The Clean Energy Legislation (Carbon Tax Repeal) Act 2014(Cth) (“Act”) received Royal Assent on 17 July 2014 and is now law with effect from 1 July 2014.  In addition to abolishing the carbon tax, the Act amends the Competition and Consumer Act 2010 (Cth) (“CCA”) to:

  • prohibit carbon tax-related price exploitation;
  • ensure that all cost savings attributable to the carbon tax repeal are passed through the supply chain for regulated goods; and
  • ensure that lower prices resulting from the repeal of the carbon tax are passed on to consumers of regulated goods.

Does the Act affect my organisation?

The Act introduces a carbon tax price reduction obligation that applies to ‘entities’ which make ‘regulated supplies’.

‘Entity’ is defined broadly and includes corporations, individuals and bodies corporate as well as any party or entity which can or does buy or sell electricity, natural gas or synthetic greenhouse gas (“SGG”).

A ‘regulated supply’ means a supply of ‘regulated goods’, which include natural gas, electricity and SGG, made during the period starting on 1 July 2014 and ending on 30 June 2015 (“carbon tax repeal transition period”).

Certain provisions under the CCA now apply to ‘electricity retailers’, ‘natural gas retailers’ and ‘bulk SGG importers’, which encompass a range of entities which sell electricity, natural gas and SGG to both businesses and domestic customers.

Penalties for failure to comply

The CCA now contains significant penalties for entities that fail to comply with the provisions surrounding the carbon tax price reduction obligation. For example, the Australian Competition and Consumer Commission (“ACCC”) can impose penalties on corporations engaging in price exploitation in relation to the carbon tax repeal of up to $1.1 million and suppliers of electricity and natural gas as well as bulk SGG importers can be penalised 250% of any costs savings from the carbon tax repeal that they fail to pass on to their customers.

How can my organisation comply with the new obligations?

Price exploitation in relation to the carbon tax repeal

In order to avoid engaging in price exploitation when making a regulated supply, your organisation must pass through all of its cost savings relating to the supply that are directly or indirectly attributable to the carbon tax repeal.

Carbon tax removal substantiation notice

If your organisation is making regulated supplies to electricity, natural gas or SGG customers, the ACCC must provide a carbon tax removal substantiation notice requiring your organisation to respond within 21 days (unless an extension is granted) with a written explanation as to how savings arising from the carbon tax repeal are reflected in its prices.

Carbon tax removal substantiation statement

Within 30 days after 17 July 2014, if your organisation is supplying electricity, natural gas or SGG to customers, it must provide the ACCC with a carbon tax removal substantiation statement setting out an estimate of its cost savings resulting from the carbon tax repeal and that are being or will be passed on to its customers during the financial year beginning on 1 July 2014.

Your organisation must ensure that a copy of the statement given to the ACCC is available on its website in a manner that is readily accessible by the public until the end of 30 June 2015.

Statements for electricity and natural gas customers

Within 30 days after 17 July 2014, if your organisation is supplying electricity or natural gas to customers, it must prepare a statement of the estimated carbon tax removal savings that will be passed on to them for the financial year beginning 1 July 2014 and must communicate the contents of that statement to its customers within the period of 30 to 60 days after 17 July 2014.

False and misleading representations about the effect of the carbon tax repeal on prices

The CCA now prohibits entities from making false or misleading representations about the effect of the carbon tax scheme and the carbon tax repeal on prices during the carbon tax repeal transition period.

The ACCC’s new powers

The ACCC has new powers to:

  • monitor the prices of certain goods before and during the carbon tax repeal transition period;
  • assess the general effect of the carbon tax repeal on these prices; and
  • consider whether an entity has engaged in, is engaging in, or may engage in price exploitation.