A carbon price commenced in Australia on 1 July 2012. The carbon price applies to certain greenhouse emissions, with some large businesses being required to purchase carbon credits against their emissions.
For more information about the carbon price contact the Clean Energy Regulator on 1300 553 542 or visit the Clean Energy Regulator website.
Under the Competition and Consumer Act 2010, you must not make false, misleading or deceptive claims about the price of goods and services. This includes false, misleading or deceptive claims linking price rises to the carbon price.
As a business, you are entitled to increase your prices as you see fit – it is business as usual. Leading up to and following the start of the carbon price, the same legal obligations not to mislead or deceive apply.
Like any other claim, if you choose to make a claim about the impact of the carbon price or why a price has increased, this claim should be truthful and have a reasonable basis.
Be aware if you make a claim, the ACCC may ask you to provide information in support of your claims.
3. What steps can my business take to avoid making misleading claims?
As a business, you may consider information from a range of sources when determining the impact of the carbon price on your costs, and ultimately your prices.
If you intend to rely on information from third party sources when making claims about the carbon price to your customers, you need to assess whether you have a reasonable basis for relying on the information.
When relying on third party information to make a claim, you should consider:
any explanation the third party has provided about the price impact of the carbon price.
whether the third party’s calculations reflect the cost of inputs into their own business – if they are being used to calculate a carbon price.
whether any price increases are consistent with the carbon price impact as predicted by other sources such as government, their industry association or other professional advisers.
if there are other factors (unrelated to the impacts of the carbon price) that have contributed to the price increase.
inform and educate businesses about their responsibilities under the Competition and Consumer Act 2010 (the Act) when making carbon price claims, including by providing guidance.
raise awareness amongst consumers about their rights under the Act.
investigate and, where appropriate, take action against businesses who engage in practices that contravene the Act.
The ACCC does not have a role in formally monitoring, setting or restricting price increases linked to the carbon price and cannot prevent a business from putting up its prices as a result of the carbon price.
However, the ACCC can act against misleading claims if a business falsely links a price rise with the carbon price.
5. What types of information should I have regard to before making a claim?
The information you should have regard to before making a claim about the impact of the carbon price will depend on the type of claim made. Before making a claim, you need to be confident that any price increase linked with the carbon price applies to your own business. This includes claims about percentage price increases, and increases within a price range.
It may not be practical or possible in all cases to separate out a precise increase in cost due to a particular factor, such as the carbon price. In these circumstances, you will need to carefully consider whether to make a carbon price claim.
Information you should consider before making a claim includes:
invoices showing the impact of the carbon price on your supply chain or business input costs (eg. raw materials, packaging and transport)
notices/invoices showing the impact of the carbon price on the cost of services (eg. gas, electricity, waste disposal and travel)
information from your industry association and the government. This may provide guidance as to likely price impacts as a result of the carbon price in certain industries. Information dealing with your specific business model is more likely to reflect your particular costs.
An important part of the ACCC’s role is to inform and educate business about their obligations and responsibilities when deciding whether to make a claim about the impact of the carbon price.
The following guidance may assist businesses in understanding their rights and responsibilities when making carbon price claims:
8. What are my obligations as an advertising agency?
As an advertising agency or a business providing marketing services, you must take particular care when working with clients and media operators to formulate marketing strategies and activities, as you may be held responsible for any breaches of the ACL. This responsibility also applies to respresentations or claims about the carbon price.
Under the ACL, businesses must not make false, misleading or deceptive claims about the price of goods or services. This includes false, misleading or deceptive claims linking price rises to the carbon price. Businesses need to take particular care not to adopt, advise or endorse misleading messages as they may be held liable for any breach of the ACL.
9. What are my obligations if my employees or agents make carbon price claims?
If you engage an agent on your behalf to make a claim about the carbon price in promoting your goods and services, you need to ensure that your agent does not overstate or otherwise misrepresent the impact of the carbon price.
Remember you may also be liable if your agent breaks the law.
You may also be responsible for claims about the impact of the carbon price made by your employees – even if you did not instruct them to make a claim on your behalf. This means you should take care to train your employees and supervise their activities to ensure any claims made are truthful and have a reasonable basis.
Is my business responsible for verbal claims about the impact of the carbon price? What about relying on verbal claims from my suppliers?
Firstly, your business is responsible for verbal claims about the impact of the carbon price, as well as written claims. If your business is considering making a carbon price claim, you might look to a range of information before making the claim – to ensure it is truthful and has a reasonable basis.
Secondly, your suppliers might choose to make verbal or written claims to you about the impact of the carbon price on their own prices. Alternatively, they may opt not to make a claim at all. Regardless of the way a claim or representation is made to you, the supplier needs to ensure that any claim about the impact of the carbon price on their price rise is truthful and has a reasonable basis.
When dealing with your suppliers and considering whether you have a reasonable basis to make your own claim, bear in mind the information you should have regard to will depend on the type of claim your business makes.
Tips and key points:
Before making your own a claim, you need to be confident that any price increase linked with the carbon price applies to your own business. This includes claims about percentage price increases, and increases within a price range;
It may not be practical or possible in all cases to separate out a precise increase in cost due to a particular factor, such as the carbon price. In these circumstances, you will need to carefully consider whether to make a carbon price claim;
Information you should consider before making a claim includes invoices from your suppliers and information from your industry associations and the government;
If you seek written information from your supplier about the impact of the carbon price on their price rises and this is not provided, remember – think twice, ask questions and shop around. Some suppliers may increase their prices and opt not to make a claim about the impact of the carbon price or any other cause. However, if you are concerned you have been misled by a claim, contact the ACCC on 1300 303 609 or www.accc.gov.au/carbon
Can a small business be held liable if a junior staff member blames the carbon price for a price rise, even though they have been told not to do so by their employer?
Yes, your business may be responsible for claims about the impact of the carbon price made by your employees – even if you did not instruct them to make a claim on your behalf. This means you should take care to train your employees and supervise their activities to ensure any claims made are truthful and have a reasonable basis.
Claims made by your agents also need to be truthful and have a reasonable basis. This includes claims about the impact of the carbon price on your price rises. When a concern about these types of claims is raised with the ACCC, we will often contact the business to understand the circumstances in which the claim was made.
If you engage an agent to make a claim about the carbon price in promoting your goods and services on your behalf, you also need to ensure that your agent does not overstate or otherwise misrepresent the impact of the carbon price. You should ensure that information you provide to the agent (including for the preparation of any promotional material) reflects your own business' circumstances. Remember, you may also be liable if your agent breaks the law.
My business is involved in supplying goods or services using refrigerant and air conditioning gases. What are my obligations and responsibilities when making a claim about the impact of the equivalent carbon price on my price increases?
Refrigerant gases in air conditioning and refrigeration equipment may contain synthetic greenhouse gases. From 1 July 2012, an ‘equivalent carbon price’ applies to certain synthetic greenhouse gases.
Certain synthetic greenhouse gases, including some refrigerants, are subject to an equivalent carbon price levy at the time of import under the Ozone Protection and Synthetic Greenhouse Gas Management Act 1989.
Businesses are free to set their own prices – but if you choose to make a claim about the impact of the carbon price on your price rises, you have obligations not to mislead your customers about the source of the price rise.
Like any claim made by a business, representations about the impact of the carbon price on refrigerant and air conditioning gases must be truthful and have a reasonable basis.
11. What should I consider before making a claim about the carbon price, or relying on a supplier claim?
Think twice – make sure you are confident about the price impact on your own business. Consider the overall impression created by information you offer about the carbon price impact, and how your customers might interpret this.
When relying on information from other sources to make your own claim or representation about a carbon price increase, you should assess whether it is reasonable to rely on the information. Ask:
How has the carbon price impact and flow-on price increase been calculated?
Have factors unrelated to the carbon price contributed to the price increase?
Do my invoices show that price increases in my supply chain or business input costs are related to the carbon price, or do they show increases are related to other factors?
What do calculations from an appropriate business calculator (that considers increased costs relevant to your particular business or industry) say? Does the calculator note whether these costs are due to the equivalent carbon price or other factors?
Consider the impact of the equivalent carbon price on your own business and ask questions before relying on third-party information. Before making a carbon price claim to your own customers relying on information from your suppliers, seek further information from your supplier or wholesaler about any price rises linked to the carbon price. Remember, if your supplier has not attributed a price rise to the carbon price, then your business cannot assume that the carbon price is the cause of the price rise.
Before making your own claim, consider information and guidance from a variety of sources – including your industry association, the government and your professional advisors. Industry associations play an important role in providing members with advice about the impact of the carbon price, and your business advisors will often be in a position to provide you with advice that considers the specific circumstances of your own business. Consider information and guidance that best reflects your own business circumstances.
Bear in mind that general information from broader sources, such as newspaper reports, may not be sufficient to support your claim.
Remember, businesses need to avoid making claims or representations about price increases based on assumptions that the introduction of the carbon price is the primary or sole cause of increases to their own costs of supply. Claims or representations need to be truthful and have a reasonable basis.
For more information, about the equivalent carbon price and synthetic greenhouse gases contact the Department of Sustainability, Environment, Water, Population and Communities:
A refrigerants contractor has told my business that the price of refrigerant gases has increased from $90 per kilogram to as high as $300 per kilogram, saying this is what they paid their suppliers. What should my business do?
The key point is that businesses are generally free to set their own prices – but if you choose to make a claim about the impact of the carbon price on your price rises, you have an obligation not to mislead your customers about the source of the price rise.
Secondly, like any claim made by a business, representations about the impact of the carbon price on refrigerant and air conditioning gases – including those made by your suppliers – must be truthful and have a reasonable basis. Suppliers are not generally required to move their own prices at particular times – some may wait until key dates to adjust prices. And some suppliers may opt not to make a claim or representation about the reasons for their price rises.
The key tips are:
Think twice before making a claim or representation about your own carbon price cost increases
Consider the impact of the equivalent carbon price on your own business and ask questions before relying on third-party information
Before making your own claim, consider information and guidance from a variety of sources – including your industry association, the government and your professional advisors
Shop around – if you’re not satisfied with a price adjustment or your supplier's representation about price rises, shop around and compare prices
Bear in mind that general information from broader sources, such as newspaper reports, may not be sufficient to support your claim.
For more information, about the equivalent carbon price and synthetic greenhouse gases contact the Department of Sustainability, Environment, Water, Population and Communities:
What can the ACCC do about misleading refrigerants claims?
The ACCC would be concerned if the impact of the equivalent carbon price was being misrepresented in claims made to businesses or consumers. The ACCC can investigate false or misleading claims about the impact of the carbon price, and may ask you for information in support of your claims.
The ACCC does not have a role in monitoring, setting or restricting prices related to the carbon price and cannot stop a business from putting up its prices as a result of the carbon price. Contact the ACCC on 1300 303 609 if you have a complaint or inquiry, or are concerned that the impact of the carbon price has been misrepresented or overstated in relation to goods or services.
For more information, about the equivalent carbon price and synthetic greenhouse gases contact the Department of Sustainability, Environment, Water, Population and Communities:
Where can I find more information about refrigerants and the carbon price?
For more information, about the equivalent carbon price and synthetic greenhouse gases contact the Department of Sustainability, Environment, Water, Population and Communities:
12. What are my obligations and responsibilities as a domestic construction business?
As with any claim, if you choose to make a claim in a domestic construction quote or contract that links a price rise with the carbon price, the claim must be truthful and have a reasonable basis.
Domestic construction businesses may be considering ways to take account of existing and future potential price rises linked to the carbon price during the term of a building contract.
There are state and territory laws that regulate residential building contracts. Some jurisdictions may allow construction businesses to include clauses in contracts that take into account increased costs. For more information contact your local Office of Fair Trading. Contact details are available on the Australian Consumer Law website.
For information about business responsibilities and obligations when making carbon pricing claims, see the ACCC Carbon price claims – Guide for business [Updated May 2012].
13. Can my business add a component of GST on top of a price rise that includes the carbon price?
The GST applies to the supply of goods and services. If the price of those goods or services increases because of a cost increase, including a carbon price increase, then the new total price attracts GST unless it is an exempt good. A carbon price-related increase makes no difference to the way GST would ordinarily be calculated for any other price increase.
The GST does not apply to the permits that liable entities need to purchase under the carbon price mechanism. However, if liable entities are required to purchase these permits, the charge will form a cost input into their business operations. Where that business chooses to pass some or all of the cost on through an increased price for their goods or services, the amount of GST will increase accordingly (unless that supply is GST- free or input taxed).
Businesses are reminded that if they make a claim about the impact of the carbon price it must be truthful and have a reasonable basis.
Consumers and businesses who are concerned they may have been misled about a carbon price claim should contact the ACCC Carbon Price Claims Hotline on 1300 303 609.
Contact the Australian Taxation Office (ATO) on 137 226 or visit the ATO’s website www.ato.gov.au. The ATO is responsible for administering the taxation consequences of the carbon pricing mechanism.
What do I need to know about energy prices and carbon price claims?
For the majority of customers, there are a range of factors in addition to the carbon price contributing to price increases. The actual rise for each customer will depend on the particular tariff they are on and their level of consumption.
The ACCC has received a range of carbon related complaints and enquiries about energy retailers. Consumers and businesses have contacted the ACCC reporting concerns or asking questions about how the carbon price will affect their electricity or gas bills, and whether the price increases communicated by energy retailers are appropriate.
The ACCC does not have a formal price monitoring role and is not responsible for calculating what the carbon price will be for business.
We have reviewed a number of claims made to ensure they are not misleading or deceptive, including those made by energy retailers, and have reported that cost increases reviewed by the ACCC have generally been in line with Treasury and State regulatory agency expectations. The majority of contacts to the ACCC have been about general price increases, not specific complaints about carbon price misrepresentation. The ACCC does not generally comment on individual investigations.
In general – as a business considering your obligations not to make misleading claims – it is worth looking at information that relates directly to your own business circumstances before making a claim. This may include your own energy bills if you are confident it gives you a reasonable basis for your claim. You might also look to figures provided by other sources, such as your State or Territory energy regulator, for example the Independent Pricing & Regulatory Tribunal in NSW (IPART). In doing so, you need to be confident that any general figures apply to your own business circumstances.
Some energy bills may provide a breakdown of separate amounts including carbon price impacts, and some may not. As a business, you need to have confidence about the reasons for a price increase before making a claim about it. If you only have access to more general information, or electricity bills are showing increases relating to a range of factors, you might consider making a more general claim about the reasons for your own price rises.
The type of comment or any carbon price claim you choose to make is up to your individual business – just remember, the claim needs to be truthful and have a reasonable basis.
If you seek written information from your suppliers about the impact of the carbon price on their price rises and this is not provided, remember – think twice, ask questions and shop around. Some suppliers will choose to make a claim about the impact of the carbon price, while others will choose not to. If you are concerned you have been misled by a claim about the impact of the carbon price, contact the ACCC on 1300 303 609 or www.accc.gov.au/carbon
I have been paying for green power/renewable energy, but now my provider has added a ‘carbon’ component to my energy bills. Is the energy retailer allowed to do this?
Energy customers may be paying an amount towards ‘renewable’ or ‘green’ energy through a range of different energy deals available. These deals generally involve customers paying an amount to support the production of electricity from green energy projects that is then fed into the national electricity grid. It is impossible for only green energy to be transmitted directly to the homes and businesses of green energy customers. Pricing for green energy schemes is often accounted for separately on electricity bills.
While a green energy consumer supports the production of electricity from renewable sources, in effect, a green energy consumer is purchasing electricity drawn from the national electricity market, which includes electricity generated from green and other generation sources. Because the national electricity market has a single wholesale price that incorporates electricity from both renewable and non-renewable sources, the wholesale price will be affected by the carbon price. As such, the carbon price will increase a retailer's cost structure for all electricity purchased from the grid, including for green energy packages. Some retailers have decided to effectively absorb this cost while others have indicated that they will pass on the increase in cost to customers. Accordingly, consumers may wish to shop around for the price and conditions that suit.
Further information
Electricity generators in the eastern and southern coast of Australia sell electricity through a wholesale ‘pool’ market called the National Electricity Market or the NEM. Retailers bundle the cost of this wholesale electricity with the cost of network services for sale to residential consumers. Due to the nature of electricity, it is impossible for an end user in the NEM to only consume electricity sourced directly from a particular generator or particular generation type. In other words, all electricity is ‘pooled’ into the system, and customers draw upon this pool.
Many retailers offer green or renewable energy packages to consumers whereby a proportion of the electricity consumed by the customer is met by electricity from renewable energy sources. Most of these products are GreenPower accredited green power products (see www.greenpower.com.au). For each unit of GreenPower sold, an equivalent additional amount of renewable energy is generated and put into the pool. However, the renewable energy may be supplied to the pool at a different time to when the energy is used by the GreenPower customer. In other words, the retailer must still buy electricity on the NEM to ensure constant electricity supply to the customer.
The NEM has a single wholesale price that incorporates electricity from both renewable and non-renewable sources. This wholesale price will be affected by the carbon price and flows through to affect the cost of all retail electricity, including GreenPower electricity.
What is the ACCC doing about green energy claims and the carbon price?
The ACCC and the AER have reviewed information provided by electricity retailers about green energy claims. The information consistently indicates that the cost to retailers of supplying green energy packages would increase as a result of the carbon price. This increase is due to the increase in the cost of purchasing wholesale electricity from the NEM (which includes electricity generated from renewable sources) as the retailer has to purchase the energy consumed by the customer at the time the energy is consumed.
While all of the retailers have indicated that the carbon price will increase their cost structure for green energy packages, some retailers have decided to effectively absorb this cost while others have indicated that they will pass on the increase in cost to customers. Accordingly, consumers may wish to shop around for the price and conditions that suit.
Based on the information provided, the AER and the ACCC consider that, in certain circumstances, an increase in the price of green energy packages may be attributed to the carbon price without raising concerns under the Australian Consumer Law. The ACCC will, however, assess any complaints about representations made by retailers about future increases in the price of renewable energy packages attributed to the carbon price on a case by case basis.
The ACCC is unable to assist with individual billing disputes. If you still have concerns about the amount you are being billed for electricity, you should contact the Energy and Water Ombudsman in your state or territory.
15. What happens if my supplier doesn’t tell me what the carbon price is?
As a small business operator, one of your key sources of information about the impact of the carbon price is information provided by your suppliers, such as invoices.
Suppliers are not generally obliged to provide their customers with information that sets out the carbon price impact on their own price rises. In many circumstances, business would hope suppliers would provide this information as part of good business practice. However, if you notice that supplier prices have gone up, and your supplier has not indicated why, you have a number of options:
Ask questions – go back to your supplier and ask them why prices have gone up;
If your supplier does not provide an explanation about the source of the price rises, you may wish to do yourown calculations or use a professional advisor such as an accountant to assist you;
Think twice – consider whether you need to tell your own customers why your prices have moved; and
Shop around – see what other suppliers are charging and the type of information they might be providing about recent price increases.
