 non-SES employees were covered under individual flexibility arrangements.

Appointment of Chair

The position of Chair is a statutory appointment with conditions of employment determined by the Remuneration Tribunal.

Remuneration and benefits

The details of our remuneration and process for salary advancement are in our Enterprise Agreement.

Appendix G provides details of the available salary ranges by classification level. Progression through the available salary points is determined by the results of annual performance assessments.

Non-salary benefits available to our employees include:

• individual flexibility agreements

• health and wellbeing programs

• coaching and mentoring

• learning and development opportunities

• studies assistance (study leave and financial assistance)

• options for flexible hours and time off in lieu, and

• flexible working conditions such as part-time employment, job sharing and working from home.

Performance pay

In 2016-17 no agency employee was awarded performance pay.

Performance management

In 2016-17 we maintained our Continuing Conversations approach to performance management. This approach emphasises the importance of individuals and their managers having ongoing conversations about performance throughout the year.

We continued to implement our performance management policy, introduced in 2016, that complements the Clean Energy Regulator Enterprise Agreement 2016-19. This agreement aligns the performance management cycle with the financial year and eligible employees receive salary advancement on 1 July each year.

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Work health and safety

We recognise the importance of our legislative obligations under the Work Health and Safety Act 2011 to prevent work-related injury and illness. Workplace health and safety hazards can be physical or psychological, and they can derive from both office-based and off-site work environments. We articulate our commitment to workplace health and safety through related policy and supporting documents.

Initiatives

As part of our commitment to providing a safe working environment, we delivered the following initiatives in 2016-17:

• a network of qualified first aid officers and three fully equipped first aid rooms for employees

• a network of trained mental health first aid officers

• a network of trained workplace harassment contact officers

• trained rehabilitation case managers available to assist staff

• early intervention initiatives

• an Employee Assistance Program (EAP) to provide confidential counselling to employees and their immediate family members, and

• wellbeing program for staff including:

» performance management training to support managers and employees for their end-of-cycle performance discussions

» posture and flexibility classes, and

» voluntary influenza vaccinations.

Security

There was a six per cent reduction in detected security breaches during 2016-17. We recorded a total of 29 security breaches, all of which were minor. This follows a 38 per cent reduction in breaches during 2015-16, and a 25 per cent reduction in 2014-15. This continued reduction reflects ongoing efforts to increase awareness and compliance across our agency. We maintained compliance with the mandatory requirements of the Protective Security Policy Framework and will be reporting full compliance for 2016-17.

Facilities and accommodation

In 2016-17 we maintained the appropriate level of facilities for our staff to provide a safe and productive working environment and we maintained our 6-star energy rating under the National Australian Built Environment Rating System.

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SNAPSHOT

We maintained a 6-star energy rating for our office

We renewed the lease on our existing building in May 2017, following an assessment of potential relocation options. This renewed lease expires in May 2022.

Asset management

Our agency’s asset management framework encompasses several elements to ensure we strategically invest in and maintain assets necessary for effective delivery of our outcome. The framework includes:

• internal governance through the internal budget process and Project Portfolio Board, to ensure investment decisions regarding assets are subject to sound investment principles and can deliver benefits to our agency

• asset management policies that articulate sound asset management principles and responsibilities, and

• annual reviews of the asset register including stocktakes and impairment testing.

We manage current and non-current assets in accordance with the Chief Executive’s Instructions and relevant accounting standards. During 2016-17 we undertook the following asset related activities:

• a full stocktake of our asset base and we engaged an independent expert to conduct a valuation of our agency’s assets (excluding intangibles) in accordance with the requirements of Australian Accounting Standards Board (AASB) 13 Fair Value Measurement, and

• asset impairment testing and review of useful life (‘re-life’ assessment) of our assets, including information and communications technology (ICT) and non-ICT property, plant and equipment, intangibles and software assets under construction, as required by the following Australian Accounting Standards:

» AASB 116 Property, Plant and Equipment

» AASB 136 Impairment of Assets, and

» AASB 138 Intangible Assets.

The results are reported in the financial statements. For more details, see Section 6: Finances from page 99. MANAGEMENT AND ACCOUNTABILITY 5

2016-17 Annual Report | Clean Energy Regulator 96

PURCHASING AND PROCUREMENT

Procurement

As a non-corporate Commonwealth entity, our purchasing and procurement policies and practices are consistent with:

• all relevant Commonwealth legislation

• the Australian Government financial framework, including the Commonwealth Procurement Rules

• the Chief Executive Instructions and relevant Clean Energy Regulator policies, and

• the Indigenous procurement policy.

All open tender opportunities of $80 000 and above (inclusive of GST) are advertised on the AusTender website. We review all procurements of $50 000 and above (inclusive of GST) to ensure they are conducted in accordance with the procurement framework. Our procurement methods aim not to discriminate against small and medium-sized enterprises.

We update our Annual Procurement Plan quarterly. This plan, available on the AusTender website, outlines the planned procurement for the forthcoming year. This gives prospective suppliers the opportunity to prepare for potential work with our agency.

Consultants

We procure consultancy services in accordance with our procurement framework.

We awarded 13 new consultancy contracts during 2016-17, involving total actual expenditure of $2 108 881 (inclusive of GST).

Five consultancy contracts, involving total actual expenditure of $453 028 (inclusive of GST), were ongoing in 2016-17.

All consultancy contracts valued at $10 000 (inclusive of GST) or more awarded in 2016-17 are published on the AusTender website.

This annual report contains information about actual expenditure on contracts for consultancies. Information on the value of individual contracts for consultancies is available on the AusTender website.

Engagement of consultants

We engage consultants through fair and equitable processes, selecting multiple providers through panel or open tender processes and conducting a value for money assessment. We conduct all procurement activities in accordance with policies, regulations and legislative requirements.

MANAGEMENT AND ACCOUNTABILITY

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97 2016-17 Annual Report | Clean Energy Regulator

Australian National Audit Office access clauses

Any contracts of $100 000 (inclusive of GST) or more awarded during 2016-17 included a provision for the Auditor-General to have access to the contractor’s premises.

Exempt contracts

In 2016-17 the Chair did not exempt any standing offer or contract in excess of $10 000 (inclusive of GST) from being published on the AusTender website36.

Procurement initiatives to support small business

We support small business participation in the Commonwealth Government procurement market. Small and medium enterprises and small enterprise participation statistics are available on the Department of Finance website.

Consistent with paragraph 5.4 of the Commonwealth Procurement Rules, we use the following initiatives and practices to support small and medium enterprises:

• the Commonwealth Contracting Suite for low-risk procurements valued under $200 000

• Australian Industry Participation Plans in whole of government procurement where applicable

• the Small Business Engagement Principles (outlined in the Government’s Industry Innovation and Competitiveness Agenda), such as communicating in clear, simple language and presenting information in an accessible format, and

• electronic systems or other processes used to facilitate on-time payment performance, including the use of payment cards.

We recognise the importance of ensuring that small businesses are paid on time. The results of the Survey of Australian Government Payments to Small Business are available on the Treasury’s website.

We comply with the requirements set out in the Indigenous Procurement Policy. In 2016-17 we entered into six contracts and one sub-contracting arrangement for the supply of goods and services from Indigenous suppliers.

36. Emissions Reduction Fund carbon abatement contracts are exempt.

MANAGEMENT AND ACCOUNTABILITY

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2016-17 Annual Report | Clean Energy Regulator 98

INFORMATION AND COMMUNICATIONS TECHNOLOGY

We require dependable information and communications technology (ICT) services and the capacity to innovate new digital services to effectively run our schemes and quickly respond to the evolving policy and regulatory environment.

Our ICT strategy for 2016-17 to 2018-19 provides an underlying roadmap to meet our agency’s strategic objectives, regulatory responsibilities and the Australian Government’s Digital Service Standard.

Several improvements in 2016-17 advanced our digital transformation agenda. These include:

• enhancing internal and client-facing systems to support setting emissions baselines as part of the safeguard mechanism

• expanding the availability of client-facing online forms and internal process automation to reduce the regulatory burden on clients for Emissions Reduction Fund project registration, project variations, reports of abatement delivery, and responsible emitter registration

• developing an electronic risk register, replacing an aging legacy system and better supporting our agency’s risk management framework

• enhancing our electronic document and records management system, for improved usability and search capabilities

• integrating with industry-developed databases to validate solar panel serial numbers when issuing small-scale technology certificates

• upgrading our agency’s intranet, including enhancing functionality. For more details, see Feature article: New and improved intranet supports our work on page 86.

• ongoing rationalisation of our outsourced technology services, by transferring support of the REC Registry in-house, and

• regular assessments of our infrastructure and applications to ensure they continue to meet government usability and security requirements.

We will continue to consolidate and build on these achievements to support the effective and efficient administration of our schemes.

MANAGEMENT AND ACCOUNTABILITY

5

99

6 FINANCES

Financial overview 100

Summary of financial performance 101 Financial statements 106

Image acknowledgement: Clean Energy Regulator. Broken Hill Solar Farm, New South Wales, Renewable Energy Target.

2016-17 Annual Report | Clean Energy Regulator 100

FINANCIAL OVERVIEW

The agency continued the successful delivery of its schemes in 2016-17 including undertaking the fourth and fifth auctions of the Emissions Reduction Fund. To ensure scheme delivery and to maximise performance the agency maintained its strong focus on budget management and resource allocation.

Highlights from the year include:

Delivered on our schemes

Emissions Reduction Fund

• recorded $160.8 million in ACCU purchases, and

• 100% of contract payments made on time.

Renewable Energy Target

• issued administered clearing house receipts from buyers of $445.9 million

• administered clearing house payments to sellers of $523.2 million

• recorded $149.5 million in shortfall charges and interest, and

• recorded $12.1 million in renewable energy certificate fees.

Delivered within budget

• operated within our agreed staffing level, and

• operated within our agreed funding envelope.

Improved our efficiency

• invested over $2.5 million in our ICT systems to improve efficiency and client experience

• strengthened our internal controls through a targeted review of the REC Registry, and

• engaged with the whole of government shared services agenda.

FINANCES

6

101 2016-17 Annual Report | Clean Energy Regulator

SUMMARY OF FINANCIAL PERFORMANCE

Departmental finances

Operating result

Our agency achieved an operating surplus of $7.591 million (before depreciation and amortisation) in 2016-17, largely attributable to revaluation adjustments ($5.510 million) and the renegotiation and subsequent removal of the makegood provision ($1.868 million) related to the renewal of the agency’s office accommodation.

Operating budget

Our operating expenditure budget for 2016-17 was $71.446 million excluding depreciation. Refer to Note 1.1 of the financial statements.

Graph 8: Operating expenditure 2016- 17

Employees 55%

Travel 1%

Contractors 9%

Office equipment 9%

Consultants 8%

Other 8%

Lease payments 5%

Third party service providers 3%

Recruitment and training 2%

FINANCES

6

Capital Investment

Our capital expenditure budget for 2016-17 was $2.833 million consisting of:

• departmental capital budget of $1.183 million

• prior year equity of $1.500 million, and

• current year equity injection of $0.150 million.

2016-17 Annual Report | Clean Energy Regulator 102

Graph 9: Capital investment by category 2016- 17

Internally developed software (work in progress) 72%

Plant and equipment 4%

Internally developed software 24%

Our systems are designed to support multiple schemes with the intent of improving the client experience, reducing client burden and improving efficiency for the agency.

Graph 10: Capital investment in schemes 2016- 17

Agency administration 14%

Schemes 86%

Refer to Note 3.2 of the financial statements.

Administered finances

Our agency administered the Emissions Reduction Fund, Renewable Energy Target, and residual items relating to the carbon pricing mechanism on behalf of the government in 2016-17.

Administered income

Administered income was $161.667 million and came entirely from the Renewable Energy Target.

FINANCES

6

103 2016-17 Annual Report | Clean Energy Regulator

Graph 11: Administered income 2016- 17

Shortfall penalty 92%

Registration of certificates 6%

Surrender of certificates 2%

Refer to Note 2.2 of the financial statements.

Administered expenses

Administered expenses were $309.233 million, predominantly in the Emissions Reduction Fund and Renewable Energy Target. Refer to Note 2.1 of the financial statements.

Graph 12: Administered expenses 2016- 17

Renewable Energy Target provision for refund, large-scale shortfall 44%

Emissions Reduction Fund 52%

FINANCES

6

Carbon pricing mechanism 3%

Renewable Energy Target inspections 1%

FINANCIAL STATEMENTS

The Clean Energy Regulator received an unqualified audit report from the Australian National Audit Office for its 2016-17 financial statements.

The Clean Energy Regulator’s 2016-17 financial statements start on page 106 following the independent auditor’s report and statement by the Accountable Authority and Chief Financial Officer.

The Agency Resource Statement table is in Appendix H on page 172.

2016-17 Annual Report | Clean Energy Regulator 104

FINANCIAL STATEMENTS

6

INDEPENDENT AUDITOR’S REPORT

To the Minister for Environment and Energy

Opinion

In my opinion, the financial statements of the Clean Energy Regulator for the year ended 30 June 2017:

(a) comply with Australian Accounting Standards - Reduced Disclosure Requirements and the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015; and

(b) present fairly the financial position of the Clean Energy Regulator as at 30 June 2017 and its financial performance and cash flows for the year then ended.

The financial statements of the Clean Energy Regulator, which I have audited, comprise the following statements as at 30 June 2017 and for the year then ended:

• Statement by the Accountable Authority and Chief Financial Officer; • Statement of Comprehensive Income; • Statement of Financial Position; • Statement of Changes in Equity; • Cash Flow Statement; • Administered Schedule of Comprehensive Income; • Administered Schedule of Assets and Liabilities; • Administered Reconciliation Schedule; • Administered Cash Flow Statement; and • Notes to the financial statements, comprising a Summary of Significant Accounting Policies and other

explanatory information.

Basis for Opinion

I conducted my audit in accordance with the Australian National Audit Office Auditing Standards, which incorporate the Australian Auditing Standards. My responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of my report. I am independent of the Clean Energy Regulator in accordance with the relevant ethical requirements for financial statement audits conducted by the Auditor-General and his delegates. These include the relevant independence requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants to the extent that they are not in conflict with the Auditor-General Act 1997 (the Code). I have also fulfilled my other responsibilities in accordance with the Code. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Accountable Authority’s Responsibility for the Financial Statements

As the Accountable Authority of the Clean Energy Regulator the Chair is responsible under the Public Governance, Performance and Accountability Act 2013 for the preparation and fair presentation of annual financial statements that comply with Australian Accounting Standards - Reduced Disclosure Requirements and the rules made under that Act. The Chair is also responsible for such internal control as the Chair determines is necessary to enable the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Chair is responsible for assessing the Clean Energy Regulator’s ability to continue as a going concern, taking into account whether the entity’s operations will cease as a result of an administrative restructure or for any other reason. The Chair is also responsible for disclosing matters related to going concern as applicable and using the going concern basis of accounting unless the assessment indicates that it is not appropriate.

GPO Box 707 CANBERRA ACT 2601 19 National Circuit BARTON ACT Phone (02) 6203 7300 Fax (02) 6203 7777

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FINANCIAL STATEMENTS

6

Auditor’s Responsibilities for the Audit of the Financial Statements

My objective is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian National Audit Office Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

As part of an audit in accordance with the Australian National Audit Office Auditing Standards, I exercise professional judgement and maintain professional scepticism throughout the audit. I also:

• identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;

• obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control;

• evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Accountable Authority; • conclude on the appropriateness of the Accountable Authority’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or

conditions that may cast significant doubt on the entity’s ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor’s report. However, future events or conditions may cause the entity to cease to continue as a going concern; and • evaluate the overall presentation, structure and content of the financial statements, including the disclosures,

and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

I communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.

Australian National Audit Office

Clea Lewis

Executive Director

Delegate of the Auditor-General

Canberra

22 September 2017

2016-17 Annual Report | Clean Energy Regulator 106

FINANCIAL STATEMENTS

6

107 2016-17 Annual Report | Clean Energy Regulator

FINANCIAL STATEMENTS

6

for the period ended 30 June 2017

2017 2016

Original Budget 2017

Notes $'000 $'000 $'000

NET COST OF SERVICES Expenses Employee benefits 1.1A 39,372 40,505 39,007

Suppliers 1.1B 31,490 31,613 32,385

Depreciation and amortisation 3.2A 12,061 13,036 12,794

Finance costs 1.1C 33 54 54

Write-down and impairment of assets 1.1D 502 482 -

Total expenses 83,458 85,690 84,240

Own-source income

Own-source revenue Rendering of services 1.2A 13 93 -

Other revenue 1.2B 497 385 -

Total own-source revenue 510 478 -

Gains Other gains 1.2C 1,875 19 465

Total gains 1,875 19 465

Total own-source income 2,385 497 465

Net cost of services (81,073) (85,193) (83,775)

Revenue from Government 1.2D 70,974 72,974 70,981

Deficit on continuing operations (10,099) (12,219) (12,794)

OTHER COMPREHENSIVE INCOME Items not subject to subsequent reclassification to net cost of services Changes in asset revaluation reserve 5,629 8 -

Total other comprehensive income 5,629 8 -

Total comprehensive loss (4,470) (12,211) (12,794)

The above statement should be read in conjunction with the accompanying notes.

Statement of Comprehensive Income

2016-17 Annual Report | Clean Energy Regulator 108

FINANCIAL STATEMENTS

6

as at 30 June 2017

2017 2016

Original Budget 2017

Notes $’000 $’000 $’000

ASSETS Financial assets Cash and cash equivalents 3.1A 345 282 307

Trade and other receivables 3.1B 21,775 25,044 24,086

Other financial assets 3.1C 10 - 51

Total financial assets 22,130 25,326 24,444

Non-financial assets Buildings 3.2A 5,514 1,956 -

Plant and equipment 3.2A 1,390 1,744 661

Intangibles 3.2A 13,952 21,311 12,408

Other non-financial assets 3.2B 850 1,130 1,097

Total non-financial assets 21,706 26,141 14,166

Total assets 43,836 51,467 38,610

LIABILITIES Payables Suppliers 3.3A 3,626 4,944 6,490

Other payables 3.3B 868 458 -

Total payables 4,494 5,402 6,490

Provisions Employee provisions 6.1A 10,625 11,364 11,858

Other provisions 3.4A - 1,836 1,900

Total provisions 10,625 13,200 13,758

Total liabilities 15,119 18,602 20,248

Net assets 28,717 32,865 18,362

EQUITY Contributed equity 85,058 83,725 85,058

Reserves 9,623 3,994 3,985

Accumulated deficit (65,964) (54,854) (70,681)

Total equity 28,717 32,865 18,362

The above statement should be read in conjunction with the accompanying notes.

Statement of Financial Position

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6

2017 2016

Original Budget 2017

Notes $’000 $’000 $’000

CONTRIBUTED EQUITY Opening balance Balance carried forward from previous period 83,725 82,540 83,725

Adjusted opening balance 83,725 82,540 83,725

Transactions with owners Contributions by owners Equity injection - Appropriations 150 - 150

Departmental capital budget 1,183 1,185 1,183

Total transactions with owners 1,333 1,185 1,333

Closing balance as at 30 June 85,058 83,725 85,058

RETAINED EARNINGS Opening balance (54,854) (42,635) (57,887)

Adjustment to Opening Balance (1,011) -

Comprehensive income Deficit for the period (10,099) (12,219) (12,794)

Total comprehensive income (10,099) (12,219) (12,794)

Closing balance as at 30 June (65,964) (54,854) (70,681)

ASSET REVALUATION RESERVE Opening balance 3,994 3,986 3,985

Comprehensive income Other comprehensive income 5,629 8 -

Total comprehensive income 5,629 8 -

Closing balance as at 30 June 9,623 3,994 3,985

TOTAL EQUITY Opening balance 32,865 43,891 29,823

Comprehensive income Deficit for the period (10,099) (12,219) (12,794)

Other comprehensive income 5,629 8 -

Total comprehensive income (4,470) (12,211) (12,794)

Transactions with owners Contributions by owners Equity injection - Appropriations 150 - 150

Equity Adjustment1 (1,011) - -

Departmental capital budget 1,183 1,185 1,183

Total transactions with owners 322 1,185 1,333

Closing balance as at 30 June 28,717 32,865 18,362

The above statement should be read in conjunction with the accompanying notes.

for the period ended 30 June 2017

Statement of Changes in Equity

1. Appropriation Act (No. 4) 2013-14 Capital Equity injection of $1.011m was quarantined by the Department of Finance and was part of the opening balance of 2016-17. The Clean Energy Regulator has no control of this appropriation from 2017-18 onwards and has removed it from the available appropriations for 2016-17.

Accounting Policy Equity injections Amounts appropriated which are designated as ‘equity injections’ for a year (less any formal reductions) and Departmental Capital Budgets (DCBs) are recognised directly in contributed equity in that year.

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FINANCIAL STATEMENTS

6

2017 2016

Original Budget 2017

Notes $’000 $’000 $’000

OPERATING ACTIVITIES Cash received Appropriations 72,614 73,522 70,501

Rendering of services 136 115 -

Net GST received 3,175 3,228 -

Total cash received 75,925 76,865 70,501

Cash used Employees 39,537 39,609 38,423

Suppliers 35,260 36,315 32,078

Section 74 receipts transferred to OPA 929 967 -

Total cash used 75,726 76,891 70,501

Net cash from/(used by) operating activities 199 (26) -

INVESTING ACTIVITIES Cash used Purchase of property, plant and equipment 102 1,056 -

Purchase of intangibles 2,858 4,809 2,833

Total cash used 2,960 5,865 2,833

Net cash used by investing activities (2,960) (5,865) (2,833)

FINANCING ACTIVITIES Cash received Contributed equity 2,824 5,866 2,833

Total cash received 2,824 5,866 2,833

Net cash from financing activities 2,824 5,866 2,833

Net increase/(decrease) in cash held 63 (25) -

Cash and cash equivalents at the beginning of the reporting period 282 307 307

Cash and cash equivalents at the end of the reporting period 3.1A 345 282 307

The above statement should be read in conjunction with the accompanying notes.

Cash Flow Statement

for the period ended 30 June 2017

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6

Budget Variances Commentary - Departmental The Clean Energy Regulator (CER) has disclosed major departmental variances against budget where the variance is greater than 10 per cent and $0.250 million of an individual line item.

Statement of Comprehensive Income Expenses: Write-down and impairment of assets The CER undertook an impairment and re-life review of its assets. Three systems were identified for partial impairment due to replaced or obsolete functionality.

Revenue: Other revenue The CER receives resources free of charge from the Australian National Audit Office. This item was budgeted against other gains.

Gains: Other gains The CER negotiated a new lease over its office accommodation which removed a makegood obligation that existed under the old lease. The agency had a provision of $1.869 million for this expense which has been reversed and recognised as other gains.

Other comprehensive income: Changes in asset revaluation reserve Following the renewal of its lease arrangements the CER undertook a fair value assessment of its leasehold improvement. A valuation firm provided a report advising that the fair value of the leasehold improvement was $5.514 million. The increase in the carrying amount was recognised as an adjustment to the asset revaluation reserve.

Statement of Financial Position Assets: Buildings The CER's building asset was fully depreciated in line with the life of the original lease. CER negotiated a new lease over its office accommodation and revalued its leasehold improvement asset.

Assets: Plant and equipment The CER finalised its acquisition of new computer hardware under its ICT refresh project during 2016-17, as well as recognising a revaluation increment.

Assets: Intangibles The CER budgeted for an increase in intangibles consistent with its known Departmental Capital Budget. However, during the year CER made planned use of current and prior year equity injections which it had not included in its budget to continue the development of its systems.

Liabilities: Suppliers payable & other payables The CER recognises payables and accrued expenditure at the end of the year for work performed but not yet paid (including salaries), this amount changes from time to time in the normal course of business.

Liabilities: Employee provisions The value of employee provisions is calculated using a combination of staff numbers, bond rates, pay rises and probability factors and changes from time to time in the normal course of business.

Liabilities: Other provisions CER had a lease for its office accommodation that included a makegood provision to pay for makegood works at lease end. During 2016-17 CER negotiated a new lease for its office accommodation which removed the makegood obligation.

Equity: Reserves CER recognised an asset revaluation increment for leasehold improvement following the negotiations for a new lease for office accommodation which was recognised against the revaluation reserve.

Equity: Accumulated deficit CER recognised a revaluation increment for leasehold improvement and an extraordinary gain for the reversal of the makegood provision which offset the expected full year operating loss and accumulated deficit.

Statement of changes in equity Retained earning: adjustment to opening balance Appropriation Act (No. 4) 2013-14 Capital Equity injection of $1.011m was quarantined by the Department of Finance and was part of the opening balance of 2016-17. CER has no control on this appropriation from 2017-18 onwards and has removed it from the available appropriations at the close of 2016-17.

2016-17 Annual Report | Clean Energy Regulator 112

FINANCIAL STATEMENTS

6

Budget Variances Commentary - Departmental Cash Flow Statement Operating activities: cash received - Net GST received The budget was prepared net of GST whereas actuals are GST inclusive.

Operating activities: cash received - Section 74 receipts transferred to Official Public Account The budget was prepared net of Section 74 receipts transferred to the Official Public Account as these are highly unpredictable and relate to leave liability transfers and other minor revenues.

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6

2017 2016

Original Budget 2017

Notes $’000 $’000 $’000

NET COST OF SERVICES

Suppliers 2.1A 3,804 3,813 3,817

Purchase of Australian Carbon Credit Units 2.1B 160,769 138,409 275,850

Write-down and impairment of assets 2.1C - 690 -

Refund of RET Shortfall Charges 2.1D 135,856 - -

Other expenses 2.1E 8,804 1,896 -

Total expenses 309,233 144,808 279,667

Income Revenue Taxation revenue Other taxes (RET Shortfall Charges) 2.2A 149,492 5,170 595

Total taxation revenue 149,492 5,170 595

Non-taxation revenue Fees and fines 2.2B 12,175 11,136 12,758

Total non-taxation revenue 12,175 11,136 12,758

Total revenue 161,667 16,306 13,353

Total income 161,667 16,306 13,353

Net cost of services (147,566) (128,502) (266,314)

Deficit (147,566) (128,502) (266,314)

OTHER COMPREHENSIVE INCOME Total other comprehensive income - - -

Total comprehensive loss (147,566) (128,502) (266,314)

The above schedule should be read in conjunction with the accompanying notes.

Administered Schedule of Comprehensive Income

for the period ended 30 June 2017

Expenses

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FINANCIAL STATEMENTS

6

2017 2016

Original Budget 2017

Notes $’000 $’000 $’000

ASSETS

Financial assets Cash and cash equivalents 4.1A 757 85,416 -

Taxation receivables 4.1B 3,888 813 213

Trade and other receivables 4.1C 8,052 7,218 493

Total financial assets 12,697 93,447 706

Total assets administered on behalf of Government 12,697 93,447 706

LIABILITIES Payables Suppliers 4.2A 417 3,050 11,031

Purchase of Australian Carbon Credit Units 4.2B 36,973 35,625 -

Other payables 4.2C 103 75,913 -

Total payables 37,493 114,588 11,031

Provisions Other provisions - Refund of Shortfall Charges 4.3A 135,856 - -

Total Provisions 135,856 - -

Total liabilities administered on behalf of Government 173,349 114,588 11,031

Net liabilities (160,652) (21,141) (10,325)

The above schedule should be read in conjunction with the accompanying notes.

Administered Schedule of Assets and Liabilities

as at 30 June 2017

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FINANCIAL STATEMENTS

6

2017 2016

Notes $’000 $’000

Opening assets less liabilities as at 1 July (21,142) (13,533)

Adjustments to opening Equity

Prior year adjustments 396 1,737

Net cost of services Income 161,667 16,306

Expenses Payments to entities other than corporate Commonwealth entities (309,233) (144,808)

Transfers (to)/from the Australian Government Appropriation transfers from Official Public Account Annual appropriations

192,440 151,152

Special appropriations (unlimited)

8,744 8,580

Appropriation transfers to OPA Transfers to OPA (193,524) (40,576)

Closing assets less liabilities as at 30 June (160,652) (21,142)

The above schedule should be read in conjunction with the accompanying notes.

Administered Reconciliation Schedule

Payments to entities other than corporate Commonwealth entities

Payments to entities other than corporate Commonwealth entities

Accounting Policy Administered cash transfers to and from the Official Public Account Revenue collected by the entity for use by the Government rather than the entity is administered revenue. Collections are transferred to the Official Public Account (OPA) maintained by the Department of Finance. Conversely, cash is drawn from the OPA to make payments under Parliamentary appropriation on behalf of Government. These transfers to and from the OPA are adjustments to the administered cash held by the entity on behalf of the Government and reported as such in the schedule of administered cash flows and in the administered reconciliation schedule.

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FINANCIAL STATEMENTS

6

2017 2016

Notes $’000 $’000

OPERATING ACTIVITIES Cash received Taxes (RET Shortfall Charges) 146,034 3,817

Fees and fines 13,535 9,888

Other 103 89,999

Net GST received - -

Total cash received 159,672 103,704

Cash used Suppliers 14,861 3,390

Subsidies - -

Purchase of Australian Carbon Credit Units 159,420 111,883

Net payments to small-scale technology clearing house 70,058 6,540

Net GST paid 7,650 16,047

Total cash used 251,989 137,860

Net cash from/(used by) operating activities (92,317) (34,156)

Cash and cash equivalents at the beginning of the reporting period 85,416 416

Cash from Official Public Account Appropriations 201,182 159,732

Total cash from/(to) Official Public Account 201,182 159,732

Cash to Official Public Account Appropriations (193,524) (40,576)

Total cash from/(to) Official Public Account (193,524) (40,576)

Cash and cash equivalents at the end of the reporting period 4.1A 757 85,416

This schedule should be read in conjunction with the accompanying notes.

Administered Cash Flow Statement

for the period ended 30 June 2017

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6

Budget Variances Commentary - Administered The CER has disclosed major administered variances against budget where the variance is greater than 10 per cent and $0.500 million of an individual line item.

Emissions Reduction Fund The CER continued the delivery of the Emissions Reduction Fund (ERF) in 2016-17, including the completion of the fourth and fifth auctions. The budget profile was updated during 2016-17 to better reflect the outcome of the auction results, with the purchase of Australian Carbon Credit Units (ACCU's) largely consistent with revised budget estimates.

Renewable Energy Target During 2016-17 a number of entities decided to pay a large-scale generation shortfall charge to meet their large-scale renewable energy target obligations rather than to surrender Renewable Energy Certificates. Entities can receive a refund of their shortfall payments if they meet certain requirements under the legislation within the ‘allowable refund period’. CER has raised a provision on the basis that some entities will become entitled to a repayment of their shortfall payments.

Administered Schedule of Comprehensive Income Expenses: Purchase of Australian Carbon Credit Units The budget allocation reflects the best estimate for ACCU purchases at the time of preparation. This estimate is then subject to auction results and movement between years of existing contract deliverables (as allowed for in ERF contracts). The estimate has since been updated in line with the known pattern of commitments.

Expenses: Provision for refund of RET shortfall charges CER has raised a provision and corresponding expense for entities that will become entitled to a repayment of their shortfall payments.

Expenses: Other expenses The carbon pricing mechanism was repealed with effect from 1 July 2014 and removed from the CER's budget estimates. Subsequent to the repeal there have been a number of minor residual items accounted for in 2016-17 relating to the re-submission of emissions numbers and the remission of shortfall charge penalty interest.

Revenue: Other taxes The budget assumes a low level of non-compliance with obligations to surrender Renewable Energy Certificates, however during 2016-17 there were a small number of entities that chose to pay a shortfall charge rather than surrender certificates.

Administered Schedule of Assets and Liabilities Assets: Cash and cash equivalents The CER operates the small-scale technology certificate clearing house to facilitate the purchase and sale of certificates between liable entities and individuals or agents installing small-scale solar, wind and hydro systems. The closing balance represents receipts from liable entities held in the clearing house for payment in 2016-17.

Assets: Taxation receivables The budget assumes that revenues under the schemes will be received before year end. The actuals represent outstanding debts under the Renewable Energy Target not yet impaired.

Assets: Trade and other receivables The budget was prepared net of GST, with this item primarily representing GST receivable by the CER in relation to the small-scale technology certificate clearing house and the accrual of surrender fee revenue, previously accounted for when payments were received.

Liabilities: Suppliers payable The CER recognises payables and accrued expenditure at the end of the year for work performed but not yet paid, this amount changes from time to time in the normal course of business.

Liabilities: Purchase of Australian Carbon Credit Units The CER's accounting treatment recognises ACCU's issued but not yet delivered and also those delivered but not yet settled as a liability at year end, whereas the budget allocation assumed settlement of all deliveries.

Provisions: Other provisions - refund of shortfall charges CER has raised a provision and corresponding expense for entities that will become entitled to a repayment of their shortfall payments.

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Registry

The financial statements have been prepared on an accrual basis and in accordance with the historical cost convention, except for certain assets and liabilities at fair value. Except where stated, no allowance is made for the effect of changing prices on the results or the financial position. The financial statements are presented in Australian dollars and rounded to the nearest $'000 unless otherwise specified.

• providing education and information on the schemes it administers and how they work.

greenhouse gas emissions and supports Australia's emissions and energy data needs

undertake audit activities under the schemes

Board (AASB) that apply for the reporting period.

The Basis of Preparation The financial statements are general purpose financial statements and are required by section 42 of the Public Governance, Performance and Accountability Act 2013 :

The financial statements have been prepared in accordance with:

b) Australian Accounting Standards and Interpretations - Reduced Disclosure Requirements issued by the Australian Accounting periods ending on or after 1 July 2016, and

• accrediting greenhouse and energy auditors who are engaged by the scheme participants and the CER to

• working with other Commonwealth, state and territory law enforcement and regulatory bodies, and

Objectives of the Entity

The Clean Energy Regulator (CER) is an Australian Government controlled entity. It is a non-corporate not-for-profit Commonwealth entity. The objective of the CER is to accelerate carbon abatement for Australia.

The CER is structured to meet the following single outcome, and the result is included in the statement of comprehensive income and statement of financial position:

Outcome 1: Contribute to a reduction in Australia's net greenhouse gas emissions, including through the administration of market based mechanisms that incentivise reduction in emissions and the promotion of additional renewable electricity generation.

The continued existence of CER in its present form and with its present programs is dependent on Government policy and on continuing funding by Parliament for the CER’s administration and programs.

The CER's activities contributing toward this outcome are classified as either Departmental or Administered. Departmental activities involve the use of assets, liabilities, income and expenses controlled or incurred by the CER in its own right. Administered activities involve the management or oversight by the CER, on behalf of the Government, of items controlled or incurred by the Government.

The role of the CER is determined by climate change law. In particular, the CER has administrative responsibilities in relation to the National Greenhouse and Energy Reporting Scheme, Carbon Pricing Mechanism, Emissions Reduction Fund, Australian National Registry of Emission Units, Carbon Farming Initiative and the Renewable Energy Target.

The responsibilities of the CER include:

• collecting, analysing and assessing emissions and energy data, which underpins the reduction of net

a) Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR) for reporting

• operating the Australian National Registry of Emissions Units and the Renewable Energy Certificate

• monitoring, facilitating and enforcing compliance with the schemes it administers

• issuing ACCU's to projects that reduce greenhouse gas emissions

Overview

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surrendered in satisfaction of contract deliverables;

obligation exists; and

Departmental

Administered

Following the introduction of the safeguard mechanism on 1 July 2016 the CER has continued to account for the ERF in line with this policy.

The CER implemented the Emissions Reduction Fund (ERF) in 2014-15 and has an accounting policy for ERF transactions with the following key elements:

• the CER will recognise a liability under the ERF where it has a present obligation arising from a past event; • the obligating event is ACCU issuance. This is on the basis that it is more likely than not that ACCUs issued will be

• where ACCUs issued exceed total contract value they will not be recognised by the CER on the basis that no contractual

• unperformed contractual obligations are disclosed as commitments in Note 2.1B

Breach of Section 83 of the Constitution

CER conducted a detailed risk assessment to ensure that there was no risk of/or actual breach for the 2016-17 financial year and concluded that no disclosure is required with respect to Section 83 of the Constitution. There was no money drawn down from the Treasury of the Commonwealth except under an appropriation made by law. Additionally, all spending from the Consolidated Revenue Fund was in accordance with an authority given by parliament.

There was no subsequent event between balance and signing of the financial statements that had the potential to significantly affect the ongoing structure and financial activities of the entity.

Reporting of Administered activities

Administered significant accounting judgements and estimates

There was no subsequent event between balance and signing of the financial statements that had the potential to significantly affect the ongoing structure and financial activities of the entity.

Events After the Reporting Period

Administered revenues, expenses, assets, liabilities and cash flows are disclosed in the Administered schedules and related notes.

Except where otherwise stated, Administered items are accounted for on the same basis and using the same policies as for Departmental items, including the application of Australian Accounting Standards.

The CER is exempt from all forms of taxation except Fringe Benefits Tax (FBT) and the Goods and Services Tax (GST).

Taxation

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Restatements of prior periods are detailed in the table below:

Administered schedules

Notes Original

$000

Adjustment $000

Restated $000

2011-12

Fees 17B 5,952 2,267 8,219

Trade and other receivables 18B 634 815 1,449

2012-13

Fees and fines 17B 19,383 405 19,788

Trade and other receivables 18C 81 2,203 2,284

2013-14

Fees and fines 17B 13,297 (627) 12,670

Trade and other receivables 18C 64 1,957 2,021

2014-15

Fees and fines 17B 12,431 87 12,518

Trade and other receivables 18C 77 2,138 2,215

2015-16

Fees and fines 2.2B 9,888 1,248 11,136

Trade and other receivables 4.1C 4,232 2,986 7,218

Administered Prior Period Error

During 2016-17 the CER identified a prior period error relating to the measurement of Renewable Energy Target large and small-scale certificate surrender fee revenue. The CER determined that revenue was being recognised when invoices were raised, rather than being accrued when an entity was deemed to have a liability on 14 February each year following the lodgement of their annual energy acquisition statements. It was established that recognition of revenue on a 'cash' basis had occurred each financial year since 2011-12.

The CER has corrected the prior period by restating the closing balances for 2015-16 in the 'Administered schedule of assets and liabilities' and the 'Administered schedule of comprehensive income'.

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1.1 Expenses

2017 2016

$’000 $’000

1.1A: Employee benefits

Wages and salaries 29,825 29,069

Superannuation Defined contribution plans 3,102 2,876

Defined benefit plans 2,433 3,094

Leave and other entitlements 2,913 5,203

Separation and redundancies 859 31

Other 240 232

Total employee benefits 39,372 40,505

1.1B: Suppliers Goods and services supplied or rendered Consultants 5,588 6,133

Contractors 6,777 6,036

Third party service providers1 2,424 7,807

Travel 749 677

Legal expenses 298 277

Recruitment and training 1,553 1,665

Office equipment 6,289 2,479

Other Goods and services supplied or rendered 3,773 2,477

Total goods and services supplied or rendered 27,451 27,551

Goods supplied 1,547 575

Services rendered 25,904 26,976

Total goods and services supplied or rendered 27,451 27,551

Other suppliers Operating lease rentals in connection with Minimum lease payments 3,479 3,536

Ongoing lease expenses 106 125

Workers compensation expenses 454 401

Total other suppliers 4,039 4,062

Total suppliers 31,490 31,613

Leasing commitments

Within 1 year 567 3,484

Between 1 to 5 years 15,015 -

More than 5 years - -

Total operating lease commitments2 15,582 3,484

2. Commitments are GST inclusive.

The CER in its capacity as lessee has one operating lease for office accommodation. Lease payments are subject to an annual increase at a fixed rate. There are no options for renewal.

Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows:

1. During 2016-17 CER initiated changes to the recording of IT expenditure (for greater granularity) resulting in changes between expenditure categories - the most significant occuring in Third Party Service Providers and Office Equipment.

Financial Performance This section analyses the financial performance of the CER for the year ended 2017.

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2017 2016

$’000 $’000

1.1C: Finance costs Unwinding of discount 33 54

Total finance costs 33 54

1.1D: Write-down and impairment of assets Impairment on intangible assets 447 455

Write-down of intangible assets - -

Write-down of property, plant and equipment 55 27

Impairment of property, plant and equipment - -

Total write-down and impairment of assets 502 482

Accounting Policy Employee benefits Accounting policies for employee related expenses are contained in the People and relationships section.

Operating leases Operating lease payments are expensed on a straight-line basis which is representative of the pattern of benefits derived from the leased assets.

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1.2 Own-Source Revenue and Gains

2017 2016

$’000 $’000

Own-source revenue

1.2A: Rendering of services Rendering of services 13 93

Total rendering of services 13 93

1.2B: Other revenue

Resources received free of charge - Remuneration of auditors 385 385

Cost Recovery Solar Towns 112 -

Total other revenue 497 385

Gains

1.2C: Other gains Gain from sale of assets 6 15

Other 1,869 4

Total other gains 1,875 19

1.2D: Revenue from Government Appropriations Departmental appropriations 70,974 72,974

Total revenue from Government 70,974 72,974

Accounting Policy Rendering of services Revenue from rendering of services is recognised by reference to the stage of completion of contracts at the reporting date. The revenue is recognised when:

a) the amount of revenue, stage of completion and transaction costs incurred can be reliably measured; and b) the probable economic benefits associated with the transaction will flow to the CER.

Receivables for goods and services, which have 30 day terms, are recognised at the nominal amounts due less any impairment allowance amount. Collectability of debts is reviewed at end of the reporting period. Allowances are made when collectability of the debt is no longer probable.

Resources received free of charge Resources received free of charge are recognised as gains when, and only when, a fair value can be reliably determined and the services would have been purchased if they had not been donated. Use of those resources is recognised as an expense.

Revenue from Government Amounts appropriated for departmental appropriations for the year (adjusted for any formal additions and reductions) are recognised as Revenue from Government when the entity gains control of the appropriation, except for certain amounts that relate to activities that are reciprocal in nature, in which case revenue is recognised only when it has been earned. Appropriations receivable are recognised at their nominal amounts.

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2.1 Administered - Expenses

2017 2016

$'000 $'000

2.1A: Suppliers Services rendered Contractors 3,804 3,813

Total suppliers 3,804 3,813

2.1B: Purchase of Australian Carbon Credit Units Purchase of Australian Carbon Credit Units 160,769 138,409

Total purchase of Australian Carbon Credit Units 160,769 138,409

2.1C: Write-down and impairment of assets Impairment on financial instruments - 690

Total write-down and impairment of assets - 690

2.1D: Refund of RET Shortfall Charges Refund of Renewable Energy Target Shortfall Charges 135,856 -

Total Refund of RET Shortfall Charges 135,856 -

2.1E: Other expenses Remission of Prior Year Carbon Pricing Mechanism Surplus Surrender 8,804 64

Adjustment to accrued carbon price revenue - 1,832

Total other expenses 8,804 1,896

Commitments for the purchase of Australian Carbon Credit Units were $1,277,290,971 as at 30 June 2017 (2016: $1,007,346,000).

Income and Expenses Administered on Behalf of Government This section analyses the activities that the CER does not control but administers on behalf of the Government. Unless otherwise noted, the accounting policies adopted are consistent with those applied for departmental reporting.

Accounting Judgements and Estimates Purchase of Australian Carbon Credit Units The CER implemented the Emissions Reduction Fund (ERF) in 2014-15 which is a voluntary scheme that aims to provide incentives for a range of organisations and individuals to reduce their emissions. The scheme is currently implemented through a carbon abatement auction process where the CER contracts with successful participants to purchase ACCU's.

ACCU's are earned by participants through eligible projects for each tonne of carbon dioxide equivalent (tCO2-e) stored or avoided.

The CER has an accounting policy for ERF transactions with the following key elements:

• the CER will recognise a liability under the ERF where it has a present obligation arising from a past event; • the obligating event is ACCU issuance. This is on the basis that it is more likely than not that ACCU's issued will be surrendered in satisfaction of contract deliverables, and • where ACCU's issued exceed total contract value they will not be recognised by the CER on the basis

that no contractual obligation exists.

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2.2 Administered - Income

2017 2016

$'000 $'000

Revenue

2.2A: Other taxes (RET Shortfall Charges) Carbon price revenue - shortfall charges and penalties - 724

Renewable energy - shortfall charges and interest 149,492 4,446

Total other taxes 149,492 5,170

Non-taxation revenue

2.2B: Fees and fines Renewable energy fees 12,143 10,838

Other fees 32 298

Total fees and fines 12,175 11,136

Accounting Policy Administered revenues All administered revenues are revenues relating to ordinary activities performed by the CER on behalf of the Government. As such, administered appropriations are not revenues of the individual entity that oversees distribution or expenditure of the funds as directed.

Carbon price revenue is recognised when liable entities' emissions occur, under the economic transaction method, where it is possible that future economic benefits will occur and can be reliably measured. Unit shortfall charges and other penalties are recognised at the time they are imposed.

Renewable energy revenue is generated through the creation and surrender of Renewable Energy Certificates when the underlying transaction occurs. Shortfall charges and interest penalties are recognised at the time they are imposed.

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3.1 Financial Assets

2017 2016

$’000 $’000

3.1A: Cash and cash equivalents

Cash on hand or on deposit 345 282

Total cash and cash equivalents 345 282

3.1B: Trade and other receivables Services receivable Services 92 251

Total services receivable 92 251

Appropriations receivable Appropriations receivable 20,981 24,195

Total appropriations receivable 20,981 24,195

Other receivables Statutory receivables 702 598

Total other receivables 702 598

Total trade and other receivables (gross) 21,775 25,044

Less: impairment allowance - -

Total trade and other receivables (net) 21,775 25,044

Trade and other receivables (net) expected to be recovered No more than 12 months 21,775 25,044

Total trade and other receivables (net) 21,775 25,044

Trade and other receivables (gross) aged as follows Not overdue 21,687 24,943

Overdue by 0 to 30 days 80 62

31 to 60 days - 9

61 to 90 days 1 29

More than 90 days 7 1

Total trade and other receivables (net) 21,775 25,044

Credit terms for goods and services were within 30 days (2016: 30 days).

Financial Position This section analyses the CER's assets used to conduct its operations and the operating liabilities incurred as a result.

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2017 2016

$’000 $’000

3.1C: Other financial assets

Accrued revenue 10 -

Total other financial assets 10 -

Other financial assets expected to be recovered No more than 12 months 10 -

Total other financial assets 10 -

Accounting Policy Cash Cash is recognised at its nominal amount. Cash and cash equivalents include: a. cash on hand

b. demand deposits in bank accounts with an original maturity of 3 months or less that are readily convertible to known amounts of cash and subject to insignificant risk of changes in value, and c. cash in special accounts.

Receivables Trade receivables and other receivables that have fixed or determinable payments and that are not quoted in an active market are classified as 'receivables'. Receivables are measured at amortised cost using the effective interest method less impairment.

Financial assets Financial assets are assessed for impairment at the end of each reporting period.

Financial asset are held at amortised cost - if there is objective evidence that an impairment loss has been incurred for receivables, the amount of the loss is measured as the difference between the asset 's carrying amount and the present value of estimated future cash flows discounted at the asset's original effective interest rate. The carrying amount is reduced by way of an allowance account. The loss is recognised in the statement of profit and loss.

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3.2 Non-Financial Assets 3.2A: Reconciliation of the opening and closing balances of property, plant and equipment and intangibles Reconciliation of the opening and closing balances of property, plant and equipment and intangibles for 2017

Buildings

Plant and Equipment

Intangibles

1

Total

$’000 $’000 $’000 $’000

As at 1 July 2016 Gross book value 6,658 2,362 55,143 64,163 Accumulated depreciation, amortisation and impairment (4,702) (618) (33,832) (39,152) Total as at 1 July 2016 1,956 1,744 21,311 25,011 Additions Purchase - 108 - 108 Internally developed - - 664 664 Assets found at stocktake - - - - Internally Developed Work in Progress (WIP) - - 2,007 2,007

Revaluations and impairments recognised in other comprehensive income 5,510 119 - 5,629 Impairments recognised in net cost of services - - (447) (447) Depreciation and amortisation (1,952) (526) (9,583) (12,061) Disposals Other - (55) - (55)

Total as at 30 June 2017 5,514 1,390 13,952 20,856 Total as at 30 June 2017 represented by Gross book value 5,514 1,390 57,437 64,341 Accumulated depreciation, amortisation and impairment - - (43,485) (43,485) Total as at 30 June 2017 5,514 1,390 13,952 20,856 Revaluations of non-financial assets All revaluations were conducted in accordance with the revaluation policy stated in Note 3.2. On 30 June 2017 an independent valuer, Preston Rowe Paterson, conducted a revaluation of Plant and Equipment & Buildings (leasehold improvements). The revaluation report identified a total increment in the net fair value of CER assets held on the asset register of $5,629,499. 1. The carrying amount of intangibles included $13,951,874 (2016: $21,311,000) internally generated software. An impairment loss of $447,000 (2016: $454,508) was recognised for intangibles as per AASB 116, 136 & 138

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Accounting Policy Assets are recorded at cost on acquisition except as stated below. The cost of acquisition includes the fair value of assets transferred in exchange and liabilities undertaken. Financial assets are initially measured at their fair value plus transaction costs where appropriate.

Assets acquired at no cost, or for nominal consideration, are initially recognised as assets and income at their fair value at the date of acquisition, unless acquired as a consequence of restructuring of administrative arrangements. In the latter case, assets are initially recognised as contributions by owners at the amounts at which they were recognised in the transferor’s accounts immediately prior to the restructuring.

Asset recognition threshold Purchases of property, plant and equipment are recognised initially at cost in the statement of financial position, except for purchases costing less than $2,000, which are expensed in the year of acquisition (other than where they form part of a group of similar items which are significant in total).

The initial cost of an asset includes an estimate of the cost of dismantling and removing the item and restoring the site on which it is located. This is particularly relevant to ‘make good’ provisions in property leases taken up by the CER where there exists an obligation to restore the property to its original condition. These costs are included in the value of the CER's leasehold improvements with a corresponding provision for the ‘makegood’ recognised. The asset capitalisation threshold for Internally Developed Intangibles and Leasehold Improvements is $50,000.

Revaluations Following initial recognition at cost, property, plant and equipment are carried at fair value. Valuations are conducted with sufficient frequency to ensure that the carrying amounts of assets did not differ materially from the assets’ fair values as at the reporting date. The regularity of independent valuations depended upon the volatility of movements in market values for the relevant assets.

Revaluation adjustments are made on a class basis. Any revaluation increment is credited to equity under the heading of asset revaluation reserve except to the extent that it reversed a previous revaluation decrement of the same asset class that was previously recognised in the surplus/deficit. Revaluation decrements for a class of assets are recognised directly in the surplus/deficit except to the extent that they reversed a previous revaluation increment for that class.

Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the asset restated to the revalued amount.

Depreciation Depreciable property, plant and equipment assets are written-off to their estimated residual values over their estimated useful lives to the entity using, in all cases, the straight-line method of depreciation.

Depreciation rates (useful lives), residual values and methods are reviewed at each reporting date and necessary adjustments are recognised in the current, or current and future reporting periods, as appropriate.

Depreciation rates applying to each class of depreciable asset are based on the following useful lives:

2017 2016

Leasehold improvements lease term lease term Plant and equipment 2 to 9 years 2 to 9 years

Impairment All assets were assessed for impairment at 30 June 2017. Where indications of impairment exist, the asset’s recoverable amount is estimated and an impairment adjustment made if the asset’s recoverable amount is less than its carrying amount.

The recoverable amount of an asset is the higher of its fair value less costs of disposal and its value in use. Value in use is the present value of the future cash flows expected to be derived from the asset. Where the future economic benefit of an asset is not primarily dependent on the asset’s ability to generate future cash flows, and the asset would be replaced if the entity were deprived of the asset, its value in use is taken to be its depreciated replacement cost.

Derecognition An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.

Intangibles The CER's intangibles comprise internally developed software and purchased software for internal use. These assets are carried at cost less accumulated amortisation and accumulated impairment losses.

Software is amortised on a straight-line basis over its anticipated useful life. The useful lives of the CER's software are 2 to 5 years (2016: 2 to 5 years).

All software assets were assessed for indications of impairment as at 30 June 2017.

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2017 2016

$’000 $’000

3.2B: Other non-financial assets Prepayments 850 1,130

Total other non-financial assets 850 1,130

Other non-financial assets expected to be recovered No more than 12 months 745 1,104

More than 12 months 105 26

Total other non-financial assets 850 1,130

No indicators of impairment were found for other non-financial assets.

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3.3 Payables

2017 2016

$’000 $’000

3.3A: Suppliers Trade creditors and accruals 3,626 4,944

Total suppliers 3,626 4,944

Suppliers expected to be settled No more than 12 months 3,626 4,944

Total suppliers 3,626 4,944

3.3B: Other payables Salaries and wages 345 205

Superannuation 42 24

Voluntary Redundancies 266 -

Lease liability 215 229

Total other payables 868 458

Other payables to be settled No more than 12 months 653 458

More than 12 months 215 -

Total other payables 868 458

Settlement is usually made within 30 days.

Accounting Policy Financial liabilities Financial liabilities are classified as either financial liabilities 'at fair value through profit or loss' or other financial liabilities. Financial liabilities are recognised and derecognised upon 'trade date'.

Other financial liabilities Other financial liabilities are initially measured at fair value, net of transaction costs. These liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or , where appropriate, a shorter period.

Supplier and other payables are recognised at amortised cost. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced).

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3.4 Other Provisions

3.4A: Other provisions

Provision for restoration

$’000

As at 1 July 2016 1,836

Amounts reversed (1,869)

Unwinding of discount or change in discount rate 33

Total as at 30 June 2017 -

2017 2016

$’000 $’000

Other provisions expected to be settled No more than 12 months - 1,836

More than 12 months - -

Total other provisions - 1,836

The CER currently has one (2016: 1) agreement for the leasing of premises which was renewed in 2017. The obligation to restore the premises to its original condition at the end of the lease was removed during negotiations. The CER has reversed the provision recognised under the original lease for this obligation.

Accounting Policy A distinction is made between finance leases and operating leases. Finance leases effectively transfer from the lessor to the lessee substantially all the risks and rewards incidental to ownership of leased assets. An operating lease is a lease that is not a finance lease. Where an asset is acquired by means of a finance lease, the asset is capitalised at either the fair value of the lease property or, if lower, the present value of minimum lease payments at the inception of the contract and a liability is recognised at the same time and for the same amount. The discount rate used is the interest rate implicit in the lease. Leased assets are amortised over the period of the lease. Lease payments are allocated between the principal component and the interest expense. Operating lease payments are expensed on a straight-line basis which is representative of the pattern of benefits derived from the leased assets.

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4.1 Administered - Financial Assets

2017 2016

$’000 $’000

4.1A: Cash and cash equivalents Cash in special accounts 696 85,386

Cash on hand or on deposit 61 30

Total cash and cash equivalents 757 85,416

4.1B: Taxation receivables Other tax Carbon price revenue - shortfall charges and penalties 72,089 46,691

Renewable energy - shortfall charges and interest 4,577 1,026

Total taxation receivables (gross) 76,666 47,717

Less: Impairment allowance (72,778) (46,904)

Total taxation receivables (net) 3,888 813

Taxation receivables (gross) aged as follows Not overdue - 477

Overdue by 0 to 30 days 59 3

31 to 60 days 743 2

61 to 90 days 191 3

More than 90 days 75,673 47,231

Total taxation receivables (gross) 76,666 47,717

Impairment allowance aged as follows More than 90 days (72,778) (46,904)

Total impairment allowance (72,778) (46,904)

Assets and Liabilities Administered on Behalf of the Government This section analyses assets used to conduct operations and the operating liabilities incurred as a result the CER does not control but administers on behalf of the Government. Unless otherwise noted, the accounting policies adopted are consistent with those applied for departmental reporting.

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2017 2016

$’000 $’000

4.1C: Trade and other receivables Other receivables Fines & Fees 2,406 3,369

Statutory receivables 5,646 4,232

Total trade and other receivables (gross) 8,052 7,601

Less: impairment allowance - (383)

Total trade and other receivables (net) 8,052 7,218

Trade and other receivables (net) expected to be recovered No more than 12 months 8,052 7,218

Total trade and other receivables (net) 8,052 7,218

Trade and other receivables (gross) aged as follows Not overdue 8,052 7,218

Overdue by More than 90 days - 383

Total trade and other receivables (net) 8,052 7,601

Impairment allowance aged as follows More than 90 days - (383)

Total impairment allowance - (383)

Reconciliation of the impairment allowance Movements in relation to 2017

Taxation receivables

Other

receivables Total

$'000 $'000 $'000

As at 1 July 2016 46,904 383 47,287

Increase recognised in net cost of services 25,874 (383) 25,491

Total as at 30 June 2017 72,778 - 72,778

Movements in relation to 2016

Taxation receivables

Other

receivables Total

$'000 $'000 $'000

As at 1 July 2015 46,214 383 46,597

Amounts recovered and reversed - - -

Increase recognised in net cost of services 690 - 690

Total as at 30 June 2016 46,904 383 47,287

Credit terms for goods and services were within 30 days (2016: 30 days).

Accounting Policy Receivables Where receivables are not subject to concessional treatment, they are carried at amortised cost using the effective interest method. Gains and losses due to impairment, derecognition and amortisation are recognised through profit or loss.

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6

4.2 Administered - Payables

2017 2016

$’000 $’000

4.2A: Suppliers Trade creditors and accruals 417 3,050

Total suppliers 417 3,050

Suppliers expected to be settled No more than 12 months 417 3,050

Total suppliers 417 3,050

Settlement is usually made within 30 days.

4.2B: Purchase of Australian Carbon Credit Units Purchase of Australian Carbon Credit Units 36,973 35,625

Total purchase of Australian Carbon Credit Units 36,973 35,625

Purchase of Australian Carbon Credit Units expected to be settled No more than 12 months 36,973 35,625

Total purchase of Australian Carbon Credit Units 36,973 35,625

4.2C: Other payables Small-scale technology clearing house - 75,913

Other 103 -

Total other payables 103 75,913

Other payables expected to be settled No more than 12 months 103 75,913

More than 12 months - -

Total other payables 103 75,913

2016-17 Annual Report | Clean Energy Regulator 136

FINANCIAL STATEMENTS

6

4.3 Administered - Provisions

2017 2016

$’000 $’000

4.3A: Provisions Refund of RET Shortfall Charges - 3 Year Rule 135,856 -

Total Provisions 135,856 -

Provisions expected to be settled No more than 12 months 135,856 -

More than 12 months - -

Total other payables 135,856 -

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6

5.1 Appropriations

5.1A: Annual appropriations ('recoverable GST exclusive')

Annual

Appropriation

Advance to the Finance Minister

Section 74 Receipts

Section 75 Transfers

$'000 $'000 $'000 $'000 $'000 $'000 $'000

Departmental Ordinary annual services

1

70,981 - 929 - 71,910 72,551 (641)

Capital budget

2

1,183 - - - 1,183 2,701 (1,518)

Other services Equity Injections

2

150 - - - 150 123 27

Total departmental 72,314 - 929 - 73,243 75,375 (2,132) Administered Ordinary annual services

Administered items

3

279,405 - - - 279,405 163,775 115,630

Total administered 279,405 - - - 279,405 163,775 115,630 Annual Appropriations for 2017

Appropriation Act

PGPA Act

Total

appropriation

Appropriation applied in 2017 (current and prior years)

Variance

1. The variance of $0.641m reflects movement in Supplier & Other Payables. 2. The variance of $1.491m between annual appropriation and appropriation applied reflects the use of $1.518m of prior year capital budget which were rephased following an approved movement of funds application to the government offset by $0.027m of unspent Appropriation Act (No. 2) 2016-17 capital appropriations. 3. The variance of $115.630m reflects changes in the profile of contracted payments under the Emissions Reduction Fund.

Funding

This

section identifies the CER's funding structure.

2016-17 Annual Report | Clean Energy Regulator 138

FINANCIAL STATEMENTS

6

Annual

Appropriation

1

Advance to the Finance Minister

Section 74 Receipts

Section 75 Transfers

$'000 $'000 $'000 $'000 $'000 $'000 $'000

Departmental Ordinary annual services 73,412 - 967 - 74,379 73,548 831 Capital budget

3

1,185 - - - 1,185 866 319

Other services Equity Injections - - - - - 5,000 (5,000)

Total departmental 74,597 - 967 - 75,564 79,414 (3,850) Administered Ordinary annual services

Administered items 304,678 - - - 304,678 117,593 187,085

Total administered 304,678 - - - 304,678 117,593 187,085 Annual Appropriations for 2016

Appropriation Act

PGPA Act

Total

appropriation

Appropriation applied in 2016 (current and prior years)

Variance

2

1. In accordance with the budget offsets for the National Wind Farm Commissioner, the CER permanently lost control of $438,000 under section 51 of the PGPA Act. 2. The variance is due to the passage of the Emissions Reduction Fund legislation occurring later than estimated and the subsequent deferral of project expenditure to the 2015-16 financial year. The administered variance is due to the changes in the profile of the contracted payments under the Emissions Reduction Fund. 3. Departmental capital budgets are appropriated through Appropriation Acts (No. 1, 3, 5). They form part of ordinary annual services, and are not separately identified in the Appropriation

Acts.

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6

5.1B: Unspent annual appropriations ('recoverable GST exclusive')

2017 2016 $’000 $’000

Departmental Appropriation Act (No. 2) 2012-13

1

5,098 5,098

Appropriation Act (No. 4) 2013-14

2

1,011 1,011

Appropriation Act (No. 1) 2014-15 - 382 Appropriation Act (No. 2) 2014-15 - - Appropriation Act (No. 1) 2015-16 - 18,472 Appropriation Act (No. 2) 2016-17 27 - Appropriation Act (No. 1) 2016-17 15,863 - Cash at Bank 345 282 Total departmental

22,344 25,245

Administered Appropriation Act (No. 1) 2014-15 - 62,555 Appropriation Act (No. 1) 2015-16 - 197,901 Appropriation Act (No. 1) 2016-17 10,170 - Supply Act (No. 1) 2016-17 53,589 -Total administered

63,759

260,456

1. Appropriation Act (No. 2) 2012-13 Capital Equity injection of $5.098 million has been quarantined by the Department of Finance. There is no loss of legal control on this appropriation for the CER. 2. Appropriation Act (No. 4) 2013-14 Capital Equity injection of $1.011 million was quarantined by the Department of Finance and was part of the opening balance of 2016-17. CER has no legal control on this appropriation from 2016-17 onwards and hence has been removed from the available appropriations for 2016-17.

2016-17 Annual Report | Clean Energy Regulator 140

FINANCIAL STATEMENTS

6

5.1C: Special appropriations ('recoverable GST exclusive')

2017 2016 $'000 $'000

Renewable Energy (Electricity) Act 2000 , section 157, Administered, Unlimited amount

- -

Public Governance, Performance and Accountability Act 2013 , section 77, Administered, Refund

3,456 4,618

Clean Energy Act 2011, section 116, Administered, Unlimited amount

- -

Clean Energy Act 2011, section 132, Administered, Unlimited amount

8,744 3,962

Total special appropriations applied 12,200 8,580

To enable payments in respect of: a) section 50 refunds of overpaid amounts b) section 98 refund of charge where certificates are surrendered c) section 121 compensation from damage to electronic equipment. To provide an appropriation where an Act or other law requires or permits the repayment of an amount received by the Commonwealth and the Finance Minister is satisfied that, apart from this section, there is no specific appropriation for the repayment. To provide an appropriation for the buy-back of certain free carbon units specified by section 116 of the Clean Energy Act 2011. To provide an appropriation for the refund of surplus surrender specified by section 132 of the Clean Energy Act 2011.

Authority

Appropriation applied

Purpose

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FINANCIAL STATEMENTS

6

5.2 Special Accounts

2017 2016

('Recoverable GST exclusive') $'000 $'000

Balance brought forward from previous period 77,388 354

Increases Receipts from buyers 445,866 490,221

Available for payments 523,254 490,575

Decreases Payments to sellers (523,223) (413,187)

Total balance carried to the next period2 31 77,388

Balance represented by:

Cash held in entity bank accounts 31 77,388

Cash held in the Official Public Account - -

Total balance carried to the next period 31 77,388

5.3 Regulatory Charging Summary

2017 2016

$’000 $’000

External Revenue Administered 12,175 11,136

Total external revenue 12,175 11,136

Regulatory charging activities: Registration, application, accreditation and renewable energy certificate fees.

Transactions related to the STC Clearing House are reported in the Administered Schedule of Assets and Liabilties as Cash and cash equivalents and Supplier payables. This is because the CER is facilitating transactions between buyers and sellers through the STC Clearing House and any net cash resulting is not revenue for Government.

3. The purposes of the Renewable Energy Special Account are as follows: (a) paying amounts under paragraph 30N(3)(b) in relation to the transfer of certificates; (b) paying amounts under subparagraph 30P(4)(b)(ii) in relation to the transfer of certificates; (c) refunding amounts under regulations made for the purpose of paragraph 30U(2)(i); (d) paying amounts of GST for which the Regulator is liable because of the creation of certificates for purchasers under section 30P.

Renewable Energy Special Account1 (Administered)

2. The balance carried to the next period will be used to purchase small-scale technology certificates (STC) from householders and registered agents through the STC Clearing House. This balance is reflected in the $0.696m under Note 4.1A and is comprised of the following amounts:

$0.031m - Payable to sellers $0.039m - GST payable to buyers $0.626m - Cash held for GST payments drawn from the OPA.

1. Appropriation: Public Governance, Performance and Accountability Act 2013 section 80. Establishing Instrument: Renewable Energy (Electricity) Act 2000, section 30R.

2016-17 Annual Report | Clean Energy Regulator 142

FINANCIAL STATEMENTS

6

6.1 Employee Provisions

2017 2016

$’000 $’000

6.1A: Employee provisions Leave 10,250 11,364

Other Redundancy provisions 375 -

Total employee provisions 10,625 11,364

Employee provisions expected to be settled No more than 12 months 4,539 4,850

More than 12 months 6,086 6,514

Total employee provisions 10,625 11,364

Accounting policy Liabilities for ‘short-term employee benefits' and termination benefits expected within twelve months of the end of reporting period are measured at their nominal amounts.

The nominal amount is calculated with regard to the rates expected to be paid on settlement of the liability.

Leave The liability for employee benefits includes provision for annual leave and long service leave.

The leave liabilities are calculated on the basis of employees’ remuneration at the estimated salary rates that will be applied at the time the leave is taken, including the entity’s employer superannuation contribution rates to the extent that the leave is likely to be taken during service rather than paid out on termination.

The liability for long service leave has been determined using the shorthand method as prescribed in the FRR. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation.

Superannuation The CER's employees are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), the PSS accumulation plan (PSSap), or other superannuation funds held outside the Australian Government.

The CSS and PSS are defined benefit schemes for the Australian Government. The PSSap is a defined contribution scheme.

The liability for defined benefits is recognised in the financial statements of the Australian Government and is settled by the Australian Government in due course. This liability is reported in the Department of Finance’s administered schedules and notes.

The CER makes employer contributions to the employees' defined benefit superannuation scheme at rates determined by an actuary to be sufficient to meet the current cost to the Government. The entity accounts for the contributions as if they were contributions to defined contribution plans.

The liability for superannuation recognised as at 30 June represents outstanding contributions.

Accounting Judgements and Estimates Employee leave provisions were calculated at year end using the shorthand method which includes discounting amounts to present value using the Commonwealth Government bond rate.

People and relationships This section describes a range of employment and post employment benefits provided to our people and our relationships with other key people.

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FINANCIAL STATEMENTS

6

6.2 Key Management Personnel Remuneration

2017 $’000

Short-term employee benefits Salary 3,415

Other allowances 82

Non-monetary benefits 39

Total short-term employee benefits 3,536

Post-employment benefits Superannuation 605

Total post-employment benefits 605

Other long-term employee benefits Annual leave 287

Long-service leave 129

Total other long-term employee benefits 416

Termination Benefits -

Total key executive remuneration expenses 4,557

The total number of key management personnel that are included in the above table are 17. The increase in key management personnel (KMP) during 2016-17 reflects the recognition of staff who acted in these roles and represents the full-time equivalent staff numbers rather than a headcount. This is also reflected in the total remuneration expense which is calculated on a pro-rata basis equal to time spent in the role for those staff who acted during the reporting period.

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity. The Clean Energy Regulator has determined the key management personnel to be the Chair, members of the Regulator, and Senior Executive Service Officers, and includes staff who acted in these roles during the year. Key management personnel remuneration is reported in the table below:

The above key management personnel remuneration excludes the remuneration and other benefits of the Portfolio and Cabinet Ministers. The Ministerial remuneration and other benefits are set by the Remuneration Tribunal and are not paid by the entity.

2016-17 Annual Report | Clean Energy Regulator 144

FINANCIAL STATEMENTS

6

6.3A: Related party disclosures

Related party relationships:

Transactions with related parties:

Giving consideration to relationships with related entities, and transactions entered into during the reporting period by the entity, it has been determined that there are no related party transactions to be separately disclosed.

The entity is an Australian Government controlled entity. Related parties to this entity are Key Management Personnel including the Portfolio Minister and Executive, and other Australian Government entities.

Given the breadth of Government activities, related parties may transact with the government sector in the same capacity as ordinary citizens. Such transactions include selling renewable energy certificates under the renewable energy scheme following the installation of rooftop solar panels. These transactions have not been separately disclosed in this note.

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FINANCIAL STATEMENTS

6

7.1 Contingent Assets and Liabilities

2017 2016

$’000 $’000

Contingent liabilities

(551) -

- (551)

Obligations expired 66 -

Total contingent liabilities (485) (551)

Quantifiable contingencies

7.1B: Administered - Contingent Assets and Liabilities

2017 2016

$’000 $’000

Contingent assets

1,517 -

- 1,517

Obligations expired (1,517)

Total contingent assets - 1,517

Contingent liabilities

(3,416) (552)

(9,347) (2,930)

- 66

Total contingent liabilities (12,763) (3,416)

Net contingent assets/(liabilities) (12,763) (1,899)

Balance from previous period New contingent liabilities recognised

The above table contains $485,000 (2016: 551,000) of contingent liabilities in respect of one request for an act of grace payment requested from the Department of Finance relating to the carbon pricing mechanism. The estimate is based on the amount included in the act of grace payment request. One contingent liability disclosed for 2015-16 has been resolved with a payment of $66,000 made by the agency in 2016-17.

During 2016-17 CER identified a prior period error in the contingent liabilities amount disclosed in 2015-16. The error has been corrected by restating the 2016 comparative to $551,000 (2016: $66,000).

New contingent liabilities recognised

New contingent assets recognised

Balance from previous period

Claims for damages or costs

There were no unquantifiable contingent assets or liabilities as at 30 June 2017 (2016: Nil).

Quantifiable administered contingencies

Unquantifiable contingencies

Obligations expired

Claims for damages or costs

Balance from previous period

Managing uncertainties

Accounting Policy Contingent liabilities and contingent assets are not recognised in the statement of financial position but are reported in the notes. They may arise from uncertainty as to the existence of a liability or asset or represent an asset or liability in respect of which the amount cannot be reliably measured. Contingent assets are disclosed when settlement is probable but not virtually certain and contingent liabilities are disclosed when settlement is greater than remote.

This section analyses how the CER manages financial risks within its operating environment.

2016-17 Annual Report | Clean Energy Regulator 146

FINANCIAL STATEMENTS

6

There were no unquantifiable contingent assets or liabilities as at 30 June 2017 (2016: Nil).

The above table contains $nil (2016: $1,517,000) of contingent assets. The contingent asset disclosed for 2015-16 has been resolved with payment received by the agency in 2016-17.

The above table contains $12,763,000 (2016: $3,416,000) of contingent liabilities in respect of large-scale generation shortfall charges incurred under the Renewable Energy (Electricity) Act 2000 which may be refunded to entities if they meet certain conditions. The estimates are based on the amount the shortfall charges paid.

During 2016-17 CER identified a prior period error in the contingent liabilities amount disclosed in 2015-16. The error has been corrected by restating the 2016 comparative to $2,930,000 (2016: $4,450,000) following the identification of $1,520,000 incorrectly disclosed as as new contingent liabilities.

Unquantifiable administered contingencies

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FINANCIAL STATEMENTS

6

7.2 Financial Instruments

2017 2016

$’000 $’000

7.2A: Categories of financial instruments Financial assets Receivables Cash and cash equivalents 345 282

Receivables for goods and services 92 251

Total financial assets 437 533

Financial liabilities Financial liabilities measured at amortised cost Supplier payables 3,626 4,944

Total financial liabilities 3,626 4,944

7.2B: Net gains or losses on financial assets There has been no income gained or expense incurred from financial assets (2016: Nil).

7.2C: Net gains or losses on financial liabilities There has been no income gained or expense incurred from financial liabilities (2016: Nil).

The carrying amount of financial assets and financial liabilities is a reasonable approximation of their fair value.

2016-17 Annual Report | Clean Energy Regulator 148

FINANCIAL STATEMENTS

6

7.2 Financial Instruments

Accounting Policy

Financial assets The CER classifies its financial assets as receivables.

The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Financial assets are recognised and derecognised upon trade date.

Effective interest method Income is recognised on an effective interest rate basis except for financial assets that are recognised at fair value through profit or loss.

Impairment of financial assets Financial assets are assessed for impairment at the end of each reporting period.

Financial assets held at amortised cost - if there is objective evidence that an impairment loss has been incurred for receivables or held to maturity investments held at amortised cost, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. The carrying amount is reduced by way of an allowance account. The loss is recognised in the Statement of Comprehensive Income.

Financial liabilities Financial liabilities are classified as either financial liabilities ‘at fair value through profit or loss’ or other financial liabilities. Financial liabilities are recognised and derecognised upon ‘trade date’.

Other financial liabilities Other financial liabilities, are initially measured at fair value, net of transaction costs. These liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective interest basis.

Supplier and other payables are recognised at amortised cost. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced).

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6

7.3 Administered - Financial Instruments

2017 2016

$’000 $’000

7.3A: Categories of financial instruments Financial Assets Receivables Cash and cash equivalents 757 85,416

Total financial assets 757 85,416

Financial Liabilities

Suppliers payables 417 3,050

Purchase of Australian Carbon Credit Units 36,973 35,625

Other payables 103 -

Total financial liabilities 37,493 38,675

7.3B: Net gains or losses on financial assets

7.3C: Net gains or losses on financial liabilities

The CER had no financial assets that were past due but not impaired (2016: Nil).

There were no gains or losses on financial assets (2016: Nil).

There were no gains or losses on financial liabilities (2016: Nil).

Financial liabilities measured at amortised cost

The carrying amount of financial assets and financial liabilities is a reasonable approximation of their fair value.

2016-17 Annual Report | Clean Energy Regulator 150

FINANCIAL STATEMENTS

6

2017 2016 $'000 $'000

Non-financial assets

1

Leasehold improvements 5,514 1,956 Property, plant and equipment 1,390 1,744

7.4 Fair Value Measurement

Fair value measurements

at the end of the reporting period

The following tables provide an analysis of assets and liabilities that are measured at fair value. The remaining assets and liabilities disclosed in the statement of financial position do not apply the fair value hierarchy. 7.4A: Fair value measurement The different levels of the fair value hierarchy are defined below. The CER has a policy to conduct valuations with sufficient frequency to ensure that the carrying amounts of assets do not materially differ from the assets' fair values as at reporting date. The regularity of independent valuations depend upon the volatility of movements in market values for the relevant assets. The agency procured valuation services from Preston Rowe Paterson

(PRP). PRP provided written assurance to the CER that the valuation method is in compliance with

AASB 13 Fair Value Measurement

.

1. Recurring and non-recurring Level 3 fair value measurements - valuation processes.

151

7 APPENDICES

Appendix A: List of requirements 152 Appendix B: Other mandatory reporting 158 Appendix C: Regulator Members 160 Appendix D: Regulator meeting dates 163

Appendix E: Agency senior executive 164 Appendix F: Governance structure 166 Appendix G: Workforce profile 168 Appendix H: Agency resource statement 172

Image acknowledgement: Clean Energy Regulator. Wind Farm, Condington, Victoria, Renewable Energy Target.

2016-17 Annual Report | Clean Energy Regulator 152

APPENDIX A: LIST OF REQUIREMENTS

APPENDICES

7

Part of report Description Requirement Page

Letter of transmittal

A copy of the letter of transmittal signed and dated by the accountable authority on date final text approved, with statement that the report has been prepared in accordance with section 46 of the Act and any enabling legislation that specifies additional requirements in relation to the annual report.

Mandatory 6

Aids to access

Table of contents. Mandatory 5

Alphabetical index. Mandatory 179-185

Glossary, abbreviations and acronyms. Mandatory 175-178

List of requirements. Mandatory 152-157

Details of contact officer. Mandatory Back cover

Entity’s website address. Mandatory Back cover

Electronic address of report. Mandatory Back cover

Review by the accountable authority

A review by the accountable authority of the entity. Mandatory 9

Overview of entity

A description of the role and functions of the entity. Mandatory 12-13

A description of the organisational structure of the entity. Mandatory 15,

73-74

A description of the outcomes and programs administered by the entity. Mandatory 16

A description of the purposes of the entity as included in the corporate plan. Mandatory 12

An outline of the structure of the portfolio of the entity.

Portfolio departments— Mandatory

N/A

Where outcome and program structures differ from PB Statements/PAES or other portfolio statements accompanying any other additional appropriation bills (other portfolio statements), details of variation and reasons for change.

Mandatory 16-17

Report on performance

Annual performance statements 20-33

Annual performance statement in accordance with paragraph 39(1)(b) of the Act and section 16F of the PGPA Rule. Mandatory 20

Report on financial performance 100-103

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Part of report Description Requirement Page

Report on performance

A discussion and analysis of the entity’s financial performance. Mandatory 100-103

A table summarising the total resources and total payments of the entity. Mandatory 172

If there may be significant changes in the financial results during or after the previous or current reporting period, information on those changes, including: the cause of any operating loss of the entity; how the entity has responded to the loss and the actions that have been taken in relation to the loss; and any matter or circumstances that it can reasonably be anticipated will have a significant impact on the entity’s future operation or financial results.

Mandatory 100-103

Management and accountability

Corporate governance

74-86, 166-167

Information on compliance with section 10 (fraud systems). Mandatory 77-78

A certification by accountable authority that fraud risk assessments and fraud control plans have been prepared.

Mandatory 6

A certification by accountable authority that appropriate mechanisms for preventing, detecting incidents of, investigating or otherwise dealing with, and recording or reporting fraud that meet the specific needs of the entity are in place.

Mandatory 6

A certification by accountable authority that all reasonable measures have been taken to deal appropriately with fraud relating to the entity.

Mandatory 6

An outline of structures and processes in place for the entity to implement principles and objectives of corporate governance.

Mandatory 74-86

A statement of significant issues reported to the Minister under paragraph 19(1)(e) of the Act that relates to non-compliance with Finance law and action taken to remedy non-compliance.

If applicable, Mandatory

N/A

External scrutiny 87

Information on significant developments in external scrutiny and entity’s response to the scrutiny.

Mandatory 87

Information on judicial decisions and decisions of administrative tribunals and by the Australian Information Commissioner that may have a significant effect on the operations of the entity.

If applicable, Mandatory

87

APPENDICES

7

2016-17 Annual Report | Clean Energy Regulator 154

Part of report Description Requirement Page

Management and accountability

Information on any reports by the Auditor-General (other than report under section 43 of the Act), a Parliamentary Committee, or the Commonwealth Ombudsman.

If applicable, Mandatory

87

Information on any capability reviews on the entity that were released during the period.

If applicable, Mandatory

N/A

Management of human resources 88-95

Assessment of the entity’s effectiveness in managing and developing human resources to achieve entity objectives.

Mandatory 88-95

Statistics on the entity’s APS employees on an ongoing and non-ongoing basis, including the following:

• statistics on staffing classification level

• statistics on full-time employees

• statistics on part-time employees

• statistics on gender

• statistics on staff location, and

• statistics on employees who identify as Indigenous.

Mandatory 90, 168-171

Information on any enterprise agreements, individual flexibility arrangements, Australian Workplace Agreements, common law contracts and determinations under subsection 24(1) of the Public Service Act 1999.

Mandatory 92-93

Information on the number of SES and non-SES employees covered by agreements etc. identified in paragraph 17AG(4)(c).

Mandatory

92-93, 169-170

The salary ranges available for APS employees by classification level. Mandatory 168

A description of non-salary benefits provided to employees. Mandatory 93

Information on the number of employees at each classification level who receive performance pay.

If applicable, Mandatory

93

Information on the average amount of performance payment, and range of such payments, at each classification level.

If applicable, Mandatory

N/A

Information on aggregate amounts of performance payments.

If applicable, Mandatory

N/A

APPENDICES

7

155 2016-17 Annual Report | Clean Energy Regulator

Part of report Description Requirement Page

Assets management

An assessment of effectiveness of assets management where asset management is a significant part of the entity’s activities.

Mandatory 95

Purchasing

An assessment of entity performance against the Commonwealth Procurement Rules. Mandatory 96-97

Consultants

A summary statement detailing the number of new contracts engaging consultants entered into during the period; the total actual expenditure on all new consultancy entered into during the period (inclusive of GST); the number of ongoing consultancy contracts that were entered into during a previous reporting period; and the total actual expenditure in the reporting year on the ongoing consultancy contracts (inclusive of GST).

Mandatory 96

A statement that ‘During [reporting period], [specific number] new consultancy contracts were entered into involving total actual expenditure of $[specific million]. In addition, [specific number] ongoing consultancy contracts were active during the period, involving total actual expenditure of $[specific million]’.

Mandatory 96

A summary of the policies and procedures for selecting and engaging consultants and the main categories of purposes for which consultants were engaged.

Mandatory 96

A statement that ‘Annual reports contain information about actual expenditure on contracts for consultancies. Information on the value of contracts and consultancies is available on the AusTender website’.

Mandatory 96

Australian National Audit Office Access Clauses

If an entity entered into a contract with a value of more than $100,000 (inclusive of GST) and the contract did not provide the Auditor-General with access to the contractor’s premises, the report must include the name of the contractor, purpose and value of the contract, and the reason why a clause allowing access was not included in the contract.

If applicable, Mandatory

97

APPENDICES

7

2016-17 Annual Report | Clean Energy Regulator 156

Part of report Description Requirement Page

Exempt contracts

If an entity entered into a contract or there is a standing off er with a value greater than $10 000 (inclusive of GST) which has been exempted from being published in AusTender because it would disclose exempt matters under the FOI Act, the annual report must include a statement that the contract or standing off er has been exempted, and the value of the contract or standing off er, to the extent that doing so does not disclose the exempt matters.

If applicable Mandatory

97

Small business

A statement that ‘[Name of entity] supports small business participation in the Commonwealth Government procurement market. Small and Medium Enterprises (SME) and Small Enterprise participation statistics are available on the Department of Finance’s website’.

Mandatory 97

An outline of the ways in which the procurement practices of the entity support small and medium enterprises.

Mandatory 97

If the entity is considered by the Department administered by the Finance Minister as material in nature—a statement that ‘[Name of entity] recognises the importance of ensuring that small businesses are paid on time. The results of the Survey of Australian Government Payments to Small Business are available on the Treasury’s website’.

If applicable, Mandatory

97

Financial statements

Inclusion of the annual financial sta tements in accordance with subsection 43(4) of the Act. Mandatory 103-150

Other mandatory information

If the entity conducted advertising campaigns, a statement that ‘During [reporting period], the [name of entity] conducted the following advertising campaigns: [name of advertising campaigns undertaken]. Further information on those advertising campaigns is available at [address of entity’s website] and in the reports on Australian Government advertising prepared by the Department of Finance. Those reports are available on the Department of Finance’s website’.

If applicable, Mandatory

N/A

If the entity did not conduct advertising campaigns, a statement to that eff ect. If applicable, Mandatory

158

A statement that ‘Information on grants awarded to [name of entity] during [reporting period] is available at [address of entity’s website]’.

If applicable, Mandatory

159

APPENDICES

7

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Part of report Description Requirement Page

Other mandatory information

Outline of mechanisms of disability reporting, including reference to website for further information.

Mandatory 159

Website reference to where the entity’s Information Publication Scheme statement pursuant to Part II of FOI Act can be found. Mandatory 159

Correction of material errors in previous annual report.

If applicable, Mandatory

N/A

Information required by other legislation. Mandatory 158-159

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APPENDIX B: OTHER MANDATORY REPORTING

Advertising and market research

In 2016-17 we did not undertake polling, direct mail, market research or advertising campaigns.

Our agency’s expenditure on advertising was under the reportable threshold of $13 000.

Legal expenditure

Paragraph 11.1(ba) of the Legal Services Directions 2005 requires all non-corporate Commonwealth entities regulated by the Public Governance, Performance and Accountability Act 2013 (PGPA Act) to publicly report their legal services expenditure. Table 11 provides a breakdown of our agency’s expenditure for 2016-17.

Table 11: Legal services expenditure summary 2016-17

Description $

Total (external + internal) expenditure $2 035 610.81

Total internal legal services expenditure $1 726 056.81

Total external legal services expenditure $309 554.00

SUMMARY EXTERNAL LEGAL SERVICES

Total value of briefs to Counsel (A) $38 206.82

Total value of disbursements (excluding counsel) (B) $2 222.63

Total value of professional fees paid (C) $269 124.55

Total external legal services expenditure (A + B + C) $309 554.00

COUNSEL

Number of direct briefs to male counsel 1

Number of direct briefs to female counsel 1

Total number of direct briefs to counsel 2

Number of indirect briefs to male counsel 1

Number of indirect briefs to female counsel 0

Total number of indirect briefs to counsel 1

Total value of briefs to Counsel (A) $38 206.82

DISBURSEMENTS

Total value of disbursements (excluding counsel) (B) $2 222.63

PROFESSIONAL FEES

Total Value of professional fees (C) $296 124.55

Note: All figures are GST exclusive.

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Grants programs

We do not administer grants programs.

Disability reporting

Disability reporting occurs through the National Disability Strategy 2010-2020 and through the Australian Public Service Commission’s State of the Service Report and APS Statistical Bulletin. This information is available at www.apsc.gov.au. High level two-yearly reports track progress against the strategy’s six outcome areas. These reports are available at www.dss.gov.au.

Information Publication Scheme

Agencies subject to the Freedom of Information Act 1982 are required to make certain information available to the public as part of the Information Publication Scheme established by Part II of that Act.

In accordance with the Information Publication Scheme, we publish information on our website.

This includes details of our functions, information about statutory appointments, and operational information such as guidelines we use to make decisions or recommendations that affect members of the public.

Ecologically sustainable development and environmental performance

We manage the environmental impact of our operations in accordance with the Australian National Audit Office better practice guide Public Sector Environmental Management.

In 2016-17 our building at 5 Farrell Place, Canberra maintained its 6-star energy rating under the National Australian Built Environment Rating System—the highest possible rating under the system. Other workplace initiatives include:

• contracting services to recycle organic waste, paper and cardboard

• reducing electricity use through staff actions such as turning off lights in unused rooms and turning off computer monitors at night, and

• purchasing electricity from 100 per cent renewable sources.

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APPENDIX C: REGULATOR MEMBERS

Ms Chloe Munro | Chair (until 31 March 2017)

‘It was a privilege to lead this agency from its inception through many challenges and even more successes. I am proud of the agency’s achievements and reputation, and know it is well placed to continue its work accelerating carbon abatement for Australia.’

Ms Munro has had a distinguished career in both the public and private sectors, with particular expertise in infrastructure and resources.

Prior to her appointment as the Chair of the Clean Energy Regulator, Ms Munro was the Chair of the National Water Commission; the independent non-executive Chairman of AquaSure, the consortium building Victoria’s desalination plant; and a non-executive director of Hydro Tasmania.

Ms Munro has also held senior positions with Telstra, and in the Victorian public sector. Early in her career she worked in the public, private and not-for-profit sectors in Kenya, New Zealand and the United Kingdom.

Ms Munro holds master’s degrees in mathematics and philosophy from Cambridge University and in business administration from the University of Westminster. She is a Fellow of the Australian Academy of Technological Sciences and Engineering and the Institute of Public Administration Australia and was awarded a Centenary Medal for outstanding contribution to public administration in 2001.

Ms Munro finished her five-year term on 31 March 2017.

Ms Anne T Brown | Member

Area of focus: Audit committee and risk framework

Ms Brown has substantial experience and knowledge of Australian and international exchange-traded financial markets, risk management, and related infrastructure and regulatory environments. She previously held the position of Chief Risk Officer with ASX Limited, following its merger with SFE Corporation Limited, with responsibility for enterprise-wide risk management, clearing house policy development and risk management, compliance and audit.

Ms Brown represented ASX from 2008 to 2010 as the Chair and executive committee member of the global association of Central Counterparties (CCP12), an influential global industry association involving all major international clearing houses.

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Ms Brown is currently a member of the Australian Securities and Investments Commission’s Markets Disciplinary Panel and a member of member of the Finance, Audit & Risk Committee of Monte Sant’ Angelo Mercy College Limited.

Ms Brown holds a degree in accountancy and computer science from Heriot-Watt University, Edinburgh, is a member of the Institute of Chartered Accountants of Scotland and is a graduate member of the Australian Institute of Company Directors.

Mr Michael D’Ascenzo AO | Member

Area of focus: Cross-agency compliance

Mr D’Ascenzo is recognised internationally for his leadership and expertise in administration, strategy and governance, and for his technical and design skills in tax law and superannuation.

Mr D’Ascenzo is a member of the Foreign Investment Review Board and is on the International Monetary Fund’s panel of experts. He is a non-executive director of Australia Post, an adjunct professor of the University of New South Wales and a professorial fellow of Melbourne University. He was previously Commissioner of Taxation and vice-chair of the Organisation for Economic Co operation and Development’s Forum on Tax Administration.

Mr D’Ascenzo holds degrees in economics and law from the Australian National University.

In 2010, Mr D’Ascenzo was appointed an Officer of the Order of Australia for service to public administration, particularly through reform and innovative engagement with the taxation profession and government agencies.

Ms Virginia Malley | Member

Area of focus: Market development and client education and engagement

Ms Malley has extensive experience in the investment and banking sectors, including as a company director. She has expertise in financial and environmental markets, risk management, corporate governance, regulatory compliance custody and trusteeship.

Ms Malley is a non-executive director of Perpetual Superannuation Limited and Perpetual Equity Investment Company Limited, a member of the Sydney Airport Trust Compliance Committee, and a member of the board of Morphic Asset Management and the Nature Conservation Trust of New South Wales. Previously, Ms Malley was the Chief Risk Officer at Macquarie Funds Management Group and a member of various committees at Macquarie focusing on clean technology, the Asia Pacific region, and global private equity. She also served on the boards of Macquarie APPENDICES

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Investment Management Limited and Bond Street Custodians Limited and was a staff-elected trustee of the Macquarie Bank Staff Superannuation Fund.

Ms Malley holds a Bachelor of Arts and a Master of Applied Finance from Macquarie University, a Graduate Diploma in Environmental Law from the University of Sydney, and a Juris Doctor from the University of Technology, Sydney.

Dr Peter Davis | Member

Area of focus: Renewable energy

Dr Davis has extensive experience in the Australian energy sector, including 19 years at Chief Executive and General Manager level. His experience includes regulatory and structural reform of critical infrastructure services in both regulated and competitive markets, with particular expertise in renewable energy, energy efficiency and demand-side management.

Dr Davis is a non-executive Director of the Australian Energy Market Operator and a Council Member of the University of Tasmania. From 2004 to 2014 he was Chief Executive Officer and Managing Director of Aurora Energy Pty Ltd, an energy utility with interests in electricity distribution, generation, retail and gas supply. He was a Director of the Energy Supply Association of Australia (ESAA) from 2008 to 2014, and chaired the ESAA’s Greenhouse Policy Committee.

Dr Davis holds a Doctor of Philosophy from the Solar Energy Research Centre at the University of Queensland, a master’s degree in business administration from Deakin University, an honours degree in science from Monash University and degrees in science and education from the University of Tasmania. He is a Fellow of the Australian Institute of Company Directors and Engineers Australia.

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APPENDIX D: REGULATOR MEETING DATES

Meeting date Attendance

26 July 2016 All Members attended

30 August 2016 Ms Anne T Brown apology

4 October 2016 All Members attended

8 November 2016 All Members attended

13 December 2016 Ms Anne T Brown apology

31 January 2017 All Members attended

7 March 2017 All Members attended

11 April 2017 All Members attended

16 May 2017 Dr Peter Davis apology

20 June 2017 All Members attended

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APPENDIX E: SENIOR EXECUTIVE STAFF 2016-17

Ms Chloe Munro | Chair (1 July 2016 - 31 March 2017)

Our agency executive staff report to the Chair, who is the head of our agency and the ‘accountable authority’ as defined by the Public Governance, Performance and Accountability Act 2013. For most of the reporting year, the Chair was Ms Chloe Munro.

Ms Jody Swirepik | Executive General Manager, Regulatory Obligation and Coordination

Ms Swirepik has an extensive background in environmental management and regulation body. She joined our agency as an Executive General Manager in February 2015.

Ms Swirepik’s previous roles include Executive Director, Environmental Management Division of the Murray Darling Basin Authority, where she led water reform work in river basin planning and management. Her work on the Living Murray program was recognised with an Australian Government Public Service Medal. Prior to this, Ms Swirepik worked with the New South Wales Environment Protection Authority and in planning and regulatory roles for the ACT Government.

Ms Swirepik has honours and master’s level qualifications in applied science.

Ms Swirepik was acting Chair from 1 April to 1 July 2017.

Mr Mark Williamson | Executive General Manager, Scheme Entry and Entitlement

Mr Williamson joined the Clean Energy Regulator in August 2012, following an extensive career including senior executive roles in the private sector as well as state and local government.

He previously held a national commercial and technical role in an ASX 200 company and was Executive Director at the Queensland Environmental Protection Agency, leading that agency’s regulatory operations across a diverse range of environmental legislation.

Mr Williamson has qualifications in applied science and post-graduate management qualifications.

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Mr Chris Ramsden | Executive General Manager, Business Operations

Mr Ramsden commenced as the Executive General Manager, Business Operations Division and Chief Financial Officer in September 2012.

Prior to this, he occupied senior finance positions in several government agencies including the Department of Health and Ageing, ComSuper, the Australian Taxation Office, and the (then) Australian Customs and Border Protection Service. His diverse public service career also spans operational law enforcement roles.

Mr Ramsden holds a business degree in accounting and finance and is a Fellow of the Certified Practising Accountants of Australia.

Mr Geoff Purvis-Smith | General Counsel

Mr Purvis-Smith joined the Clean Energy Regulator as General Counsel in June 2012.

Mr Purvis-Smith has extensive experience as a regulatory lawyer, having worked in a number of Commonwealth agencies including the (then) Australian Customs and Border Protection Service, the Australian Competition and Consumer Commission and the Australian Communications and Media Authority.

Before joining the Australian Public Service, Mr Purvis-Smith was a private sector lawyer specialising in litigation, regulation and government.

Mr Purvis-Smith holds degrees in arts and law and a master’s degree in international law.

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APPENDIX F: GOVERNANCE STRUCTURE

Executive Committee

The Executive Committee:

• is an advisory committee to the Chair

• provides a formal venue for clearance of papers referred to the Regulator

• comprises our Chair, Executive General Managers and General Counsel, and

• meets monthly before each meeting of the Regulator.

Strategic Leadership Team

The Strategic Leadership Team:

• leads our agency in setting the strategic direction for operations including regulatory posture, risk appetite, corporate planning, purpose and objectives

• makes decisions about policies, allocates resources and monitors our agency’s regulatory posture, and

• has the same membership as the Executive Committee and generally meets weekly.

Business Leadership Team

The Business Leadership Team:

• is responsible for decisions about implementing our agreed annual and business plans

• manages matters that require collaboration across divisions, and

• monitors resolution of identified issues and implementation of our strategic priorities.

Audit Committee

The Audit Committee:

• provides independent assurance and assistance to the Chair on our agency’s internal audit work program and our external accountability under the Public Governance, Performance and Accountability Act 2013

• reviews our annual financial statements and annual performance statements

• comprises three members, including an independent chair and at least one other external member, with a Member of the Regulator attending as an observer, and

• meets at least quarterly, and may hold special meetings to review annual financial statements and performance statements or to meet other specific committee responsibilities.

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Security Management Committee

The Security Management Committee:

• oversees and coordinates the strategic direction of our protective security and information security policies and practices and ensures we comply with relevant government requirements, and

• comprises the Agency Security Executive (Chair), the Chief Information Security Officer, the Chief Information Officer, the General Manager Investigations and Enforcement, the Information Technology Security Advisor, the Agency Security Advisor and the Assistant Agency Security Advisor. This committee generally meets quarterly.

Project Portfolio Board

The Project Portfolio Board:

• ensures that investment in our suite of projects will achieve agreed outcomes

• comprises the Chief Operations Officer (chair) and Executive General Managers, and is supported by subject matter expertise from the Chief Information Officer, Chief Financial Officer and Manager Business Investment

• is accountable to the Strategic Leadership Team, and

• generally meets monthly.

Staff Consultative Committee

The Staff Consultative Committee:

• provides a forum for consultation on workplace issues covered under the agency Enterprise Agreement

• is one of many forums for seeking staff feedback on workplace initiatives

• comprises the Chief Operations Officer (chair) and employee representatives from each branch as well as two management representatives, and

• is required to meet at least quarterly, and generally meets bimonthly.

Work Health and Safety Consultative Committee

The Work Health and Safety Consultative Committee:

• encourages and facilitates staff participation in preventing work-related injury and illness

• considers workers’ health and safety matters raised by managers, health and safety representatives or other staff

• comprises the General Manager Human Resources (chair), agency health and safety representatives, worker representatives and elected officers, and

• is required to meet at least quarterly.

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2016-17 Annual Report | Clean Energy Regulator 168

APPENDIX G: WORKFORCE PROFILE The following tables detail our workforce profile including salary ranges, level and gender, full-time and part-time status, and representation of diversity groups.

Table 12: Salary ranges at 30 June 2017

2015-16 2016-17

Minimum $

Maximum $

Minimum $

Maximum $

APS1 44 662 50 657 45 645 51 771

APS2 53 193 56 760 54 363 58 009

APS3 59 201 65 304 60 503 66 741

APS4 66 525 71 407 67 989 72 978

APS5 72 628 77 817 74 226 79 529

APS6 79 342 93 990 81 088 96 058

Legal Officer 61 338 90 328 62 687 92 315

Senior Legal Officer

97 651 126 946 99 799 129 739

Principal Legal Officer

137 322 142 816 140 343 145 958

EL1 97 651 124 408 99 799 127 145

EL2 116 571 153 801 119 136 157 185

Table 13: Senior Executive Service (SES) salary ranges at 30 June 2017

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2015-16 2016-17

Minimum $

Maximum $

Minimum $

Maximum $

SES Band 1 196 291 230 162 200 610 235 225

SES Band 2 241 117 283 258 246 422 289 490

169

Table 14: Ongoing officers by level and gender (by headcount) 2015-16 to 2016-17 37

2015-16 2016-17

Female Male Total Female Male Total

Graduate 2 3 5 3 2 5

APS1 1 2 3 0 0 0

APS2 0 0 0 1 2 3

APS3 2 5 7 2 7 9

APS4 18 8 26 22 7 29

APS5 41 25 66 34 24 58

APS6 45 48 93 33 44 77

EL1 42 40 82 42 45 87

EL2 19 25 44 15 22 37

SES Band 1 4 4 8 3 4 7

SES Band 2 1 2 3 1 2 3

Total 175 162 337 156 159 315

Table 15: Non-ongoing officers by level and gender (by headcount) 2015-16 to 2016-17 38

2015-16 2016-17

Female Male Total Female Male Total

Graduate 0 0 0 0 0 0

APS1 0 0 0 0 0 0

APS2 0 0 0 0 0 0

APS3 6 6 12 0 2 2

APS4 3 2 5 5 2 7

APS5 5 1 6 4 2 6

APS6 6 4 10 3 1 4

EL1 2 1 3 0 0 0

EL2 0 0 0 0 0 0

SES Band 1 0 0 0 0 1 1

SES Band 2 0 0 0 0 0 0

Chair 1 0 1 0 0 0

Total 23 14 37 12 8 20

37. All levels under the relevant enterprise agreement are categorised under their standard APS equivalency. This table includes officers on leave and inoperative officers, but does not include officers in the Clean Energy Regulator on secondment.

38. The four external members of the Regulator are not included in the above table. The Chair has not been included in the 2016-17 figures as staffing numbers are based on substantive classifications. All levels under the relevant enterprise agreement are categorised under their standard APS equivalency. This table includes officers on leave and inoperative officers, but does not include officers in the Clean Energy Regulator on secondment.

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Table 16: Employment type by level (by headcount) 2015-16 to 2016-1739

2015-16 2016-17

Full-time Part-time Total Full-time Part-time Total

Graduate 5 0 5 5 0 5

APS1 3 0 3 0 0 0

APS2 0 0 0 3 0 3

APS3 9 10 19 11 0 11

APS4 29 2 31 35 1 36

APS5 62 10 72 53 11 64

APS6 91 12 103 71 10 81

EL1 70 15 85 74 13 87

EL2 38 6 44 33 4 37

SES Band 1 8 0 8 8 0 8

SES Band 2 3 0 3 3 0 3

Chair 1 0 1 0 0 0

Total 319 55 374 296 39 335

39. All levels under the relevant enterprise agreement are categorised under their standard APS equivalency. This table includes officers on leave and inoperative officers, but does not include officers in the Clean Energy Regulator on secondment. APPENDICES 7

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Table 17: Employment type by gender (by headcount) 2015-16 to 2016-1740

2015-16 2016-17

Full-time Part-time Total Full-time Part-time Total

Female 159 39 198 136 32 168

Male 160 16 176 160 7 167

Total 319 55 374 296 39 335

Table 18: Representation of diversity groups (by headcount) 2015-16 to 2016-17

2015-16 2016-17

Female 198 168

Non-English speaking background41 27 30

Indigenous 5 4

People with a disability 3 3

Table 19: Ongoing/non-ongoing by full-time and part-time (by headcount) 2015-16 to 2016-17

2015-16 2016-17

Full-time Part-time Total Full-time Part-time Total

Ongoing 295 42 337 278 37 315

Non-ongoing

24 13 37 18 2 20

40. This table includes officers on leave and inoperative officers, but does not include officers in the Clean Energy Regulator on secondment. 41. Non-English speaking background includes two categories: • People born overseas who arrived in Australia after the age of five and whose first language was not English.

• Children of migrants, including: those who were born overseas and arrived in Australia when they were aged five or younger but did not speak English as a first language; those who were born in Australia but did not speak English as a first language and had at least one parent that did not speak English as a first language; and those who were born in Australia and had neither parent speaking English as a first language.

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2016-17 Annual Report | Clean Energy Regulator 172

APPENDIX H: AGENCY RESOURCE STATEMENT

Table 20: Clean Energy Regulator Agency resource statement

For the period ended 30 June 2017

Actual

appropriation for 2016-17 $’000

Payments made 2016-17 $’000

Balance remaining 2016-17 $’000

Ordinary annual servces42

Departmental appropriation43 91 460 75 252 16 208

Total 91 460 75 252 16 208

Administered expenses

Outcome 1 279 405 163 775

Total 279 405 163 775

Total ordinary annual services 370 865 239 027

Other services

Departmental non-operating

Equity injections44 5 248 123 5 125

Total other services 5 248 123 5 125

Total available annual appropriations and payments 376 113 239 150

Special appropriations

Special appropriations limited by criteria/entitlement

Public Governance, Performance and Accountability Act 2013 - section 77

3 456

Clean Energy Act 2011 - section 132 8 744

Total special appropriations 12 200

Total resourcing and payments 376 113 251 350

42. Appropriation Act (No. 1) 2016-17. The amount also includes prior year departmental appropriations and section 74 retained revenue receipts. 43. Includes an amount of $1 183 000 for the 2016-17 Departmental Capital Budget and $1 500 000 for the prior year Departmental Capital appropriations. For accounting purposes this amount has been designated as ‘contributions by

owners’.

44. Appropriation Act (No. 2) 2016-17 and Appropriation Act (No. 2) 2012-13. APPENDICES 7

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LIST OF TABLES, FIGURES AND GRAPHS

Tables

Table 1 Number of projects registered under the Emissions Reduction Fund 2016-17 39

Table 2 Number of project applications received and/or processed 2016-17 40

Table 3 Number of ACCUs issued by method category 2016-17 42

Table 4 Number of power stations accredited and capacity 2014-15 to 2016-17 60

Table 5 New accredited power stations by energy source and capacity 2016-17 61

Table 6 Validated small-scale systems as at 30 June 63

Table 7 Renewable Energy Target liability discharged 69

Table 8 Investigations closed in 2016-17 by type and scheme 79

Table 9 Total investigations in 2016-17 80

Table 10 Key client survey findings 85

Table 11 Legal services expenditure summary 2016-17 158

Table 12 Salary ranges at 30 June 2017 168

Table 13 Senior Executive Service (SES) salary ranges at 30 June 2017 168

Table 14 Ongoing officers by level and gender (by headcount) 2015-16 to 2016-17 169

Table 15 Non-ongoing officers by level and gender (by headcount) 2015-16 to 2016-17 169

Table 16 Employment type by level (by headcount) 2015-16 to 2016-17 170

Table 17 Employment type by gender (by headcount) 2015-16 to 2016-17 171

Table 18 Representation of diversity groups (by headcount) 2015-16 to 2016-17 171

Table 19 Ongoing/non-ongoing by full-time and part-time (by headcount) 2015-16 to 2016-17 171

Table 20 Clean Energy Regulator Agency resource statement 172

LIST OF TABLES, FIGURES AND GRAPHS

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Figures

Figure 1 State and territory emissions profile 2015-16 54

Figure 2 Key uses of National Greenhouse and Energy Reporting data 55

Figure 3 Organisational structure as at 30 June 2017 74

Figure 4 Our committee structure as at 30 June 2017 75

Figure 5 Planning and performance reporting frameworks 76

Figure 6 Focus areas for compliance 78

Figure 7 Audit activities 80

Graphs

Graph 1 Number of ACCUs issued 2011-12 to 2016-17 41

Graph 2 Total delivery of carbon abatement delivered under Emissions Reduction Fund contracts as at 30 June 2017 45

Graph 3 Australia’s sources of reported scope 1 emissions by industry for 2015-16 52

Graph 4 Energy production by fuel type for 2015-16 52

Graph 5 Net energy consumption 2015-16 53

Graph 6 Large-scale generation certificate spot price 1 July 2016-30 June 2017 67

Graph 7 Workforce profile by level and gender as at 30 June 2017 (by headcount) 90

Graph 8 Operating expenditure 2016-17 101

Graph 9 Capital investment by category 2016-17 102

Graph 10 Capital investment in schemes 2016-17 102

Graph 11 Administered income 2016-17 103

Graph 12 Administered expenses 2016-17 103

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GLOSSARY, ABBREVIATIONS AND ACRONYMS

ACCU Australian carbon credit unit

Air source heat pumps Air source heat pump water heaters transfer heat

from air outside the unit to water stored inside the unit. The air heats a special type of refrigerant (not a chlorofluorocarbons) and the energy is used to heat the water.

ANREU Australian National Registry of Emissions Units

APS Australian Public Service

Benchmark price The maximum amount we would pay for

emissions reductions at an auction.

Biomass Biomass includes the following fuel sources:

agricultural waste, bagasse, biomass-based components of municipal solid waste, black liquor, energy crops, food processing waste, food waste, landfill gas, sewage gas and biomass-based components of sewage, waste from processing of agricultural products and wood waste.

Carbon abatement contracts A contract to sell ACCUs to the Australian

Government. Carbon abatement contracts are standard commercial, payment-on-delivery contracts.

Carbon dioxide equivalent CO2-e A measure of greenhouse gas emissions. Carbon dioxide equivalence is estimated by multiplying the amount of gas by the global warming potential of the gas.

Compliance year The Renewable Energy Target operates on a

calendar year basis, meaning liable entities must surrender large-scale generation certificates for the energy acquisition in the previous calendar year.

Controlling corporation An entity that must register and report under the

National Greenhouse and Energy Reporting Act 2007, as defined in section 7 of the Act.

Crediting Participants receive one ACCU for each tonne

of CO2-e stored or avoided through registered Emissions Reduction Fund projects.

Delivery under the Emissions Reduction Fund This transaction refers to ACCUs transferred in the ANREU to make a delivery under a carbon abatement contract.

Displaced/displacement The estimated reduction in demand for electricity

from the grid that results from the installation of a solar water heater or air source heat pump. GLOSSARY, ABBREVIATIONS AND ACRONYMS 7

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ACCU Australian carbon credit unit

EAP Employee Assistance Program

Enforceable undertaking Enforceable undertakings are written statements

from a person or organisation that they will do, or refrain from doing, certain things in order to resolve breaches or improve compliance with the legislation.

Greenhouse gas emissions Greenhouse gas emissions refers to gases

produced from human activity, such as carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O). These emissions alter the natural greenhouse effect and encourage atmospheric warming.

The greenhouse effect is created by naturally occurring gases such as water vapour (H2O) that insulate the Earth, preventing the sun’s heat from escaping and keep the Earth at liveable temperatures.

Issuance The act of issuing units including ACCUs under

the Carbon Credits (Carbon Farming Initiative) Act 2011 and international units in accordance with United Nations Framework Convention on Climate Change directions.

Kilowatt A kilowatt is a measurement of power. Power is

the rate at which the energy is generated or used. One kilowatt is equal to 1000 watts.

Kilowatt hour A kilowatt hour is a measure of electrical energy

equivalent to a power consumption of 1000 watts for one hour.

Liable entity A person who, during a year, makes a relevant

acquisition of electricity is called a liable entity. Liable entities are mainly electricity retailers.

Megawatt A megawatt is a measurement of power. Power is

the rate at which the energy is generated or used. One megawatt is equal to 1000 kilowatts.

Megawatt hour A megawatt hour is a measure of electrical

energy equivalent to a power consumption of 1000 kilowatts for one hour.

Petajoules A petajoule is a standard unit of energy. For

electricity, one petajoule equals 277.78 million kilowatt hours.

Photovoltaic system A photovoltaic (PV) system, also known as a

solar PV power system or PV system, is a power system designed to convert sunlight into usable electrical power by means of photovoltaic cells.

REC Registry Renewable Energy Certificate Registry

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ACCU Australian carbon credit unit

Relinquish In certain situations where excess units have

been issued, a participant can be required to relinquish units; that is, return them to the Commonwealth. They include situations relating to reforestation, such as the voluntary withdrawal of reforestation projects from the relevant scheme and the issue of units as a result of fraudulent conduct by the recipient.

Renewable energy certificate Renewable energy certificate refers to both

large-scale generation certificates and small-scale technology certificates.

The basis, set out in the Renewable Energy (Electricity) Regulations 2001, for calculating the number of large-scale generation certificates that a liable entity must purchase in a given year.

Reporting transfer certificate holders A person that holds a reporting transfer certificate (RTC) must complete a final emissions report under s22G of the National Greenhouse and Energy Reporting Act. This report contains information about the RTC facility's scope 1 and scope 2 emissions and energy production and consumption.

Safeguard mechanism The safeguard mechanism is designed to ensure

emissions reductions purchased through the Emissions Reduction Fund are not offset by significant increases in emissions above business as usual levels elsewhere in the economy.

Scope 1 emissions The release of greenhouse gas into the

atmosphere as a direct result of an activity or series of activities (including ancillary activities) that constitute the facility. For example, the emissions produced when coal is burned at a power station are scope 1 emissions.

Scope 2 emissions The release of greenhouse gas into the

atmosphere as a direct result of one or more activities that generate electricity, heating cooling or steam that is consumed by the facility but that do not form part of the facility.

Secondary market The market for units or certificates issued by the

Clean Energy Regulator that occurs between two entities, not including the Clean Energy Regulator.

SES Senior Executive Service

Solar panels A panel designed to absorb the sun’s rays as a

source of energy for generating electricity or heating. GLOSSARY, ABBREVIATIONS AND ACRONYMS

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ACCU Australian carbon credit unit

Sub-standard A sub-standard small-scale system does not

meet key clauses in the Clean Energy Council standards and requirements for installation, or relevant Australian Standards, and may lead to premature equipment failure or other issues. The installation work and or equipment should be improved. The system owner should contact the installation company or a qualified installer to rectify the items listed for improvement.

Surrender This transaction allowed eligible units to be

surrendered from an ANREU account.

Unsafe An unsafe small-scale system has a safety hazard

which poses an imminent risk to a person or property. The inspector shuts down the system and renders it safe. The inspector also advises the relevant state or territory regulatory authority of the nature and extent of the safety risk. The system owner should contact the installation company or a qualified installer to rectify the items listed for improvement.

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ALPHABETICAL INDEX

A

abbreviations and glossary, 175-178 access and equity (staff diversity groups), 91, 171 accessibility of information, 92 accommodation and facilities, 94-95, 159 accountable authority, 15, 164 address and contact details, inside back cover administered finances, 102-103 Administrative Appeals Tribunal decision review, 87 advertising and market research, 158 agency resource statement, 172 air source heat pumps, 23, 63, 175 ANAO see Australian National Audit Office annual performance statement see performance asset management, 95 auctions (Emissions Reduction Fund), 43, 100 Audit Committee, 166 Audit Determination and Auditor Registration Instrument, 82 Auditor-General reports, 87 see also Australian National Audit Office auditors, 81 audits

audit framework, 82 independent auditor’s report (agency), 103, 104-105 internal, 82-83 under National Greenhouse and Energy Reporting Audit Framework, 80-82 Auscontact Association ACT/NSW Contact Centre award, 84 AusTender, 96 Australian Bureau of Statistics Business Longitudinal Analysis Data Environment, 57 Australian carbon credit units

delivered, 29 issued, 22, 40-42 method category, 42 Australian Energy Market Operator, 65, 67 Australian Energy Statistics, 55 Australian Information Commissioner, 87 Australian National Audit Office access clauses in contracts, 97 independent auditor’s report (agency), 103, 104-105

performance audit, 87

Australian National Registry of Emissions Units, 25, 47 see also Emissions Reduction Fund Australian National Registry of Emissions Units Act 2011, 14 Australian Public Service Commission, 91, 159 Australian Public Service Values and Code of Conduct, 13, 74 Australian Renewable Energy Agency, 58 Australian Renewable Energy Mapping Infrastructure Project, 58 awards (recognition of excellence), 84, 88, 89

B

benchmark price, defined, 175 benefits (staff) see remuneration and benefits biomass, 61, 175 Brown, Anne T, 160-161 business continuity management, 82 Business Leadership Team, 166 business planning, 75-76 see also plans and planning

C

capital investment, 101-102 carbon abatement contracts, 175 available funds, 47 delivery performance, 29, 43-46

exempt from publication on AusTender, 97 number of contracts, 27, 43 value and magnitude, 33, 43 see also Emissions Reduction Fund carbon abatement programs, 9 carbon credit units see Australian carbon credit units

Carbon Credits (Carbon Farming Initiative) Act 2011, 9, 14 carbon dioxide equivalent, 22, 175 abatement (tonnes), 40

see also carbon abatement contracts Carbon Farming Initiative, 47, 79, 80 see also Emissions Reduction Fund carbon unit tracking see Australian National Registry of Emissions Units certificates see renewable energy certificates

ALPHABETICAL INDEX

7

2016-17 Annual Report | Clean Energy Regulator 180

Chair, 160, 164 Acting Chair, 73, 164 conditions of appointment, 93 review by, 9 role, 15 Chair’s awards, 89 Chief Executive Instructions, 95, 96 Clean Energy Act 2011, 14 Clean Energy Council, 66 Clean Energy Legislation (Carbon Tax Repeal) Act 2014, 14 Clean Energy Regulator

accountable authority, 15, 164 establishment and legislative framework, 14 meetings of the Regulator, 73, 163 Members, 73, 160-162 objectives, 3, 13 purpose, 3, 12 role, 3, 12, 72 structure (statutory authority and public service agency), 15, 73-74 see also performance and schemes administered: Emissions Reduction Fund; National Greenhouse and Energy Reporting Scheme; Renewable Energy Target Clean Energy Regulator Act 2011, 14, 72, 73 client completion of enforceable undertakings, 28 client engagement and guidance function

client survey results, 27, 31, 85 contact centre, 22, 84 performance results, 21-22 clients, 14 Climate Change Authority, review of the Carbon Credits (Carbon Farming Initiative) Act 2011, 9 committees, 75, 166-167 Commonwealth Director of Public Prosecutions, 28 Commonwealth Information Sharing Network, 56 Commonwealth Ombudsman, 87 Commonwealth Procurement Rules, 96, 97 Communications section, 89 compliance functions approach, 77-78 capability, 22, 65, 67 compliance year, 175 data matching program, 65 performance results, 30, 47 priorities, 9, 47, 78 see also Emissions Reduction Fund; National Greenhouse and Energy Reporting Scheme

compliance of registered auditors, 81 compliance rates (regulated and liable entities), 30 compliance with governance and control frameworks (Regulator), 27 conflict of interest, 82 consultants, 96 consultative arrangements (staff), 167 contact centre, 22, 84 contact details, inside back cover Continuing Conversations approach to performance management, 93 contracts see purchasing and procurement (agency) controlling corporations, 24, 51, 175 corporate governance, 74-86, 166-167 Corporate Plan, 2, 16, 17, 20, 75-76

performance indicator results, 21-33 see also performance court cases, 28 crediting (Emissions Reduction Fund), 175 CSIRO, 57, 58

D

D’Ascenzo, Michael, 161 data integrity, 31, 65 data matching, 65 data publication see information published Data61 project (CSIRO), 58 Davis, Peter, 162 Department of the Environment and Energy, 36

climate policy review, 9 international reporting obligations, 55 Departmental finances, 101-103 see also finances disability reporting, 159 diversity groups (staff), 91, 171

E

ecologically sustainable development (agency), 159

electrical safety, 66 electricity generator data, 51-54 electricity generators see grid-connected generators; renewable energy power stations; small-scale systems

ALPHABETICAL INDEX

7

181 2016-17 Annual Report | Clean Energy Regulator

emissions data published, 51, 57 greenhouse gas emissions, defined, 176 industry sources of, 52 reporting see National Greenhouse and Energy Reporting Scheme safeguard mechanism, 25, 36, 48-49, 177 scope 1 emissions, 48, 50, 52, 57, 177 scope 2 emissions, 50, 177 state and territory emissions profile, 53-54 Emissions and Energy Reporting System, 56 Emissions Reduction Fund, 9, 12, 36, 65

ACCUs delivered, 29, 175 ACCUs issued, 22, 40-42 application processing timeliness, 24 applications, 40 auctions, 43, 100 audits, 83, 87 available funds, 47 compliance levels, 30, 47 contracts see carbon abatement contracts data integrity, 65 elements, 36 financial performance highlights, 100 focus in 2016-17, 37 highlights in 2016-17, 38 investigations, 79, 80 looking forward, 47 projects, 9, 37, 38-40 purpose, 36 safeguard mechanism, 25, 36, 48-49, 177 see also Australian National Registry of Emissions Units employees see staff enabling legislation, 14 energy auditors, 81 energy production and consumption

consumption by industry, 50, 53 production by fuel type, 52 energy sources for power stations, 61 Energy Use Data Model, 57 enforceable undertakings, 28, 47, 176 enterprise agreement, 92, 93 environmental performance (agency), 159 equity and access (staff diversity groups), 91, 171 ethical standards, 74 Executive Committee, 166 Executive General Managers, 164-165 exempt contracts, 97 external scrutiny, 87

F

facilities and accommodation, 94-95, 159 Fair Work Act 2009, 92 feature articles Awards of Excellence, 89

contact centre award for excellence, 84 contract delivery under Emissions Reduction Fund, 46 data matching program for compliance checking, 65 increasing transparency through data release, 62 intranet improvements, 86 safeguarding emissions reductions, 49 finances

agency resource statement, 172 asset management, 95 financial overview (schemes), 100 financial performance summary (agency), 101-103

financial statements, 103-150 statement by accountable authority and CFO, 106

fraud prevention and control, 77 Freedom of Information Act 1982, 159 Frydenberg, Hon Josh, 15 fuel sources

renewable energy sources, 61 types used for energy production, 52 functions of Clean Energy Regulator see role and functions of Clean Energy Regulator

G

gender of staff, 90, 169, 171 General Counsel, 165 glossary and abbreviations, 175-178 governance see corporate governance Graduate Development Program, 91 grant programs, 159 greenhouse auditors, 81 greenhouse gas emissions see emissions grid-connected generators, 49, 51

H

health and safety see work health and safety highlights in 2016-17, 8, 38, 50, 59, 72, 100 household electricity requirements, 61, 63 household solar installations see small-scale systems; solar water heaters human resources management, 88-95 see also staff

hydro-power, 23, 60, 61, 63

ALPHABETICAL INDEX

7

2016-17 Annual Report | Clean Energy Regulator 182

I

Independent Review into Future Security of the National Electricity Market, 9 Indigenous Procurement Policy, 96, 97 Indigenous trainees, 91 individual flexibility arrangements, 92, 93 industry assistance (exemptions), 69 industry emissions

scope-1 emissions, 50, 52, 57, 177 states and territories, 53, 54 information accessibility, 92 information and communications technology services

achievements, 98 asset management, 95 client satisfaction with systems, 31 intranet improvements, 86 performance results, 32-33 strategy, 98 systems and content, 32, 92 Information Publication Scheme, 159 information published, 51, 57, 62 Information Security Manual, 33 information sharing, 56 inspection of registered auditors, 81 internal audit, 82-83 International Energy Agency, 55 international reporting obligations, 55 intranet improvements, 86 investigations, 79, 80 investment in renewable energy, 9, 70, 101-102

J

judicial decisions, 87

K

key performance indicators agency, 17, 20 Regulator Performance Framework, 83 see also performance

L

Large-scale Renewable Energy Target, 9, 59 application processing timeliness, 25 certificate prices, 67-68 certificate purchase and surrender, 68 certificates registered, 23 certificates validated, 61 liable entity compliance, 30

large-scale renewable power stations, 59-61 energy sources, 61 investment in, 70 megawatt hours generated, 33, 60 number accredited, 60 projects committed, 70 supply and demand data, 62 learning and development see training and development

legal expenditure, 158 legislative framework, 14 letter of transmittal, 6 liable entities, 176

compliance, 30, 68

M

Malley, Virginia, 161-162 market research, 158 meetings of the Regulator, 73, 163 megawatt, defined, 176 megawatt hours

defined, 176 generated, 33, 59, 61 Members of the Regulator, 73, 160-162 milestones from first five years, 10 Minister, 15 monitoring and compliance function, performance results see compliance functions Munro, Chloe, 160, 164

N

National Disability Strategy 2010-2020, 159 National Greenhouse and Energy Register, 51 National Greenhouse and Energy Reporting Act 2007, 14 National Greenhouse and Energy Reporting Scheme, 12

application processing timeliness, 24 audits, 80-82 compliance levels, 30 data integrity, 31 data publication, 51, 57 data usage, 31, 55-56 focus in 2016-17, 50 highlights in 2016-17, 50 investigations, 79, 80 looking forward, 58 purpose, 50 reporting system, 30 non-ongoing officers, 169, 171 non-salary benefits, 93

ALPHABETICAL INDEX

7

183 2016-17 Annual Report | Clean Energy Regulator

O

Oakton Services Pty Ltd, 83 objectives of Clean Energy Regulator, 3, 13 Ombudsman, 87 ongoing officers, 169, 171 operating result, 101 organisational structure, 15, 73-74 outcome and program structure, 16

P

parliamentary committees, 87 parliamentary questions on notice, 87 partnerships, 14, 85 see also stakeholders Patterson, Nicole, 89 pay see remuneration and benefits performance

analysis of performance against purpose, 33 annual performance statement, 17, 20-33 Chair’s review, 9 client perceptions, 27, 85 environmental (agency), 159 financial overview and performance summary, 101-103 highlights in 2016-17, 8, 38, 50, 59, 72, 100 introductory statement, 20 key performance indicators, 17, 20 milestones from first five years, 10 planning and reporting framework, 76 results against key performance indicators, 21-33

scheme performance see Emissions Reduction Fund; National Greenhouse and Energy Reporting Scheme; Renewable Energy Target self-assessment against Regulator Performance Framework, 26, 83 performance framework, 15 performance management (staff), 93 performance pay, 93 personnel see staff petajoules, defined, 176 photovoltaic systems see solar photovoltaic systems plans and planning

business planning, 75-76 corporate plan, 2, 16, 17, 20, 75-76 ICT, 98 planning and reporting framework, 76 see also performance

Portfolio Budget Statements, 2, 16 portfolio membership, 15 power stations data publication, 51

scope 1 emissions, 52, 177 see also renewable energy power stations procurement (agency), 96-97 Project Portfolio Board, 167 projects (carbon farming/emissions reduction) see Emissions Reduction Fund prosecutions, 28, 79 Protective Security Policy Framework, 33, 94 Public Governance, Performance and Accountability Act 2013, 6, 15, 164 Public Service Act 1999, 82, 92 section 24(1) determinations, 92, 93 publication of emissions data see information published purchasing and procurement (agency), 96-97 purpose of Clean Energy Regulator, 3, 12 Purvis-Smith, Geoff, 165

Q

questions on notice, 87

R

Ramsden, Chris, 165 REGi (intranet), 86 registered auditors, 81 Regulator see Clean Energy Regulator Regulator Performance Framework key performance indicators, self-assessment against, 26, 83 see also performance regulatory officer development program, 90 see also staff regulatory reform, 83 remuneration and benefits, 93 Renewable Energy Certificate Registry, 62, 70 see also certificates renewable energy certificates, 23, 59, 177 see also certificates under Large-scale Renewable Energy Target; and under Small-scale Renewable Energy Scheme Renewable Energy (Electricity) Act 2000, 14, 60, 69, 87

ALPHABETICAL INDEX

7

2016-17 Annual Report | Clean Energy Regulator 184

renewable energy power stations capacity (megawatts), 59, 70 energy sources, 61 investment in, 70 megawatt hours generated, 59 see also large-scale renewable power stations; small-scale systems renewable energy small-scale systems see small-scale systems Renewable Energy Target, 12

administrative report (Tracking towards 2020), 60, 67, 70 audits, 81 certificate purchase and surrender, 68 compliance levels, 30 data publication, 62 eligible renewable energy sources, 61 exemptions, 69 financial performance highlights, 100 focus in 2016-17, 59 highlights in 2016-17, 59 installation checks, 84 investigations, 79, 80 liabilities discharged, 69 liable entities, 68-69, 81 looking forward, 70 projects committed, 70 purpose, 59 regulating market demand, 68 shortfall charges, 68-69 see also Large-scale Renewable Energy Target; Small-scale Renewable Energy Scheme Renewable Power Percentage, 68 reporting and planning framework (agency), 76 reporting obligations (emissions and energy) see National Greenhouse and Energy Reporting Scheme reporting transfer certificate holders, 51, 177 responsibilities of Clean Energy Regulator, 12 risk management, 76-77 role and functions of Clean Energy Regulator, 3, 12, 72

S

safeguard mechanism, 25, 36, 48-49, 177 salary ranges see remuneration and benefits satisfaction of clients with interactions and systems, 27, 31, 85

schemes administered see Emissions Reduction Fund; National Greenhouse and Energy Reporting Scheme; Renewable Energy Target scope 1 and 2 emissions see emissions secondary market, 36, 177 section 24(1) determinations, 92, 93 security, 33

breaches, 94 Security Management Committee, 167 self-assessment against Regulator Performance Framework, 26, 83 Senate Environment and Communications Legislation Committee, 87 Senior Executive Service officers

employment arrangements, 92, 93 remuneration and benefits, 168 statistics, 169-170 senior executives (agency), 73, 74, 164-165 see also Clean Energy Regulator: Members senior management committees, 75, 166-167 shortfall charges,- 68-69 small and medium-sized enterprises’ participation in procurement, 96, 97 Small-scale Renewable Energy Scheme, 59, 63-64 application processing timeliness, 24 certificate prices, 68 certificate purchase and surrender, 68 certificates registered, 23, 79 certificates validated, 63-64 compliance checking, 65-67 data matching program for compliance checking, 65 integrity, 67 liable entity compliance, 30 small-scale systems compliance checking, 65-67 electrical safety, 66 inspections of, 66 installations, 63-64 installers, 66 megawatt hours generated or displace, 8, 23, 59, 63 number of, 59 small-scale technology certificates clearing house, 68

Small-scale Technology Percentage, 68 solar photovoltaic systems, 176 inspections, 66 installations, 23

solar panels, defined, 177 solar power stations, 61

ALPHABETICAL INDEX

7

185 2016-17 Annual Report | Clean Energy Regulator

solar power systems (small-scale) see small-scale systems solar water heaters, 23, 63 staff

consultative arrangements, 167 diversity groups, 91, 171 employment arrangements, 92 performance management, 93 recognition of excellence, 88, 89 recruitment, 91 remuneration and benefits, 93, 168 senior executives, 73, 74, 164-165 training and development, 90 work health and safety, 94 workforce profile, 90, 168-171 see also Senior Executive Service officers Staff Consultative Committee, 167 stakeholders, 14 see also partnerships State and Territory Information Sharing Network, 56

states and territories electrical safety regulation, 66 emissions profile, 53-54 energy efficiency program data, 65 Strategic Leadership Team, 166 strategic risks, 77 see also risk management study assistance, 90 Swirepik, Jody, 164

T

TEC Pipe Pty Ltd and Clean Energy Regulator [2017] AATA 48, 87 territories see states and territories timeliness

application processing times (Regulator), 24-25 client completion of enforceable undertakings, 28

Tracking towards 2020: Encouraging renewable energy in Australia, 60, 67, 70 training and development, 90 transfer certificate holders see reporting transfer certificate holders

U

United Nations Framework Convention on Climate Change, 55

V

values, 13, 74

W

waste coal mine gas, 61 website address, inside back cover Williamson, Mark, 164 wind energy, 23, 61 work health and safety, 94 Work Health and Safety Consultative Committee, 167

workforce profile see staff workplace diversity, 91, 171

Y

year in review, 8-10

ALPHABETICAL INDEX

7

CONTACT DETAILS

Published by the Clean Energy Regulator ISSN 2200-937 © Commonwealth of Australia 2017

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© Commonwealth of Australia (Clean Energy Regulator) 2017

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2016-2017 Annual Report