Energy Policy and Programs

9 November 2015

Energy Policy and Programs

Department of Economic Development, Jobs, Transport and Resources

Proposed VEET Activity Regulation Changes October 2015

Dear Sir/Madam,

Thank you for the opportunity to provide feedback on proposed VEET Activity Regulation changes.

The Victorian Building Authority (VBA) was established on 1 July 2013 and regulates building and plumbing practitioners to ensure the safety, liveability and sustainability of the built environment. The VBA is the successor in law of the former Building Commission and the Plumbing Industry Commission (PIC) in Victoria.

As you would be aware, a number of prescribed activities require a suitably qualified plumbing practitioner to carry out. This includes the installation of water heating systems, space heating and cooling systems, gas clothes dryers, refrigeration fans, gas heating ductwork and low flow trigger nozzles. The VBA (through the PIC), has previously provided advice to, and worked withthe Essential Services Commission (ESC) on implementation matters for the effective operation of the Energy Saver Incentive Scheme. In particular, where there the scheme involves plumbing or an interaction with the Victorian plumbing regulatory framework.

The VBA supports the intent and direction of the proposals associated with the VEET Activity Regulation changes. However, we note these are likely to result in a number of consequences of material impact to the plumbing industry that the Department may not be aware of when making the proposed changes.

These material impacts relate specifically to the proposed baseline increase in the energy efficiency requirements for appliances associated with:

·  Schedule 7 - high efficiency ducted air to air heat pump replacing a ducted air to air heat pump,

·  Schedule 8 - high efficiency ducted air to air heat pump replacing central electric reistance heater; and

·  Schedule 10 - space air to air heat pump activities.

The significance of the proposed VEET Activity Regulation changes are illustrated in the following two examples:

Example 1: Schedule 7 and 8 activities

Based on the register currently available on the ESC website for Schedule 7 and 8 activities, there are presently 569 approved models with Coefficient of Performance (CoP) ranging from 3.5 to 4.6 . The proposed resetting of the minimum 3.5 CoP to 3.7 annual CoP as a baseline requirement will mean that models that currently have a CoP between this range will become ineligible to create VEECs. Based on the data in the register, this would mean 309 out of the current 569 models will become ineligible for the scheme, equivalent to a 54% reduction in the number of possible choices for consumers.

Example 2: Schedule 10 activities

At present there are 1,104 approved models eligible to create VEECs under this activity. The proposed change to the CoP will result in 831 approved models becoming ineligible for the scheme, representing a significant reduction of 75%.

In both the above examples a significant number of systems will be unincentivized, which is likely to have an impact on the market demand for these installations. Unless a comparable number of new systems that are eligible under the more stringent requirements are rapidly added to the product register, the abrupt removal of these units may undermine the broader consumer demand for these prescribed activities.This would in turn reduce the total number of VEECs created, which would then drive up the cost of VEECs in the market place.

The proposed changes are also likely to impact the flow-on employment benefits these activities have created in the plumbing sector since the introduction of the VEET scheme. We also note that of the 309 products that fail to meet the new minimum baseline requirement under Schedule 7 and 8 prescribed acitvities, 114 were only added to the register in 2013. In the case of the 831 products which were previously elibigble under Schedule 10, 391 – or 47% - were added in 2013.

As a result of the above, the VBA believes that the Department should consider what impact the sudden removal of those products from the Scheme might have on future applications to the Product Register.

Possible options to ameliorate these negative impacts and unintended consequences could include deferring these changes, introducing transitional arranagements to allow the industry to adjust, or setting the minimum CoP at a rate that would not immediately result in a significant reduction in the number of eligible models in the market.

The VBA recommends that the Department gives further consideration to the potential unintended consequences the proposed VEET Activity Regulation changes may create, to ensure the scheme can continue to operate effectively and efficiently.

Please do not hesitate to contact Mr Thinh Tran, Specalist Regulatory Adivsor on telephone 9618 9352 or via email at if you like to discuss further any aspect associated with this submission , including further ideas on how the VBA may be able to promote or facilitate greater uptake of the VEET scheme, particularly within the plumbing industry.

Once again thank you for the opportunity to provide feedback on the VEET scheme.

Yours Sincerely,

John Hin

Manager, Technical and Regulation (Plumbing)