Annual Report 2019-20

We regulate the creation of certificates as part of the Victorian Energy Upgrades (VEU) program. We do this under the Victorian Energy Efficiency Target (VEET) Act 2007.

The VEU program aims to reduce greenhouse gases by making energy efficiency improvements more affordable for consumers and reducing their long-term energy consumption, facilitating the development of an energy efficiency industry.

Our year in review

LED the way in 2019–20

The replacement of compact fluorescent lightbulbs with LED lights became the main source of certificates from June 2019. 
36 accredited businesses supported by more than 900 electricians installed over 5 million LED lights in more than 280,000 households (over 10 per cent of Victorian households).

These contributed 3.1 million certificates to the total 6.9 million registered during the financial year and the total of over 60 million registered between the beginning of the program and 30 June 2020.

The benefits are real

We safeguard the integrity of the program. We continued to implement a risk-based approach to our regulatory activities enhanced by updated data analytics capabilities.

During the financial year, we checked over 30,000 installations and identified more than 3,500 high-potential non-compliance issues. At the end of the financial year, over 340 thousand certificates remained withdrawn.

Our compliance activities included 348 field audits, 191 desktop audits and 48 phone audits. Our compliance regime led to participants agreeing to voluntarily surrender 33,024 certificates. 

This financial year also saw us issuing a formal warning to Cyanergy Pty Ltd (including placing independent auditor conditions on their accreditation) and required them to surrender around 20,000 certificates.

We helped resolve issues for consumers 

We received consumer complaints equivalent to 0.12 per cent of installations. As part of our focus on supporting consumers, we resolved 90 per cent of these complaints. Most related to residential lighting installations and product issues, communications with accredited businesses and installers’ behaviour.

We actively worked with the accredited businesses to resolve these issues for the consumer. To protect customers from aggressive marketing practices under the program, we expanded our collaboration with Consumers Affairs Victoria.

We also engaged with participants to understand how they were adapting to the coronavirus pandemic and our role in supporting them through the coronavirus pandemic.

Progress report, 2019–20

Objective: An upgraded and modern VEU registry system – Status: Ongoing

Upgraded IT system project

Outputs

• Nine out of 13 workstreams completed. 

Objective: Effective processes for engaging with stakeholders– Status: Ongoing

Improved stakeholder engagement processes

Outputs

• Published our stakeholder engagement plan.
• Worked with industry to identify barriers for project-based activities projects.
• Collaboration with other government agencies to facilitate uptake of gas efficiency activities.
• Kicked off release of our first quarterly newsletter in January 2020.

Outcomes

• Greater awareness of the VEU program and opportunities available across industry.
• Greater understanding of our functions, focus and reasons for regulatory requirements.
• Advanced data analysis to inform operational decisions, reports for policy makers and publication of web-based program data.

Objective: Developed data analytics and intelligence capabilities – Status: Ongoing

Developed the division’s data analytics and business intelligence capabilities 

Outputs    

• Published a program data dashboard on our website showing program performance data.
• Development of internal data dashboards to streamline internal processes.
• Development of Power BI governance framework to ensure privacy and confidentiality of program data.

Outcomes

• Updated monitoring capabilities, enhanced targeted effective audits, improved collaboration on policy development and better-informed consumers and participants.

Objective: Integrated risk-based compliance focus – Status: Ongoing

Improved risk-based compliance functions and interventions pre-and post-registration

Outputs    

• Introduced automated requests for further information for high risk installations. 
• Incorporated baseline intelligence in determining risk profile for residential lighting.

Outcomes

• Improved coverage of pre-registration checks
• Streamlined and more consistent pre-registration validation processes.

Measuring our success in 2020–21

Strategy objective	Objective	What outputs do we intend to produce?	What outcomes do we intend to achieve?
Objective 1	Upgrade our IT system	Deploy new IT system by April 2021.	A new VEU registry system that is fast, secure, intuitive, versatile and future ready. A system that improves processing times and focuses our assessment capabilities based on risk
Objective 2	Improve stakeholder engagement processes	Work proactively and collaboratively with Department of Environment, Land, Water and Planning in reviewing the Victorian Energy Efficiency Target Act, drafting new regulations or specifications, and resolving policy gaps to improve regulatory outcomes.	A modern legislative framework that provides us with the tools and powers to regulate participants under the program and protect consumers.
Objective 3	Develop the division’s data analytics and business intelligence capabilities	Protocols to monitor implementation of audit recommendations by accredited persons. Dynamic, balanced and risk-based assessment processes.	Improved compliance of accredited persons who have been subject to a previous audit or investigation. Minimum 10 audit or investigations of accredited persons. 90 per cent of regular batches processed within two days of target timeframe. 90 per cent of accreditation and additional activity applications assessed within processing timeframes 100 per cent of all project-based activities approvals within legislated timeframes Project-based activities certificates registered within a reasonable time after impact report received
Objective 4	Improved risk-based compliance functions and interventions	Timely release of website updates, program updates and updated guidance documents. Two forums every year. Focused stakeholder workshops.	Improved understanding by stakeholders of obligations. Informed consultation in decisions. Improved understanding of operational realities of accredited persons and installers.

Environmental factors

The main environmental factors influencing our work are: 

• increased expectations on regulators requires an increase in resources for timely validation, audit checks and enforcement activities 
• the uptake by regulated businesses of residential lighting upgrades required more resources to validate and audit due to the large number of installations
• uncertainty surrounding future targets and uptake of new prescribed activities
• speed of technological change and increased technological complexity of products installed require higher expertise to ensure their timely registration and ongoing compliance 
• the co-existence of high-volume low-cost activities (such as lighting) with more complex and low volume activities (such as project-based)
• the onset of the coronavirus pandemic and potential impacts on economy.

We will review our operational and regulatory framework to reflect policy developments in Victoria. In doing this, we will seek to safeguard the integrity of the VEU program, ensuring energy consumers continue to benefit from energy efficiency upgrades through a balanced, transparent and efficient system.

Cost of our VEU activities

In 2019–20, the total cost of the Victorian Energy Upgrades team was $7.37 million. The cost includes the direct costs incurred by the team plus an allocation for overhead costs.