Explanation of Levy

The Electricity Commission recovers the cost of performing its functions, powers and duties by way of a levy on electricity generators, purchasers and line owners. Details of the levy and how it is calculated are set out in the Electricity (Levy of Industry Participants) Regulations 2005 (the Regulations).

Published Levy Rates

The Commission publishes three sets of levy rates in each financial year:

• Indicative levy rates – estimated rates published in December / January prior to the start of the financial year; intended as a guideline to industry for planning purposes.
• Invoiced levy rates – estimated rates gazetted prior to the start of the financial year after finalisation of Commission budgets; used to calculate monthly levy invoices during the financial year.
• Reconciled levy rates – actual rates published in December after the annual audit is complete; used to determine whether industry participants have underpaid or overpaid their levy for the previous financial year.

Levy Rate Calculation

The steps involved in the levy calculation are as follows:

1. Determine estimated / actual Commission costs for the financial year and allocate costs across activities.
2. Allocate costs for each activity between generators, purchasers and line owners in the proportions set out in the Regulations (Regulation 7, Table 1).
3. Obtain the estimated / actual quantity of electricity generated, purchased and conveyed during the year, and number of consumer connections (Regulation 7, Table 2).
4. Calculate the estimated / actual levy rates.

Annual Levy Process

The two main levy processes performed in each financial year to meet the requirements of the Regulations are:

Monthly invoicing - actual monthly units (provisional) are multiplied by the invoicing levy rates to give a monthly invoice amount.

Annual reconciliation - at the end of the financial year the annual reconciliation uses actual annual units multiplied by the reconciled levy rate to determine the amount each participant should have paid; the difference between this total and the amount paid on monthly invoices during the year is then either refunded or invoiced.