Issue
Does an entity that conducts a retail/hospitality business have 'ready access' to a commercial supply of electricity for the purposes of subparagraph 53(4)(a)(ii) of the Energy Grants (Credits) Scheme Act 2003 (EGCSA) if a commercial power supply cannot be accessed safely?
Decision
No. An entity that conducts a retail/hospitality business does not have 'ready access' to a commercial supply of electricity for the purposes of subparagraph 53(4)(a)(ii) of the EGCSA if a commercial power supply cannot be accessed safely.
Facts
An entity purchases diesel fuel and uses it to generate electricity for use in carrying on an enterprise that has as its principal purpose the retail sale of goods or services or the provision of hospitality. The electricity generated is used at the premises where the retail/hospitality business is carried on.
The site where the enterprise is carried on is a temporary site where no power is available. There is a limited commercial power supply 500 metres away, but it is not safe to run cables from the commercial power supply to the site.
Reasons for Decision
Subsection 53(1) of the EGCSA states that an entity is entitled, subject to certain prescribed conditions, to an off-road credit if they purchase diesel fuel for a use by them that qualifies.
Paragraph 53(4)(a) of the EGCSA provides that the following is a use that qualifies: use at particular premises to generate electricity for use in the course of carrying on, at those premises, an enterprise that: (i) has, as its principal purpose, the retail sale of goods or services (other than electricity) or the provision of hospitality; and (ii) does not have, at those premises, ready access to a commercial supply of electricity;
The requirements of subparagraph 53(4)(a)(i) of the EGCSA have been met. What must then be considered is whether the entity has ready access to a commercial supply of electricity at the temporary site.
The phrase 'ready access' is not defined in the legislation, but the Explanatory Memorandum to the Diesel Fuel Rebate Scheme Amendment Bill 2002, says that a business would be regarded as having ready access if: A commercial supply of electricity was present or convenient to the business and immediately available for connection. (emphasis added)
The Diesel Fuel Rebate Scheme was the precursor to the Energy Grants (Credits) Scheme, and was administered under the Customs Act 1901 and the Excise Act 1901.
The Excise Act and the Customs Act both contained similar provisions to that contained in paragraph 53(4)(a) of the EGCSA. Consequently, the Explanatory Memorandum to the Diesel Fuel Rebate Scheme Amendment Bill 2002 remains relevant.
In this instance, the electricity supply is not 'present' to the business, in terms of the business already being connected to it. It must therefore be determined whether a commercial supply of electricity is 'convenient' to the business. If so, it must then be determined whether the electricity supply is 'immediately available' for connection.
The term 'convenient' in this context suggests that connection to the electricity supply should not be burdensome to the business in terms of cost and effort. It also suggests that connection to the power supply should suit the business.
In this case, although there is a commercial supply of electricity 500 metres away, the supply is unsuitable for the business, as it cannot be accessed safely. Therefore, the entity does not have 'ready access' to a commercial supply of electricity for the purposes of subparagraph 53(4)(a)(ii) of the EGCSA.