NGER Act: Thresholds Lower Again as Third Reporting Year Approaches

The third reporting period of the National Greenhouse and Energy Reporting Act 2007 (NGER Act) is fast approaching and commences on 1 July 2010.

As at 1 July 2010, the thresholds under the NGER Act will decrease as follows:

• Energy consumption - from 350 terajoules to 200 terajoules;
• Energy production - from 350 terajoules to 200 terajoules;
• Greenhouse gas emissions - from 87.5 kilotonnes of carbon dioxide equivalent greenhouse gas emissions to 50 kilotonnes.

As a practical guide, 200 terajoules is equivalent to approximately 55,000 megawatt hours. This means that the controlling corporation of any corporate group that consumes around 55,000mwh of energy may need to register and report under the NGER Act (note however that there are a number of technical and legal tests that may impact upon how your aggregate energy consumption and greenhouse gas emissions are calculated).

For any corporate group that exceeds the current threshold of 350 terajoules (about 97,000 megawatt hours) for the reporting period ending on 30 June 2010, the controlling corporation of that corporate group must register under the NGER Act by no later than 31 August 2010 (unless it has previously registered) and then submit its report by 31 October 2010.

Determining the extent of a corporate group's reporting obligations under the NGER Act requires careful analysis of three key concepts:

• corporate group;
• facilities; and
• operational control.

For information on the complexities of each of those concepts refer to Gadens Lawyers' previous updates here, including the recent update on the treatment of trusts in the context of defining a corporate group under the NGER Act.

Severe penalties apply for non-compliance with the NGER Act. For example, if a corporate group meets one of the thresholds under the NGER Act and fails to register with the relevant authority it will be exposed to a $220,000 penalty as well as an ongoing penalty of $11,000 per day for every day that corporate group remains in breach. The same penalty applies for failing to report relevant data in accordance with the NGER Act.

Further, provisions of the NGER Act extend these civil penalties to CEOs and if a CEO fails to take reasonable steps to prevent a contravention of the NGER Act the CEO will be personally liable (in addition to the corporation's liability).

The Gadens Lawyers sustainability and climate change team specialises in providing strategic advice on compliance with the NGER Act and in particular, applying the 'corporate group', 'facility' and 'operational control' tests across wide range of industries and factual scenarios.

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.