Audit & Compliance
Under the Victorian Energy Efficiency Target Act 2007 (the Act), the Essential Services Commission (ESC) is responsible for monitoring compliance with the Act and the Victorian Energy Efficiency Regulations 2008 (the Regulations). This includes undertaking periodic audits of the VEET-related operations of scheme participants.
Energy retailers that have a liability under the scheme (known as Relevant Entities) and accredited businesses that create energy efficiency certificates (known as Accredited Persons) are subject to different forms of audit. This page gives an overview of the compliance responsibilities of both. A detailed account of these responsibilities is contained in the explanatory notes at the bottom of the page.
This page also contains relevant information to firms interested in joining the audit panel established by the ESC, with regards to VEET compliance activities.
Annual energy acquisition statement
Relevant Entities that make energy acquisitions under the Act are required to report their acquisitions for each calendar year in an audited annual energy acquisition statement, to be provided to the ESC by 30 April of the following year. The statement, and a guidance paper to assist Relevant Entities to determine their acquisitions, can be downloaded from the bottom of this page.
Relevant Entities must ensure that their statement or return is audited in accordance with the Victorian Energy Efficiency Target Guidelines (the Guidelines) before being submitted to the ESC. For further information on the VEET scheme's audit process and requirements, please refer to Explanatory Note - Relevant Entities: Audit process for annual energy acquisition statements available from the bottom of this page.
The ESC has established a panel of approved VEET auditors. Relevant Entities may (but are not required to) nominate auditors from the panel list to conduct audits of their annual statement.
Greenhouse gas reduction rates
The greenhouse gas reduction rates establish a Relevant Entity's rate of liability and therefore the number of VEECs they are required to surrender each year. There are separate greenhouse gas reduction rates for gas and electricity - RE referring to the greenhouse gas reduction rate for electricity, and RG being the greenhouse gas reduction rate for gas. Relevant Entities determine their liability by multiplying the total liable electricity acquisitions for a year by the RE and the total liable gas acquisitions for a year by the RG.
The RE and RG factors are determined and published in the Government Gazette before 31 May of the year that it applies to. The RE and RG factors are published in advance to allow relevant entities time to plan their VEEC acquisition strategies. If the RE and RG factors are not published prior to 31 May, then the default process under section 32(3) of the Act applies.
For the 2016 compliance year (1 January to 31 December 2016) the RE factor is 0.13111 and the RG factor is 0.00780.
For the 2017 compliance year (1 January to 31 December 2017) the RE factor is 0.14901 and the RG factor is 0.00752.
Where a Relevant Entity surrenders insufficient certificates for a given year, the ESC will issue a shortfall statement setting out the energy efficiency certificate shortfall penalty for which the entity is liable.
Pursuant to section 28(1) of the VEET Act, a Relevant Entity which has an energy efficiency shortfall in a given compliance year is liable to pay a pecuniary penalty to the Consolidated fund in the form of a shortfall penalty. The shortfall penalty is determined in accordance with section 28(2) of the VEET Act. The shortfall penalty rate for the 2016 compliance year is subject to a CPI calculation and is $46.08 per certificate.
Audit panel members
The ESC has established a VEET panel of approved auditors from which scheme participants may nominate to conduct audits of their annual returns or statements. The panel has been established to reduce the effort required to approve the auditor, as well as improving the timeliness of the auditing process. The VEET Audit Panel document is available below.
Entities may apply for appointment to the VEET panel of auditors at any time. For further information on how to become an audit panel member, please refer to the Explanatory Note - Information for potential VEET audit panel members, available below. This document includes details about the information that a firm will need to provide the ESC and the selection criteria against which they will be evaluated.
Entities wanting to be appointed to the panel will need to provide in-principle agreement to the terms and conditions of a standard tripartite deed before being appointed to the panel.
The Guidelines establishes the requirements for conducting audits under the VEET scheme. All applicants should be familiar with this document before applying to join the panel. Audit panel members will need to execute a tripartite deed in order to conduct an audit for the purposes of the VEET scheme. Under the terms of the tripartite deed, firms undertaking audits will have a primary duty of care to the ESC.
Under the VEET scheme, an Accredited Person is obliged to keep records that substantiate:
An assignee must maintain (Clause 8.9):
- Details of all certificates created by the accredited person during the year;
- The matters specified in the Guidelines as follows (Clause 13.1):
- the records referred to in clause 8.9 of the Guidelines (refer below) in relation to assignments of rights to create certificates;
- sales, purchase and/or service records of each product or service which constitutes a prescribed activity for which certificates have been created, including make and model number if applicable, and the street address and postcode of the energy consumer; and
- evidence of removal or destruction of existing products where removal or destruction is required by the Regulations.
- a copy of the completed and signed form of assignment; and
- evidence of the benefit provided to the energy consumer, for inspection and audit by the ESC on request, for a period of at least six years after the date of the assignment;
Accredited persons must also keep all records and statements of attainment relating to completion by their installers (whether employed directly or subcontracted) of the mandatory safety training units associated with Prescribed Activities 11,12,13,14,15,17, 21, 26 and 34.
These records must be kept for a period of six years after the associated VEECs are created.
Accredited Persons are subject to periodic audits by the ESC to ascertain whether they have kept the necessary records and to confirm that they have created VEECs in accordance with the VEET legislation. This may include site audits to ensure that the prescribed activities undertaken have been carried out in accordance with the requirements of the Regulations.
The ESC has developed a number of Explanatory Notes to help Accredited Persons understand and fulfil their audit and compliance obligations. These Explanatory Notes can be accessed by scrolling through the Relevant Documents and Forms section below.