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 it is ordinarily connected to a commercial supply of electricity but a natural disaster has caused large scale damage to the infrastructure of the commercial power supply?
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 it is ordinarily connected to a commercial supply of electricity but a natural disaster has caused large scale damage to the infrastructure of the commercial power supply.
Facts
An entity operates an enterprise that has, as its principal purpose, the retail sale of goods or services.
At the place where the enterprise is carried on, they are connected to a commercial supply of electricity.
A natural disaster has caused large scale damage to the infrastructure of the commercial power supply and the affected area has been declared a disaster area.
The commercial power supplier will not be able to resume its usual commercial supply of electricity until its infrastructure has been rebuilt.
Diesel fuel is used to power a generator at the place where the retail/hospitality business is carried on. The generator will provide electricity for use in the retail/hospitality enterprise until the commercial power provider's infrastructure is rebuilt.
Reasons for Decision
Subsection 53(1) of the EGCSA states that subject to certain prescribed conditions, a person is entitled 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.
The phrase 'ready access' is not defined in the legislation, but the Explanatory Memorandum to the Diesel Fuel Rebate Scheme Amendment Bill 2002 (the Explanatory Memorandum) says 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.
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 Customs Act and the Excise Act both contained similar provisions to that contained in paragraph 53(4)(a) of the EGCSA. Consequently, the Explanatory Memorandum remains relevant.
In this instance, the electricity supply is not 'present' to the business, in terms of the business already being connected to it, as the scale of damage means that a commercial supply of electricity from the power company is no longer available. It must therefore be determined whether a commercial power supply of electricity is 'convenient' to the business. If so, it must then be determined whether the electricity supply is 'immediately available' for connection.
In this instance, the large scale damage to the infrastructure of the commercial power supply means that a commercial power supply is neither 'convenient' to the business nor 'immediately available' for connection.
Consequently, 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 it is ordinarily connected to a commercial supply of electricity but a natural disaster has caused large scale damage to the infrastructure of the commercial power supply.