Hydro Power Pty Ltd and the Renewable Energy Regulator
[2008] AATA 385
•13 May 2008
CATCHWORDS – ENERGY AND RESOURCES – RENEWABLE ENERGY – hydro-electricity – accreditation, as an accredited power station, a particular electricity generation system – consideration of an electricity generation system and a power station – identifying the components of each – whether regulations address components of electricity generation or of power station – decision set aside.
Administrative Appeals Tribunal Act 1975 s 37
Renewable Energy (Electricity) Amendment Act 2006
Trade Marks Act 1995
Water Act 1912 (NSW)
Water Management Act 2000
Renewable Energy (Electricity) Regulations 2001 rr 2, 3.1, 4, 5, 14(2)(a), 17, Schedule 1, Schedule 2 and Schedule 3
Renewable Energy (Electricity) Act 2000 ss 2, 3, 4, 5(1),8, 9, 10, 11, 13, 14, 15, 18(1), 19, 20, 21(2), 22, 23A(2), 26(1) ,27, 28, 29, 31, 32, 33, 35, 36, 38, 44, 135, 141A, 161, 163 and 164
Alexandra Private Geriatric Hospital v Blewett (1984) 2 FCR 368; 56 ALR 265
CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384; 141 ALR 618
Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation [1981] HCA 26; (1981) 147 CLR 297; 35 ALR 151
Defence Force Retirement and Death Benefits Authority v Britt (1984) 4 FCR 306; 57 ALR 199
Deputy Commissioner of Taxation v Media Press Computer Supplies Pty Ltd [2004] NSWSC 1271
Gatward v Alley (1940) 40 SR (NSW) 174
Gibson v Mitchell (1928) 41 CLR 275
HR Products Pty Ltd v Collector of Customs (1990) 20 ALD 340
Malaysia Shipyard and Engineering SDN BHD v “Iron Shortland” as the surrogate for the ship “Newcastle Pride” (1995) 59 FCR 535
Macquarie Worsteds Pty Ltd v Federal Commissioner of Taxation (1974) 3 ALR 123
Minister for Urban Affairs and Planning v Rosemount Estates Pty Ltd, unreported, 906401277, 14 August 1996; [1996] NSWSC 348
Municipal Officers’ Association of Australia v Lancaster (1981) 37 ALR 559
Pepsi Seven-Up Bottlers v Commissioner of Taxation (1995) 62 FCR 289
Re Enterprises Pty Ltd v Registrar of Trade Marks (2004) 76 ALD 272
Re Pacific Hydro Limited and Office of the Renewable Energy Regulator (2005) 87 ALD 580; [2005] AATA 752
STCB v Minister for Immigration and Multicultural and Indigenous Affairs 81 ALJR 485, 231 ALR 556, 93 ALD 272, [2006] HCA 61
TCN Channel Nine Pty Ltd v Australian Mutual Provident Society (1982) 42 ALR 496
The Winkfield [1902] P 42
Wacando v The Commonwealth (1981) 148 CLR 1; 37 ALR 317
Whitten v Falkiner (1915) 20 CLR 118
Yager v R (1977) 13 ALR 247
DECISION AND REASONS FOR DECISION [2008] AATA 385
ADMINISTRATIVE APPEALS TRIBUNAL )
) N2006/621
GENERAL ADMINISTRATIVE DIVISION )Re:HYDRO POWER PTY LTD
Applicant
And:THE RENEWABLE ENERGY REGULATOR
Respondent
DECISION
Tribunal: Deputy President S A Forgie
Date: 13 May 2008
Place: Melbourne
Decision: The Tribunal:
1.sets aside the decision of the respondent dated 1 May 2006; and
2.substitutes a decision that the applicant’s application for accreditation, as an accredited power station, of a particular generation system that it owns and that is generally known as Wyangala B is approved.
S A FORGIE
Deputy President
REASONS FOR DECISION
The applicant, Hydro Power Pty Limited (Hydro Power), applied to the respondent, the Renewable Energy Regulator (Regulator), for accreditation, as an accredited power station, of a particular electricity generation system that it stated it owns and that is known as Wyangala B. Wyangala B relies on water from the Wyangala Dam to generate electricity. So too does Wyangala A, which Hydro Power also owns. Both share some infrastructure but have separate turbines and generators, separate planning and building approvals from New South Wales’ authorities, separate connections to the national grid and separate agreements with a purchaser of electricity, Country Power.
Hydro Power made its application under the Renewable Energy (Electricity) Act 2000 (Act). Accreditation would enable Wyangala B to create a certificate for each whole MWh of electricity it generates from eligible renewable energy resources (in this case hydro) that is in excess of the power station’s 1997 eligible renewable power (1997 baseline). As it would not have generated electricity before 1 January 1997, its 1997 baseline would be nil. The Regulator refused Hydro Power’s application. On review, there have been a number of issues that have arisen from the interpretation of the Act. They have included issues relating to the meaning of an electricity generation system and a power station and the place of the purpose of the Act in interpreting those terms. I have decided that Hydro Power’s application should be granted.
THE SUBMISSIONS
On behalf of Hydro Power, Mr Curtin of counsel submitted that I must have regard to the three objects of the Act set out in s 3. Wyangala B meets all three. In summary, it has increased the generating capacity of the national grid from a renewable resource, the water in the Wyangala Dam, without any increased demand on that resource and without generating any greenhouse gases.
The fact that Wyangala A and Wyangala B share some infrastructure is irrelevant to the question whether the latter should be accredited. The issue that the Regulator must decide is whether the components specified by Hydro Power in its application constitute a power station. He is not required to consider whether it is a separate or a single power station. A “power station” is a thing that generates electricity and that is what Wyangala B does.
Failure to accredit Wyangala B would lead to an absurd result for, had it been constructed so that it was independent of any infrastructure servicing Wyangala A, it would have been accredited without question. Failure to accredit is contrary to the objects of the Act. Its accreditation will encourage Hydro Power to generate additional electricity from an ecologically sustainable renewable source which would, without the construction of Wyangala B, been wasted. It will do so without the generation of greenhouse gas emissions and while advancing the objects of the Act.
On behalf of the Regulator, Dr Beard of counsel submitted that I need to have regard to the objects of the Act. They are found in s 3, to which Mr Curtin referred me, and also in the Government’s response at the time to the Kyoto Protocol to the United Nations Framework Convention on Climate Change and the response of the Australian Greenhouse Office in its Regulation Impact Statement for the Mandatory Target for the Uptake of Renewable Energy in Power Supplies.
Dr Beard submitted that the Regulator is, and so I am, required to determine which components of the system, if any, are to be taken to be a power station for the purposes of the Act. He must do that with reference to cl 1.1 of Schedule 1 of the Regulations but is not limited by that clause. The fact that Hydro Power has applied for accreditation is not determinative of the status of the components under the Act.
In Dr Beard’s submission, the Regulator is obliged to make a determination as to which components of the system are to be taken to be a power station for the purposes of the Act. That includes the power to make a determination that all, some or none of the components is to be accredited. “In other words, a ‘power station’ is defined by accreditation.”[1] It would be an exercise in futility to define each power station by reference to generator units alone. It would be absurd to think that Parliament intended each and every generator unit to install the required technology to enable base lines to be set. In many cases, there would be no data to set the 1997 baseline. The administration required for such a scheme would not be in the interests of the power station.
[1] Respondent’s submissions at [34]
The Regulator submitted that the purpose of the Act is not to ensure that every separate set of turbines and generators is always accredited as a power station under the Act. That is so even if those additional generators enable a renewable energy source to be utilised in a manner that generates more electricity by using a greater amount of a renewable energy source. To accredit every separate set of turbines and generators would not encourage existing owners of power stations to meet and/or improve on their 1997 baselines. It would, instead, encourage existing owners to avoid them by investing in new components and/or infrastructure in ways that could be interpreted as separate from the existing plant. In the most extreme of cases, an existing owner could decide to de-commission an existing power station accredited under the Act and commission a new one. The commissioning of a new power station would result in the production of Renewable Energy Certificates (RECs) from a new 1997 baseline of zero. That could make the exercise profitable.
From a practical point of view, the Regulator argues:
“… if Wyangala B were accredited as a separate power station, it is possible that the Applicant could operate Wyangala B using water that could also be used in Wyangala A. If Wyangala B had a baseline of zero, although it may be more efficient to operate Wyangala A at partial capacity than Wyangala B at full capacity, operating Wyangala B at full capacity would create a greater number of RECs. However, operating Wyangala B in the range in which Wyangala A could more efficiently operate would not generate a greater amount of renewable energy and would thus thwart the purpose of the Act.
… the Respondent contends the Act aims to increase both the use and efficiency of existing electricity generation from renewable energy sources; as well as to encourage a shift away from non-renewable energy sources towards the use or renewable energy sources in the medium and long term. To accredit the components of Wyangala B as a power station for the purposes of the Act would, with respect, be to misunderstand the purposes of the Act, the scheme it establishes and the definition of a power station.”[2]
[2] Respondent’s submissions at [46]-[47]
LEGISLATIVE BACKGROUND
The Act applies to the year commencing on 1 January 2001 and to all subsequent years.[3] It was amended by the Renewable Energy (Electricity) Amendment Act 2006 (Amendment Act) with effect from 11 September 2006 and so after the Regulator’s decision that is under review. The parties and I agree that the Act as in force before its amendment is the applicable law. As Dr Beard addressed that issue in her written submissions, I give reasons for my view below.
[3] Act, s 4
The background to the Act
In Re Pacific Hydro Limited and Office of the Renewable Energy Regulator,[4] Brigadier Ermert and I set out the purpose of the Act as set out in the Explanatory Memorandum with reference to the Kyoto Protocol to the United Nations Framework Convention on Climate Change. I adopt these passages as remaining relevant in this case:
[4] (2005) 87 ALD 580; [2005] AATA 752
“9. The Kyoto Protocol to the United Nations Framework Convention on Climate Change (‘Kyoto Protocol’) was agreed in December 1997 and signed by Australia on 29 April 1998. Potentially, Australia is committed to a target for national greenhouse emissions of 8% above 1990 levels by 2008-2012. Without any action being taken, the Australian Greenhouse Office predicted that Australia’s total emissions were expected to grow by 28% from 1990 to 2010. By 1997, emissions had already reached a level higher than Australia’s agreed emissions cap for 2008‑2012. Therefore, by September 1999, Australia had to achieve a 30% reduction against business-as-usual projections of greenhouse gas emissions if it were to achieve the agreed emissions cap represented for this period.[5] One of Australia’s major contributors to greenhouse gas emissions is the electricity sector.
[5] Regulation Impact Statement for the Mandatory Target for the Uptake of Renewable Energy in Power Supplies prepared by the Australian Greenhouse Office, September 1999.
10. Against this background, the Prime Minister announced a range of measures on 20 November 1997. Among them, the Prime Minister said:
‘Targets will be set for the inclusion of renewable energy in electricity generation by the year 2010. Electricity retailers and other large electricity buyers will be legally required to source an additional 2 per cent of their electricity from renewable or specified waste-product energy sources by 2010 (including through direct investment in alternative renewable energy sources such as solar water heaters). This will accelerate the uptake of renewable energy in grid-based power applications and provide an ongoing base for commercially competitive renewable energy. The program will also contribute to the development of internationally competitive industries which could participate effectively in the burgeoning Asian energy market.’
11. In the Regulation Impact Statement for the Mandatory Target for the Uptake of Renewable Energy in Power Supplies prepared in September 1999,[6] the Australian Greenhouse Office noted the specific objectives of the renewable energy targets forming part of the Government’s response:
[6] Forming part of the Explanatory Memorandum to the Renewable Energy (Electricity) Bill 2000.
‘Specific objectives of the renewable energy target are, by 2010:
to accelerate the uptake of renewable energy in grid-based applications, so as to reduce greenhouse gas emissions;
as part of the broader strategic package to stimulate renewables, provide an on-going base for the development of commercially competitive renewable energy; and
to contribute to the development of internationally competitive industries which could participate effectively in the burgeoning Asian energy market.
…
The renewables target is primarily a long-term greenhouse response measure achieved through the development of industry capacity, although it will generate direct greenhouse emission reductions in the medium term. As there is the potential for substantial emissions reductions to be required from the electricity sector in the future, occurring at the same time as growing electricity demand, a shift towards renewables will be particularly important for the electricity generation sector. However, if Australia is to position itself to cost-effectively reduce emissions in the long run by increased use of renewables, action will be required now.’”[7]
[7] (2005) 87 ALD 580; [2005] AATA 752 at 583-584
Later in our reasons, we summarised the effect of these statements:
“73. Looking first at the Explanatory Memorandum, we note that it includes the Prime Minister’s statement on 20 November 1997. He said that targets would be set ‘… for the inclusion of renewable energy in electricity generation by the year 2010.’ Electricity retailers and large purchasers of electricity would be ‘… required to source an additional 2 per cent of their electricity from renewable or specified waste-product energy sources by 2010’. Both statements clearly point to a focus on increasing the use of both existing and new renewable sources in generating electricity. The focus is not solely upon the additional generation of electricity from existing sources. That this is so is confirmed when regard is had to other passages in the Explanatory Memorandum referring to the wider context in which the Act was passed and the Regulations were made. Those passages refer to the Kyoto Protocol and to the need to achieve a 30% reduction of greenhouse gas emissions against what were current business-as-usual predictions in September 1999. As it was also recognised that one of the major contributors to greenhouse emissions was the generation of electricity, it follows that it is intended that a factor underpinning the regulatory scheme found in the Act and the Regulations is the need to increase the use of renewable sources to generate electricity and not simply the generation of increased amounts of electricity from renewable sources.”[8]
[8] (2005) 87 ALD 580; [2005] AATA 752 at 602-603
A broad description of the features of the Act
The Act provides “… for the establishment and administration of a scheme to encourage additional electricity generation from renewable energy sources …”.[9] It is intended:
“(a) to encourage the additional generation of electricity from renewable sources; and
(b)to reduce emissions of greenhouse gases; and
(c)to ensure that renewable energy sources are ecologically sustainable.”[10]
[9] Act, Long Title
[10] Act, s 3
In broad terms, the Act seeks to achieve its objects by:
“… issuing … certificates for the generation of qualifying electricity[[11]] and requiring certain purchasers (called liable entities[[12]]) to surrender a specified number of certificates for the electricity that they acquire during a year.
Where a liable entity does not have enough certificates to surrender, the liable entity will have to pay renewable energy shortfall charge.”[13]
No certificates can be created and no liability can arise in respect of electricity generated on or after 1 January 2021.[14]
[11] “Qualifying electricity” is a short-hand reference to the electricity in respect of which a nominated person for an accredited power station may create a certificate under Subdivision A of Division 4 of Part 2 of the Act.
[12] A “liable entity” is a person who, during a year, makes either a wholesale acquisition or a notional wholesale acquisition of electricity: Act, ss 5(1) and 35. A “wholesale acquisition” is explained in s 32 and a “notional wholesale acquisition” in s 33 of the Act. Both forms of acquisition must also comply with the provisions of s 31.
[13] Act, s 3
[14] Act, s 4
What is a liable entity and what is its liability?
A person who makes a wholesale acquisition of electricity within the meaning of s 32 or a national wholesale acquisition within the meaning of s 33 makes a relevant acquisition of electricity.[15] Section 35 provides that the person is called a “liable entity”.[16] Except in limited circumstances, a liable entity is liable to pay a renewable energy shortfall charge in respect of any renewable energy certificate shortfall.[17] That is to say, it is liable to pay a charge in relation to its relevant acquisitions of electricity in so far as they exceed the value, shown in MWh, of any renewable energy certificates surrendered by the liable entity.[18]
[15] Act, ss 5(1) and 31
[16] See also Act, s 5(1)
[17] Act, s 36
[18] See [18] below
The amount of the renewable energy shortfall is worked out by multiplying the total amount, in MWh, of electricity acquired by the liable entity during the year under relevant acquisitions by the renewable power percentage for the year. That figure is adjusted to reflect any shortfall or surplus carried over from the previous year. Subtracted from that adjusted figure is the total value, in MWh, of the renewable energy certificates that the liable entity surrendered to the Regulator for that year. If the resulting figure is greater than zero, the liable entity has a renewable energy certificate shortfall for the year. If less than zero, the liable entity has a carried forward surplus for the year.[19]
[19] Act, s 38
The creation of certificates
Division 4 of Part 2 is concerned with the creation of certificates in relation to electricity generation, solar water heaters and small generation units. I am concerned only with electricity generation and that is the subject of Subdivision A of Division 4. Section 18(1) provides that:
“A registered person may create a certificate for each whole MWh of electricity generated by an accredited power station that the person operates during a year that is in excess of the power station’s 1997 eligible renewable power .”[20]
[20] The eligible renewable power baseline is determined under s 14.
Certificates may be created immediately after the generation of the final part of the electricity in relation to which it was created.[21] The Regulator must register a certificate when it is created in order to be valid.[22] It may be transferred[23] but the Regulator must be notified of any transfer and the Regulator must alter the register of certificates to show the transferee as the owner of the certificate.[24] The certificates have a commercial value as they can be used to avoid or reduce the amount of renewable energy shortfall charge that liable entities who acquire electricity have to pay. Consequently, their transfer can provide a secondary stream of income to a registered person generating electricity from an accredited station.
[21] Act, s 19
[22] Act, s 26(1)
[23] Act, s 27
[24] Act, s 28
The surrender of certificates
A liable entity who acquired electricity under a relevant acquisition during a year must lodge an energy acquisition statement for the year. The statement must contain information required by s 44(2) and must also be accompanied by details of all renewable energy certificates being surrendered in that year.[25] Once a certificate has been surrendered under s 44, it ceases to be valid.[26]
[25] Act, s 44(4)
[26] Act, ss 8 and 29(1)
Who is a registered person?
Any person may be registered under the Act.[27] The person does so in accordance with s 10. Once the Regulator receives that application, he must approve it unless the person has previously been registered.[28]
[27] Act, s 9(1)
[28] Act, s 11
An accredited power station: what is it?
That brings me to an accredited power station. A registered person may apply to the Regulator “for accreditation, as an accredited power station, of a particular electricity generation system that the person owns.”[29] The application must comply with s 13(2). That provision provides that the application must:
[29] Act, s 13(1)
“(a) be made in a form and manner required by the Regulator; and
(b)specify those parts of the system that the applicant considers are a single power station; and
(ba)list:
(i)the eligible renewable power sources from which power is intended to be generated; and
(ii)the estimated average annual output of each source listed under subparagraph (i); and
(c)contain any other information required by the Regulator; and
(d)be accompanied by any documents required by the Regulator; and
(e)be accompanied by the fee (if any) prescribed by the regulations for the making of the applications for accreditation.”[30]
[30] Act, s 13(2)(b) and (ba)
If the Regulator receives an application that is properly made under s 13, then:
“(1) … the Regulator must:
(a)determine which components of the system are to be taken to be a power station for the purposes of this Act; and
(b)determine whether the power station is eligible for accreditation.”[31]
[31] Act, s 14(1)
The identification of the components that are taken to be a power station and eligibility for accreditation are the subject of further provisions in the Act and I deal with them under separate headings relating to accreditation and components. If the Regulator decides that the power station is eligible for accreditation, he must also determine the 1997 baseline for the power station and any energy sources that it uses and that are not eligible renewable energy sources.[32] Furthermore, the Regulator must approve the application for accreditation if he decides that a power station is eligible for accreditation.[33]
[32] Act, s 14(3)
[33] Act, s 15
An accredited power station: when is a power station eligible for accreditation?
Taking eligibility first, s 14(2) provides that:
“A power station is eligible for accreditation if:
(a)some or all of the power generated by the power station is generated from an eligible renewable energy source; and
(b)the power station satisfies any prescribed requirements.”
Section 14 of the Act requires the Regulator to determine the matters specified in, among others, ss 14(1)(b) and (2)(b) in accordance with guidelines prescribed in the regulations.
Regulation 4 of the Renewable Energy (Electricity) Regulations 2001 (Regulations) provides that:
“(1) For paragraph 14(2)(b) of the Act:
(a)a power station that is in the national electricity market must use metering that meets the performance standard required by the National Electricity Code; and
(b)a power station that is not in the national electricity market must use metering that enables the Regulator to determine the amount of electricity generated by the power station.
(c)the power station must be operated in accordance with any relevant Commonwealth, State, Territory or local government planning and approval requirements.”
Regulation 4(2)(b) provides that:
“For subsection 14(4) of the Act:
(a)…;
(b)the guidelines for eligibility and revocation of eligibility for accreditation are set out in Schedule 2.”[34]
Schedule 2 sets out matters of which the Regulator should be satisfied in three situations. The first two concern the revocation of accreditation of a power station. The Regulator should revoke it if the registered person does not, without reasonable excuse, comply with s 20[35] or the power station is not operated in accordance with any relevant Commonwealth, State, Territory or local government planning and approval requirements.[36] Clause 2 of Schedule 2 is concerned with an application for re-accreditation after it has been revoked.
[34] r 14(2)(a) relates to guidelines for determining components of an electricity generation system: see [28]-[30] below
[35] Section 20 provides for the nominated person of an accredited power station to give the Regulator an electricity generation return each year.
[36] Regulations, Schedule 2, cl 1.1
An accredited power station: identification of the components taken to be a power station
Turning now to the identification of the components that are taken to be a power station, I note that s 14(4) provides that “The Regulator must determine the matters specified in paragraph…(1)(a) … in accordance with guidelines prescribed in the regulations.” Section 14(5)(a) goes on to provide that:
“To avoid doubt:
(a)the regulations may provide that a power station includes components that are integral to the operation of the power station or to the generation of electricity by the power station …”
Regulation 4(2)(a) of the Regulations provides that “the guidelines for determining which components of an electricity generation system are taken to be a power station are set out in Schedule 1”. Item 1 of Schedule 1 sets out general provisions relating to the determination of the components. Items 2 to 10 then go on to specify the components that power stations using particular energy sources may include but it is clear from Item 1.5 that the components of a system are not limited to those mentioned for the system in Schedule 1.
Beginning with the general provisions, they provide:
“1.1 Components of an electricity generation system include any of the following, whether or not they are owned by the operator of the system, that are integral to the operation of the system and the generation of electricity:
(a)any component that operates to transform an eligible renewable energy source into electricity;
(b)any infrastructure of the system, including buildings, fuel storage areas, fuel handling devices, information technology, instrumentation and controls.
1.2The components of a supplementary power supply for the system are taken to be components of the system.
Note...
1.3If fuel is processed in the system before it is converted to electrical energy, the fuel processing and delivery components are taken to be part of the power station.
1.4A long-term storage hydro-electric dam that provides water to more than 1 power station may be treated as interconnected, incorporating each power station that could be affected by the release of water from the storage.
1.5The components of a system are not limited to those mentioned for the system in this Schedule.”
Item 6 provides that:
“A hydro-electric power station may include the following components:
(a)control, telemetering and protection system;
(b)turbine, generator, associated buildings, transformer and grid connection;
(c)water channelling infrastructure;
(d)water discharge;
(e)water intake;
(f)water storage or weir;
(g)for a pumped storage hydro-electric power station – pumping equipment.”
An accredited power station: the Regulator’s obligations
If the Regulator decides that the power station is eligible for accreditation, he must also determine the 1997 baseline for the power station as well as any energy sources used by the power station that are not eligible renewable energy sources.[37] The Regulator must determine those issues “… in accordance with guidelines prescribed in the regulations.”[38]
[37] Act, s 14(3)
[38] Act, s 14(4)
Schedule 3 of the Regulations is entitled “Guidelines for 1997 eligible renewable power baselines”. Clause 1.1 provides that the 1997 baseline for a power station generating electricity for the first time after 1 January 1997 is nil.[39] Where a power station generated electricity before 1 January 1997, the 1997 baseline is the average of the annual electricity generated from eligible renewable energy sources in 1994, 1995 and 1996 (the reference period) worked out in accordance with Subdivision 2.3.1.[40] That method may be varied where the electricity was generated for less than 24 months in the reference period.[41] A special 1997 baseline may be determined where, for example, electricity generation by the power station is linked to seasonal variations of longer than 3 years and determining the 1997 baseline in accordance with cl 2 would cause hardship for the registered person.[42]
[39] Act, s 14(4) and Regulations, r 5 and Schedule 3, cl 4.2
[40] Regulations, Schedule 3, cl 2.1
[41] Regulations, r 2.3
[42] Regulations, Schedule 3, cl 3.2
The 1997 baseline in 2001 is taken to be ¾ of the 1997 baseline worked out for a power station.[43] That allows for the fact that the Act did not apply to electricity generated before 1 April 2001.[44]
[43] Regulations, Schedule 3, cl. 6.1
[44] Act, s 163 and see also s 164
Where there is an interconnected hydro-electric system, cl 4 of Schedule 3 of the Regulations makes particular provision. An “interconnected hydro-electric system” means:
“… a hydro-electric system in which water can be directed from a common storage down different watercourses so that water can be diverted from 1 power station to another, altering the amount of electricity that can be generated by each power station.”[45]
[45] Regulations, r 3.1
Clause 4 of Schedule 3 provides:
“4.1 For an interconnected hydro-electric system:
(a)a 1997 renewable energy baseline may be determined for:
(i)the system; and
(ii)each power station in the system; and
(b)a 1997 renewable energy baseline may be adjusted if an action or policy of the Commonwealth government:
(i)directly reduces a power station’s ability to generate electricity for a sustained period; or
(ii)diverts water from 1 power station to another.
Example for subparagraph (b)(i)
Diversion of water from a hydro-electric station to be used for other purposes.
4.2For subparagraph 4.1(b)(ii), if a new power station is built to take advantage of the change in flow, its 1997 renewable energy baseline is nil.
4.3If a registered person asks the Regulator to adjust a 1997 renewable energy baseline under paragraph 4.1(b), the Regulator must consider the following matters:
(a)whether a diverted flow is a direct result of a Commonwealth action or policy;
(b)the release patterns of diverted flows;
(c)whether diverted flows pass through a power station;
(d)the water to generation ratio of the power station from which water was diverted;
(e)the water to generation ratio of the system.”
Clause 5 is concerned with a hydro-electric power station that is not part of an interconnected system. Its:
“5.1 … 1997 renewable energy baseline may be adjusted if an action or policy of the Commonwealth government:
(a)directly reduces a power station’s ability to generate electricity for a sustained period; or
(b)diverts water away from 1 power station.
5.2If a registered person asks the Regulator to adjust a 1997 renewable energy baseline under subclause 5.1, the Regulator must consider the following matters:
(a)whether a diverted flow is a direct result of a Commonwealth action or policy;
(b)the release patterns of diverted flows;
(c)the water to generation ratio of the power station from which water was diverted.”
BACKGROUND
Hydro Power and the Regulator were in agreement regarding a number of matters forming the background to the issues that I must decide.[46] In light of that and in light of the statement of Mr Jeffrey William Rice[47] and the other material to which I make specific reference, I have made the findings of fact in the following paragraphs. Mr Rice is the Chief Executive Officer and Company Secretary of Envirogen Pty Limited and of Hydro Power. He holds a Bachelor of Engineering (Electrical Power) from the University of New South Wales.
[46] The Regulator noted his agreement with 20 paragraphs of Hydro Power’s Statement of Facts and Contentions lodged on 4 December 2006: Regulator’s Statement of Facts and Contentions lodged on 16 January 2007 at [1].
[47] Exhibit A
Wyangala Dam
The Wyangala Dam, which is located on the Lachlan River in the Lachlan Valley in central New South Wales, is owned by the Water Administration Ministerial Corporation (Corporation) and managed by State Water. It was built in 1928 to store water that is released for irrigation, town needs and environmental flow purposes. State Water controls the amount and timing of the water releases.
Wyangala A
On the basis of the Electricity Agreement between it and the South West Slopes County Council (Council) dated 8 April 1991,[48] I find that Hydro Power was formed for the purpose of building, owning and operating what it described as a “Power Station” on the Wyangala Dam and for the purpose of selling that electricity that was generated from that Power Station. Hydro Power undertook to commence construction of the Power Station. For its part, the Council undertook to construct and/or supply the transmission lines required for the transmission of electricity produced at the Power Station to the Council.[49]
[48] Exhibit B, Document 1
[49] Exhibit B, Document 1 at 4.4 and see definition of “Transmission Lines” in 1.1
The term “Power Station” was defined in the Electricity Agreement to mean:
“… the power station (presently planned to consist of 2 x 8 mega wart [sic] generators, and adjacent 11kv to 66kv substation) to be built, owned and operated by … [Hydro Power] on the Wyangala Dam.”[50]
Technical Specifications concerning the installation and operation of the Power Station were annexed at Schedule B to the Electricity Agreement. Under the heading “THE SYSTEM”, Schedule B specified that:
“The electrical system shall consist of a 21MVA (Max) synchronous generator and associated plant, 11kv underground cables to a 11kv/66kv – 21MVA (Max) outdoor substation and a 66kv overhead transmission line connecting to Council’s electricity grid.”[51]
[50] Exhibit B, Document 1 at 1.1
[51] Exhibit B, Document 1, Schedule B, cl i)
Except for backup metering and 11kv feeder supply equipment, ownership of the generator and associated plant, 11kv underground cables and 11kv/66kv substation remained with Hydro Power. The Council retained ownership of the backup metering and 11kv feeder supply equipment.[52]
[52] Exhibit B, Document 1, Schedule B, cl ii)
The Council agreed that Hydro Power would be its preferred external supplier of electricity on the terms set out in the Electricity Agreement. It agreed to purchase, and Hydro Power to sell, all electricity produced by the Power Station or, subject to certain qualifications, all electricity which would have been produced but for the Council’s failure to take it.[53]
[53] Exhibit B, Document 1 at 5.1
The commencement and operation of the Electricity Agreement were conditional upon the execution of five other agreements which, together with it, formed the Transaction Documents. Those other agreements were a lease agreement between Hydro Power and the Corporation in relation to “the lease of the land on which the Power Station is to be built”, an “agreement between the Corporation and … [Hydro Power] for the supply of water to the Power Station”, a licence agreement between Hydro Power and the Corporation for the period of construction of the Power Station, an agreement among Hydro Power, the Council and the Corporation and an agreement among parties including Hydro Power and the Corporation.[54] Hydro Power was required to install metering equipment at the Council’s Load Centres to register the quantity of electricity it supplied to the Council.[55] Provision was made for discrepancies between the metering equipment installed by Hydro Power and that by the Council.[56]
[54] Exhibit B, Document 1 at 2.1 and see definition of terms in 1.1
[55] Exhibit B, Document 1 at 6.1
[56] Exhibit B, Document 1 at 6.2-6.5
On 16 April 1991, the Corporation and Hydro Power entered a Water Agreement.[57] Subject to the Water Act 1912 (NSW) and other relevant legislation, the Corporation agreed to permit Hydro Power to use water from the Wyangala Dam.
[57] Documents lodged under s 37 of the Administrative Appeals Tribunal Act 1975 (T documents) at 13-16
The Power station referred to as the Power Station in the Electricity Agreement is now known as the Wyangala A Hydro Power Station (Wyangala A). It started operation in 1992. Originally, it consisted of one 18 MW[58] generator driven by two nine MW hydro turbines coupled at the ends of the generator shaft. More recently, Wyangala has been upgraded to achieve 20 MW capacity.
[58] Megawatt
Wyangala A’s turbines were designed to operate within the nominal range of approximately 1,000 to 2,800 MLD.[59] Their design was based on there having been a release of water from the Wyangala Dam averaging 2,320 MLD each day in the years from 1975 to 1990. This means that Wyangala A cannot generate electricity if the water flow released from the Wyangala Dam is less than 1,000 MLD. The same is true if the water flow exceeds 2,800 MLD because that flow exceeds the maximum capacity of its generators.
[59] Megalitres per Day or Million Litres per Day
Between 1975 and 2000, State Water released water from the Wyangala Dam to flow down the Lachlan River at rates ranging between 50 MLD per day to more than 70,000 MLD when the river was in flood. A variety of factors affected the amount of water that State Water released. One has been the declining rainfall. Another has been the introduction of rules developed and implemented in 1992 to provide water from the Wyangala Dam for the environment surrounding the Lachlan River.[60] Those rules meant that, between 1992 and 1997, water released for environmental flows were at a minimum. A third factor has been the 1998/1999 Flow Rules for Regulated Streams in the Lachlan Catchment (June 1998).
[60] The Department of Infrastructure, Planning and Natural Resources (NSW) prepared a document entitled “A guide to the Water Sharing Plan for the Lachlan Regulated River Water Source” dated September 2004.
In April 2001, Hydro Power applied for accreditation of Wyangala A as an accredited power station under the Act. It was accredited with effect from 1 April 2001 and given a 1997 baseline of 61,980 MWh and so of 46,485MWh in 2001. The 1997 baseline was derived by averaging Wyangala A’s energy generation over a nine year period between 1992 and 2000.
The way in which State Water regulates the flow from the Wyangala Dam as well as declining rainfall has meant that those flows are regularly less than 1,000 MLD. Hydro Power is unable to operate Wyangala’s turbines at anything less than 1,000 MLD. That has led to a reduction in the gross annual amount of electricity generated by Wyangala A. The introduction of environmental flows has meant that Wyangala A is less likely to be able to utilise those flows.
On the basis of Mr Rice’s evidence, I find that the Regulator assessed Wyangala A’s 1997 baseline on the basis of actual generation it achieved over the period 1992 to 1999. It is, therefore, a function of the actual heads and volumes of release over the early years of Wyangala A’s operating life. Significantly more water was available for generation during this period than in more recent years.[61] Hydro Power decided to build Wyangala B as a result of the introduction of environmental flows from the Wyangala Dam.
[61] Exhibit A, [41]
Wyangala B
On 31 July 2002, State Water wrote to Hydro Power advising that:
“Approval is hereby granted under Part 5 of the EPA Act for construction of an additional power station at Wyangala Dam in Accordance with the Deed of Acknowledgment between the parties in regard to construction and operation conditions.”[62]
[62] T documents at 16
The Deed of Acknowledgement was made between the Corporation and Hydro Power on the same day. The Recitals read:
“A. The Corporation is the owner of all the land shown in the pans [sic] annexed marked ‘A’. (Land).
B.The Corporation is the owner and operator of Wyangala Dam and appurtenant works and structures. (Dam).
C.Pursuant to Lease … and Water Agreement dated 16 April 1991, the Operator respectively occupies the Corporation’s land at the Dam and operates an hydro-electric power station, substation and appurtenant works thereon. (Wyangala A).
D.the Operator is proposing to construct and operate a new hydro-electric power station and appurtenant works, (Wyangala B), on, in, across and under the Land.
E.Wyangala B is to be generally constructed in accordance with a set of plans … attached and marked B. (Plans).
F.For the purposes set out in Recital D, the parties wish to amend the Water Agreement and the Lease referred to in Recital C.
G.The Corporation and the Operator have reached agreement on the amendments to Water Agreement and Lease and wish to give effect to the agreement so reached in the terms set out in this Deed.”[63]
[63] T documents at 18
The Corporation and Hydro Power agreed that the latter might undertake the construction of Wyangala B in accordance with and subject to the construction conditions set out in Appendix 1.[64]
[64] Deed of Acknowledgement, cl. 2.1: T documents at 20
On 1 August 2002, the Cowra Shire Council consented to the construction of a hydro electric power station.[65] The consent was subject to the conditions attached to the consent and required the “Proposed Power Station to be erected in accordance with Part 5 of the Environmental Planning and Assessment Act and deed of acknowledgment between Department of Land and Water Conservation and Hydropower for construction and operation.”[66]
[65] T documents at 25
[66] T documents at 26, cl 10
On 20 November 2002, Country Energy, which is a statutory corporation established under the Energy Services Corporations Act 1995 (NSW) and which is a retailer of electricity, entered an agreement with Hydro Power.[67] Under that agreement, Hydro Power agreed to supply and Country Energy agreed to purchase the electrical energy generated by the Wyangala Hydro Power Project on specified terms and conditions. The “Wyangala Hydro Power Project” is defined to mean:
“… the hydro electricity generation facility comprising up to 4.5MW, located at Wyangala, New South Wales.”[68]
[67] Exhibit B, Document 4
[68] Exhibit B, Document 4, 1.1(34)
The agreement obliged Hydro Power to use its best endeavours to complete the construction of the Wyangala Hydro Power Project by the Nominated Commissioning Date of 1 January 2004.[69] Country Energy could terminate the agreement if Hydro Power had not achieved the commissioning of the Wyangala Hydro Power Project within six calendar months of the Nominated Commissioning Date unless the delay was due to a lack of supply of water for generation or the Department of Land and Water Conservation.[70] The electrical energy that Hydro Power supplied to Country Energy had to be generated using only hydro-electric generators.[71]
[69] Exhibit B, Document 4, 1.1 (27) and 3.1
[70] Exhibit B, Document 4, 3.4
[71] Exhibit B, Document 4, 7.1
Clause 4 of the agreement obliged Hydro Power to register the Wyangala Hydro Power Project as a non-participating non scheduled generator with the National Electricity Market Management Company (NEMMCO). On the basis of the evidence of Mr Rice, I find that Wyangala A and Wyangala B are treated differently under the National Electricity Code.[72] Wyangala B is exempt from registration with NEMMCO but is registered in order to comply with Hydro Power’s agreement with Country Energy.
[72] Exhibit A, [26]
Under the agreement, Hydro Power was also required to obtain all necessary approvals, licences and registrations to enable it to supply electrical energy including, but not limited to, registration under the Act and registration as a new green generator under the Green Power Accreditation Program.[73]
[73] Exhibit B, Document 4, 7.2
Hydro Power was obliged to arrange for an Official Meter to be installed, maintained and operated as close as practicable to the Delivery Point so as to ensure an accurate measurement of the amount of electrical energy supplied.[74] Hydro Power measures the supply and calculates the charges but cl 14 of the agreement provides for checks and balances and for the resolution of any disputes between it and Country Energy. The “Delivery Point” means:
“… the point at which Hydro Power supplies electricity to Country Energy under this Agreement being the 11kv circuit breaker panel located at the Wyangala 66kv substation”.[75]
[74] Exhibit B, Document 2, 14.1(1)
[75] Exhibit B, Document 2, 1.1(9)
In 2004, Hydro Power constructed Wyangala B at the base of the Wyangala Dam and some 80 metres from Wyangala A. It features a single turbine feeding a 4.5 MW generator and has its own metering equipment, connection point, control system, power purchase agreement and connection agreement. Wyangala B is capable of utilising water at a flow rate less than 1,000 MLD as well as those exceeding 2,800 MLD. On 27 February 2004, the Cowra Shire Council certified that the hydro electric power station had been inspected and that all building work had been completed to its satisfaction.[76] It gave a Final Occupation Certificate to Hydro Power for hydro electric power station on 29 March 2004.[77]
[76] T documents at 28
[77] T documents at 29
On the basis of Mr Rice’s evidence, I find that the Water Sharing Plan for the Lachlan Regulated River Water source made under the Water Management Act 2000 (WM Act) provided rules and restrictions on the management of water flows. They commenced on 1 July 2004 and will continue until 30 June 2014.[78]
[78] Exhibit A at [35] and see also T documents at T30-32
On 3 January 2006, Hydro Power lodged an application with the Regulator for approval of Wyangala B Hydro Power Station. It attached the development and construction consent that it had obtained from the Cowra Shire Council, a Deed of Acknowledgement with Water Administration Ministerial Corporation, connection diagrams and correspondence in relation to the exemption from registration with NEMMCO.[79]
[79] T documents at 33-45 and see [57] above
In 2006, Country Energy and Hydro Power entered an agreement in which the latter was described at the outset as “Hydro Power – Wyangala B Power Station … (‘Generator’).” It was called a Negotiated Embedded Generator Connection Agreement (NEGC Agreement). Under the NEGC Agreement, Country Energy agreed to provide the “Generator” with connection and network services.[80] Country Energy was responsible for the provision of the connection equipment set out in Item 9 of Schedule 2 to the agreement in order to permit the Generator to connect to Country Energy’s network in accordance with the agreement and Rules. The Generator was responsible for the provision of all other connection equipment necessary to connect Country Energy’s network set out in Item 10 of Schedule 2.[81]
[80] Exhibit B, Document 5, Introduction, 2
[81] Exhibit B, Document 5, 4.1 and 4.2
Clause 4.2 of the NEGC Agreement was concerned with ownership, operation and maintenance and provided:
“4.2.1 Country Energy will own and be responsible for the operation and maintenance of all entry equipment up to the landing span of ABS 8911 as identified on drawings WYAN-01 and WYAN-02 attached to and forming part of this agreement at Appendix 1 sheet 3 and sheet 4 respectively plus the 11kv circuit breaker designated as CB12 and being the connection point for the Generator.
4.2.2The original generator, designated Generator A, owns and is responsible the [sic] operation and maintenance of the Wyangala Dam 66/11V substation, and generally includes the 66kV switchgear, the 66/11kV transformer, the 11kV switchboard, the auxiliary supply and associated protection and control instillations.
4.2.3The Generator will own and be responsible for the operation and maintenance of the remainder of the connection equipment downstream of the connection point, being circuit breaker CB12.”
Sheet 3 at Appendix 1 is described as the “66kv Feeder Schematic Diagram” and shows the Young, Monteagle, Bendick Murrell and Wyangala Dam Substations linking with the Cowra Substation Transgrid. The Wyangala Dam Substation link is such that it comes between the Cowra Substation on the one hand and the line linking Bendick Murrell, Monteagle and Young Substations on the other. In that way, the output from Wyangala B can be to either the Young or Cowra Substations.[82]
[82] Exhibit B, Document 5, Schedule 2
Sheet 4 at Appendix 1 is a schematic diagram depicting the feed into the 66kv substation.[83] The connection point for Wyangala B is shown schematically as occurring before the electrical energy it has generated enters the 1kV busbar. The connection point for Wyangala A is shown as occurring after the electrical energy it has generated enters that busbar and just before the Wyangala Dam Substation.
[83] See also Exhibit B, Document 5, Schedule 2
Schedule 4 to the NEGC Agreement is concerned with metering. It provides that Country Energy will be the Metering Provider for the Connection Point. It also provides that:
“The Revenue Metering system has been altered from that which initially applied to Generator A to simplify the original metering algorithm and to allow separate measurement of Wyangala B Power station output.
Auxiliary supply for Wyangala A and Wyangala B power stations will be invoiced to Hydro Power as separate customer supplies and independent of generated output.
…
As the installation of Generator B impacts on the metering arrangements for Generator A, a metering algorithm has to be adopted for the power flows.”[84]
[84] Exhibit B, Document 5, Schedule 4
On the basis of the evidence of Mr Rice, I find that, due to low levels at the Wyangala Dam, Wyangala B did not commence operating until February 2006.
CONSIDERATION
The approach
The language used in ss 13, 14 and 15 causes me some difficulty when I try to analyse them in order to work out the issues that I must decide. The focus of
s 15 is upon a “power station … [that] is eligible for accreditation” for, if there is one, the Regulator must approve the application. The language of a “power station … [that] is eligible for accreditation” is consistent with s 14(2) when it provides the criteria that a power station must meet to be eligible for accreditation. My problem is that the application made by a registered person under s 13(1) is not for accreditation of a power station but “for accreditation, as an accredited power station, of a particular electricity generation system that the person owns” (emphasis added). Therefore, the application is clearly not made in relation to a power station as such but in relation to a particular electricity generation system.[85] That suggests that, if there is to be any accreditation at all, it is the particular electricity generation system that is accredited as the power station. That, however, is not the case. It becomes clear that is not the case when it is realised that s 13(2)(b) requires the registered person applying for accreditation to specify those parts of they system that it considers are a single power station.[85] The form of Application for Accreditation used by Hydro Power appears to be a form prepared by the Regulator. Its language suggests that as it opens with “Notes to applicants” and advises applicants to refer to the detailed Guidelines for Applicants in completing the form. The form is drafted in terms of the applicant’s “seeking to gain accreditation for a power station” and no reference is made to an electricity generation system (T documents at 34-45). This might be thought to be a pedantic point but it seems to me that the Act distinguishes between an electrical generation system and a power station for a reason. In the case of an interconnected hydro-electric system, a 1997 renewable energy baseline may be determined both for the system and for each power station in the system: Regulations, Schedule 3, cl 4. Section 135 provides that the Regulator maintain registers of four matters including accredited powers stations and applications for accredited power stations: ss 135(b) and (d). Section 141A provides that the register of applications for accredited power stations, contain, among other information, the name of each applicant for accredited power stations and the “the location of the electricity generation system”: ss 141A(a) and (b). Unless s 141A is intended to require entry of applications after the accreditation of the power station, it seems to confuse the entity in relation to which the application is made.
The apparent change in language between accreditation “as an accredited power station, of a particular electricity generation system” and the isolation of the parts or components of the system that are a power station starts in
s 13(2)(b) and continues in s 14. Once the Regulator has an application properly made under s 13, he must “determine which components of the system are to be taken to be a power station for the purposes of this Act.” He does that under s 14(1)(a) and that requirement gives strength to the interpretation that a power station need not necessarily comprise the whole of the electricity generation system in respect of which the application for accreditation is made. That interpretation is further strengthened by the fact that, having made that determination, those components must be taken to be the power station for the purpose of the Act and so be taken to be the power station referred to in provisions such as ss 14(2) and 15.
That interpretation is initially thrown into doubt, however, when regard is had to Schedule 1 of the Regulations. Normally, the doubt would not arise in light of the general rule that regulations may not be taken into account in interpreting an Act[86] and I will come back to that.[87] For the moment, I will focus on the doubt that they cast if regard is had to them.
[86] See generally Statutory Interpretation in Australia, DC Pearce and RS Geddes, 5th edition, 2004, Butterworths at [2.27]-[2.31] at [3.41]
[87] See [78]-[82] below
I note that the heading of the Schedule is “Components of an electricity generation system”.[88] That wording is inconsistent with the reference made immediately under the heading to r 4(2)(a). That provision refers to “guidelines for determining which components of an electricity generation system are to be taken to be a power station are set out in Schedule 1.” Its wording is consistent with that in s 14(1)(a) to which s 14(4) refers in giving the relevant regulation-making power. No reference is made in either r 4(2)(a) or s 14(1)(a) to guidelines for determining the components of an electricity generation system simpliciter; only to determining those parts of the electricity generation system that are taken to be a power station. Although I consider, for reasons I give below,[89] that the clauses in the Schedule making guidelines for determining the components of an electricity generation system are validly made, I do not consider that they can be supported by r 4(2)(a) or
s 14(1)(a). Schedule 1 is a mixed bag of provisions with some relating to the components of an electricity generation system, some to a power station and one or two to neither. I will briefly categorise them.[88] The Schedule forms part of the Act (Acts Interpretation Act 1901, s 13(2)).
[89] See [87]-[89]
Clause 1.3 of Schedule 1 refers to the components of the system that are to be taken to be part of a power station but cll 1.1, 1.2 and 1.5 refer to the components of an electricity generation system without any reference to their being part of a power station. The latter three clauses are consistent with the subject foreshadowed in the heading to the clause but the variation in language between these clauses and cl 1.3 has caused me a lot of difficulty. Clause 1.4 has also caused me a lot of difficulty. As drafted, it reads as if the long-term storage hydro-electric dam may be treated as inter-connected and incorporating each power station that could be affected by release of its water. The first point is that it is clearly separating out the dam from the, which might be thought to be part of a hydro-electric generation system, from the power station or stations, to which that dam provides water. I do not have any difficulty with that proposition but, as drafted, cl 1.4 then goes on to state that it is the “… long-term storage hydro-electric dam that … may be treated as interconnected …” and that the “… long-term storage hydro-electric dam … [incorporates] … each power station that could be affected by release of water from the storage.” It does not make a lot of sense to suggest that a dam may incorporate a power station. It makes more sense to suggest that an electricity generation system may incorporate a single dam and more than one power station which could be affected by release of water from that dam and that the system may be treated as an interconnected. That reading would be consistent with the provisions of the Regulations relating to an interconnected hydro-electric system.[90] To reach it, though, requires the implication of words and I am aware of the dangers in doing so.[91] In view of the findings of fact that I have made in this case, it is not necessary to pursue it further.
[90] See definition of an “interconnected hydro-electric system” in r 3(1) and r 17 and Schedule 3, cl 4.
[91] The limitations upon the implication of words into a legislative provision are discussed in Statutory Interpretation in Australia, DC Pearce and RS Geddes, 5th edition, 2004, Butterworths at [2.27]-[2.31]
Clauses 7 and 8 of Schedule 1 refer specifically to electricity generation systems as they refer to an ocean, wave or tide generation system and a solar electricity generation system respectively. Clause 10 refers to “Wind” and then goes on to provide that “A wind turbine may include the following components” that it then specifies. Whether reference is being made to a power station or an electricity generation system is unclear. I have the same lack of clarity in relation to cl 4 dealing with a fuel cell.
Clause 9 refers to solar water heaters. A “solar water heater” is defined in s 5(1) of the Act as a “device that heats water using solar energy that satisfies any conditions set out in the Regulations.” Section 21 of the Act provides for the creation of certificates in relation to solar hot water heaters installed after 1 April 2001 if it displaces non-renewable electricity determined in accordance with the Regulations. In broad terms, r19 provides that it displaces non-renewable electricity if it replaces an electric hot water system or replaces, and uses less electricity than, an electric-boosted solar water heater. It is clear that a solar water heater has nothing to do with either a power station or an electricity generation system and yet it finds its place in Schedule 1 of the Regulations.
Clauses 2, 3, 5 and 6 refer to the components of power stations using particular renewable energy resources. That they do is consistent with the reference made immediately under the heading to Schedule 1 of the Regulations to r 4(2)(a). Clause 4 provides that a fuel cell may contain the components set out in that provision. It makes no reference to a power station. I am concerned with cl 6, which lists components that a hydro-electric power station may include.
Mr Rossiter gave evidence that the expression “power station” means “… a device or series of devices, which together with appropriate infrastructure, transform one or more types of energy into useful electricity.”[126] In considering Mr Rossiter’s evidence, there are two initial questions to be considered before I can have regard to evidence of the meaning of the words in the Act. The first is whether the expression has a technical meaning and, if so, the second is whether the Act intended it to be used in that way. Determining the first of those questions is a question of fact and evidence is admissible. [127] Whether or not a word should be read according to some trade or technical meaning or according to some other meaning is a question of law.[128] In answering that question, regard would be had to the principles expressed by Hill J in Pepsi Seven-Up Bottlers v Commissioner of Taxation.[129]
[126] Exhibit 2 at [11]
[127] Whitten v Falkiner (1915) 20 CLR 118 at 127 per Isaacs J and see also HR Products Pty Ltd v Collector of Customs (1990) 20 ALD 340 at 342 per Lee J and Pepsi Seven-Up Bottlers v Commissioner of Taxation (1995) 62 FCR 289 at 299 per Hill J
[128] HR Products Pty Ltd v Collector of Customs (1990) 20 ALD 340 at 342 per Lee J and see also Yager v R (1977) 13 ALR 247 at 249 per Barwick CJ
[129] (1995) 62 FCR 289 at 298-299
Whether or not the expression “power station” has a technical or trade meaning is not a question that was pursued at the hearing and I am left with the ordinary meaning of the expression when read in its statutory context.[130] The ordinary meaning of the expression is:
“… a building where electricity is generated on a large scale from another form of energy, such as coal, nuclear fuel, moving water, etc.”[131]
The definition in the Macquarie Dictionary is similar. That in the Shorter Oxford English Dictionary has a slightly different emphasis when it defines the expression to mean:
“a building or works where electricity is generated for distribution”.[132]
[130] cf Macquarie Worsteds Pty Ltd v Federal Commissioner of Taxation (1974) 3 ALR 123 at 126 in which Mahoney J decided that “plant” is an ordinary English word whose meaning may be influenced by the context in which it is used.
[131] Chambers 21st Century Dictionary, 1999, reprinted 2004, Chambers
[132] Shorter Oxford English Dictionary, 5th edition, 2002, Oxford University Press
It is apparent from the ordinary meaning of the term “power station” that its emphasis is much narrower than that of an “electricity generation system”. The emphasis is upon the place at which the actual generation takes place and not upon the infrastructure needed simply to transport the chosen form of renewable energy to that building or those works or on that needed to take the resulting electricity from it. That interpretation seems entirely consistent with the way in which the Act separates the system from the station.
Hydro Power submits that Wyangala B is a power station for the purposes of the Act. Wyangala A, it continues, features a single turbine feeding a 4.5MW generator and is located adjacent to Wyangala A but in a separate concrete structure. Limiting the power station to these components accords with the meaning of “power station” and also accords with cl 1.3 of Schedule 1. Clause 1.3 provides that if fuel is “processed in the system” before it is converted to electrical energy, the fuel processing and delivery points “are taken to be part of the power station”. That is a mandatory requirement. It would seem to be within the regulation-making power given by ss 161(1)(a) and 14(4) to make guidelines for the determination of the components of the system that are to be a power station for the purposes of the Act.
What if the fuel is not “processed” i.e. it does not go through “a series of stages … resulting in the development or transformation …”[133] of the fuel? What if, as in the case of water from the Wyangala Dam, it is piped to Wyangala B but its pressure is not increased and all that happens is that its pressure is maintained as much as possible? That would leave open the possibility that the delivery of the fuel is part of the system but not necessarily part of the power station. That would make logical sense given the distinction drawn between the system and the power station in the Act.
[133] Chambers 21st Century Dictionary, 1999, reprinted 2004, Chambers
Clause 6 of Schedule 1 throws that interpretation into some doubt as it effectively provides that everything including the water storage or weir may be included as components of a hydro-electric power station. For the reasons that I have already given, I do not think that the Regulations and the Act can be read as two parts of an interdependent scheme enabling the words of the Act to be construed in light of those in the Regulations. Rather, the Regulations must be read in light of the words in the Act. When I do that, I read cl 6 as prescribing components that a hydro-electric power station may include but not as requiring a determination that a hydro-electric power station will always include them. It seems to me that cl 6 must be read in light of the distinction that is made in the Act between the system and the station and in light of the particular system under consideration.
Having regard to all of these matters, I determine that the components of the electricity generation system that are to be taken to be a power station for the purposes of the Act are the single turbine feeding a 4.5MW generator, which is known as Wyangala B and which is housed in a concrete structure adjacent to but separate from Wyangala A.
Is Wyangala B eligible for accreditation?
Section 14(2) of the Act specifies the criteria that Wyangala B must meet if it is eligible for accreditation. There is no room for the exercise of any discretion. There is no question that it meets s 14(2)(a) as some or all of the power it generates is generated from an eligible renewable power source i.e. hydro as specified in s 17(1). It also meets the prescribed requirements found in Schedule 2 of the Act. Those requirements relate to the revocation of an accreditation and to an application for re-accreditation. Neither is relevant in this case. Therefore, Wyangala B is eligible for accreditation and, once that determination is made, s 15 requires that Hydro Power’s application be approved. That decision requires the Regulator to take further steps such as the allocation of a unique identification code under s 16 but those steps are outside the scope of this case.
For these reasons, I:
1.set aside the decision of the respondent dated 1 May 2006; and
2.substitute a decision that the applicant’s application for accreditation, as an accredited power station, of a particular generation system that it owns and that is generally known as Wyangala B is approved.
I certify that the one hundred and thirty preceding paragraphs are a true copy of the reasons for the decision herein of
Deputy President S A Forgie,
Signed: .......................................................................
Jayne Haydon Associate
Date of Hearing 15 August 2007
Date of Decision 13 May 2008
Counsel for the Applicant Mr G Curtin
Solicitor for the Applicant Middletons Lawyers
Counsel for the Respondent Dr J Beard
Solicitor for the Respondent Australian Government Solicitor
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