Victorian Energy Efficiency Target Dumped

Alexi Lynch

The Victorian Energy Efficiency Target (VEET) is a Victorian Government initiative that commenced in 2009 and was legislated to continue until 2030. Victorian councils and communities have benefitted greatly from VEET and over the last 12 months have advocated for the scheme to be strengthened and the included technology broadened. Despite isolated issues around the door-to-door sales of once “fashionable” activities such as standby power controllers (which at one state represented over 70% of created VEECs or Victorian Energy Efficiency Certificates), the scheme has been incredibly successful in cutting power bills and had achieved bi-partisan support

Not any more.

In May 2014 VEET was dumped by the Victorian State Government and along with it the opportunity for tens of millions of dollars of funding for council energy efficiency projects over the next decade. Victoria no longer has an energy efficiency target. 

Here’s What Happened 

Early last year the Department of State Development, Business and Innovation (DSDBI) prepared a Regulatory Impact Statement (RIS) to develop new regulations for the future of the VEET scheme. The DSDBI reviewed both the effectiveness of the scheme to date and the need for the scheme to continue and gathered feedback from stakeholders, providing them with the opportunity to influence the future direction of the scheme. Stakeholder views were sought on the barriers to the uptake of energy efficiency measures and the performance of VEET to date. Victorian councils and local government representatives were provided an opportunity to respond to the Issues Paper to support the continuation and expansion of VEET. 

Responses from Ironbark Sustainability as well as strong advocacy from the likes of the Northern Alliance for Greenhouse Action (NAGA) and the Eastern Alliance for Greenhouse Action (EAGA) can still be found online and made the strong case for the scheme to continue. In our view – and the view of the vast majority of responses to the VEET Issues Paper – VEET would have provided a long-term reduction in electricity costs to Victorians and Victorian councils, as clearly explained by Ric Brazzale, Managing Director of Green Energy Trading.

The Government ran the argument that the immediate costs from VEET liable parties (energy retailers) are passed on to households and make the scheme too expensive. However it completely ignores the benefit of reducing demand from the grid, remembering that these costs (distribution and transmission network costs) represent over 35% of electricity costs to Victorians.

A National Energy Efficiency Scheme?

Forget it. There was a push within COAG around 2008-2010 for a possible national Energy Savings Initiative (ESI). A Prime Minister's Task Group on Energy Efficiency was set up and there was talk that VEET and the NSW Energy Savings Scheme (ESS) could be rolled into a national scheme. Legacy information is still online, however this is now a very low priority for the Federal and State Governments. 

How this hurts Victorian Councils 

Councils could create and sell VEECs for certain prescribed energy efficiency projects – from installing high efficiency hot water systems, air heater/coolers, lighting, draught proofing and window treatments through to the purchase of high efficiency appliances like refrigerators and televisions. For example, last year the Live Green with LESS program in Melbourne’s east assisted over 1439 households across the region reduce their energy consumption and save money through the installation of VEEC subsidised products. This reduced the cost of implementing these actions and reduced electricity costs for councils and ratepayers. 

Councils could also create VEECs for open space lighting energy efficiency projects for metered installations in parks, sporting clubs and car parks. Without VEET the costs of these actions will increase for Victorian councils.

No Assistance for Street Lighting

Last year things were looking up with legislation passed in Victorian state parliament in June 2013 allowing streetlights to be included in VEET. This was encouraging news, and could have resulted in savings to councils undertaking a street lighting bulk change in the order of $60-$100 light (or as much as 25% of the project cost).

The Victorian State Government had promised they would assist councils with street lighting. Before the 2010 state election, the then-opposition announced $20m in funding to Victorian councils to change their street lights, under their Green Light Plan.

The continuation and expansion of VEET gave the Government the opportunity to assist councils and ratepayers to reduce their electricity costs. Instead there is now a new barrier for councils and communities to reduce their power bills.

Like others, we've called on the State Government to review their decision and to reinstate VEET and we'd encourage councils to do likewise. If you need assistance or data to back up the case for VEET being of great benefit to councils then please contact us or contact other councils and/or regional alliances to discuss a regional response.