Projects

2015-16 Minimum Retailer Solar Feed-in Tariff

Stage:
Final
Released:
16 Dec 2014
Closes:
16 Dec 2014
Project Type:
Pricing & access
Contact Person:
Nathan Petrus

The Commission has released its final decision in respect of the minimum retailer feed-in tariff payable from 1 January 2015 by electricity retailers to customers with solar photovoltaic units, for electricity fed into the distribution network from those units.

The Commission will shortly be commencing a review of the retailer feed-in tariff (R-FiT) to determine the ongoing need for a regulated R-FiT value to apply from 1 January 2015 and, if required, the value of the minimum R-FiT. The Commission will release its Draft Decision early October 2014 and will invite submissions from all members of the community.

The Commission has released for public consultation a Draft Price Determination in respect of the minimum electricity feed-in tariff payable by electricity retailers (R-FiT) to customers with solar photovoltaic generators. The Draft Determination also proposes that a 2 year regulatory period be established to provide for the continued monitoring of the performance of the retailer feed-in tariff market so as to inform the Commission’s future decision as to whether or not a further price determination is required.

The Commission has proposed a retailer feed-in tariff of 5.3 cents/kWh to apply from 1 January 2015 to 31 December 2015. This amount reflects the lower bound of the reasonable range of estimated values (that is from 5.3 to 7.4c/kWh) to retailers of PV customers’ exports in 2015.  The Draft Determination also proposes that this amount be reviewed, and potentially varied, for 2016.

The minimum R-FiT is binding on retailers. However, it is up to retailers to decide whether it should offer payments above this amount.

The proposed R-FiT of 5.3c/kWh reflects the forecast wholesale market value of PV electricity in the coming year. The proposed value is lower than the 2014 R-FiT of 6.0c/kWh due to the lower forecast wholesale market price of electricity driven by lower customer demand. 

The setting of the R-FiT for 2015 at 5.3c/kWh recognises that there remains uncertainty as to how competitive the market for solar PV customers is in this State. Setting the value at 5.3c/kWh will provide both a safety net for solar PV customers while also providing electricity retailers the opportunity to compete for customers by potentially offering higher feed-in payments.

As well as setting the minimum tariff, the Draft Price Determination provides for the continuation of the formal price monitoring regime of the retailer FiT market. This will allow the Commission to monitor the extent of competition for PV customers and the incidence of feed-in tariffs above the mandatory amounts over the coming 2 years. Evidence provided through this process will inform the Commission’s future decision as to whether or not a further price determination is required.

The Commission invites submissions from all members of the community on this Draft Price Determination, with submissions due on or before Thursday 30 October 2014. All submissions will be placed on the Commission’s website, subject to any confidential material being excluded.

The Commission intends to release a Final Decision in mid-December 2014.  If the Commission elects to make a Price Determination (whether or not on the same terms as this Draft Price Determination) as a result of its Final Decision, then that determination will take effect from 1 January 2015.

Publications

The Commission has released its final decision in respect of the minimum retailer feed-in tariff payable from 1 January 2015 by electricity retailers to customers with solar photovoltaic units, for electricity fed into the distribution network from those units.

The Commission’s final decision is that it will make a further two-year price determination setting the minimum retailer feed-in tariff at 5.3 cents per kWh. The minimum amount fixed by the Commission is at the lower end of the reasonable range of fair and reasonable value to an electricity retailer of electricity fed-in to the distribution network. The value of R-FiT reflects the reduction in the forecast wholesale cost of electricity. From 1 January 2015, all electricity retailers are required to pay at least that minimum retailer feed-in tariff amount to PV customers for electricity exported into the distribution network, although they may offer higher amounts.

Further,the Commission will review the forecast value of the R-FiT to apply from 1 January 2016 and, if the forecast value lies on or within ±10% of 5.3 cents per kWh, the Commission will leave that value unchanged. If the forecast value lies outside of that range, the forecast value will apply during 2016.

Although the signs of competition for solar PV customers are encouraging, a further period of setting a minimum R-FiT and monitoring is considered appropriate, to be confident that no consumer detriment would occur from deregulation. Therefore, the Commission considers that it is still appropriate to continue regulating the minimum R-FiT for a further two years. Doing so will provide the market with further stability and time to absorb the changes arising from the deregulation of the energy markets, the transition to the National Electricity Retail Law (NERL), the National Energy Customer Framework (NECF) and the Commission’s changes in setting the R-FiT. It will also provide the Commission with the opportunity to collect further evidence about the potential costs and benefits to PV customers, and energy customers more generally, of deregulating the R-FiT.

Publications