Electricity Infrastructure Investment Act 2020

Executive summary of update

This update fundamentally overhauls the approval and delivery process for REZ network infrastructure projects, centralising significant authority with the infrastructure planner. The planner now assesses projects, appoints network operators, and recommends ministerial directions, a role previously held by the consumer trustee. A new framework for “access areas” is introduced, expanding the Act’s scope beyond the initial renewable energy zones.

Critically, the update introduces personal liability for directors and managers for corporate failure to comply with project directions. This is coupled with a significant increase in financial penalties for such failures. Transitional provisions are in place to manage projects already in progress. These changes aim to streamline project delivery while substantially increasing compliance risks and accountability for network operators and their leadership.

Impacted parties

This update most significantly impacts infrastructure planners, network operators, the consumer trustee, and the directors and senior managers of network operator corporations.

Change Analysis

1. Overhaul of REZ Network Project Approval and Delivery Process

• Change Description: The process for authorising and initiating REZ network infrastructure projects has been completely restructured. The infrastructure planner’s role is significantly expanded, while the consumer trustee’s role has been refocused.
  • The infrastructure planner is now responsible for assessing and recommending REZ projects for authorisation (Section 30**), appointing network operators to carry out those projects (Section 31A), and recommending that the Minister issue a direction to an operator (**Section 31B).
  • The consumer trustee’s function is now to formally authorise (or refuse to authorise) projects based on the planner’s recommendation (Section 30AA**) and to set and amend the maximum capital costs for authorised projects (**Section 31).
  • Transitional provisions in Schedule 1, Part 4 ensure that projects authorised under the previous framework are deemed to be authorised and have their operators appointed under the new framework.
• Impact Assessment: This change centralises the technical and commercial assessment and delivery functions with the infrastructure planner (Energy Corporation), streamlining the path from concept to execution. Network operators will now engage primarily with the infrastructure planner for project appointment and direction, rather than the consumer trustee. This shift aims to accelerate project delivery but also concentrates significant power and responsibility with the infrastructure planner.
• Affected Sections:** 30, 30AA (new), 31, 31A (new), 31B (new), 33, 36A, 38, **Schedule 1, Part 4, Clause 5 (new).

2. Introduction of Director Liability and Increased Penalties

• Change Description: The enforcement regime for ministerial directions has been significantly strengthened.
  • A new provision, Section 35AA**, establishes that directors and persons concerned in the management of a corporation can be held personally liable for a corporation’s failure to comply with a direction under **Section 32, if they knowingly authorised or permitted the contravention.
  • The maximum penalty for a corporation failing to comply with a direction has been increased from 5,000 to 18,000 penalty units. The penalty for an individual has increased from 2,500 to 3,500 penalty units (Section 35).
• Impact Assessment: This introduces a substantial new compliance risk for the leadership of network operator corporations. The threat of personal liability for directors and managers elevates the importance of robust internal governance and oversight mechanisms to ensure all ministerial directions are met. The increased corporate penalties further underscore the financial risk of non-compliance.
• Affected Sections:* 35, *35AA (new).

3. Creation of ‘Access Areas’ and Expanded Consultation Duties

• Change Description: The Act now provides for the creation of “access areas” in addition to renewable energy zones.
  • Section 19A grants the Minister a new power to declare an “access area” comprising a specified geographical area and infrastructure, which cannot overlap with an existing REZ or another access area.
  • The procedures for declaration, amendment, and the application of access schemes have been extended to cover these new areas (Sections 20, 21, 22A, 24, 26, 27).
  • The infrastructure planner’s obligation to consider guidelines on consulting with local Aboriginal communities has been explicitly stated and linked to the process of appointing network operators and recommending ministerial directions (Section 4).
• Impact Assessment: The introduction of “access areas” expands the potential geographic scope for coordinated infrastructure investment under the Act, creating new opportunities for development outside the five designated REZs. This provides greater flexibility to respond to emerging network needs. The strengthened consultation requirements place a direct and enforceable duty on the infrastructure planner, making community and Aboriginal engagement a critical part of the project delivery process.
• Affected Sections:** 4, 19A (new), 20, 21, 22A (new), 24, 26, 27, 63, 73, **Dictionary.

Corrective and preventive actions

Legal

• Section 35AA: Immediately review and confirm the adequacy of Directors and Officers (D&O) liability insurance in light of the new personal liability provisions for directors and managers.
• Section 35AA: Prepare and deliver an urgent briefing to the Board and senior management on the new personal liability provisions and the required standards of due diligence to mitigate this risk.
• Section 35: Update the internal compliance register and all relevant policies to reflect the significantly increased penalties for failure to comply with a ministerial direction.
• Part 5, Divisions 1 & 1AA: Revise all legal templates and process documents related to project approvals to reflect the new roles of the infrastructure planner and consumer trustee.
• Section 43 & Schedule 1, Clause 6: Review all existing and proposed Long-Term Energy Service (LTES) agreements for long-duration storage projects to assess the impact of the change from “registered capacity” to “relevant capacity”.

Government & Regulatory Affairs

• Part 5, Divisions 1 & 1AA: Immediately update stakeholder engagement plans to reflect the expanded authority of the infrastructure planner as the primary point of contact for project assessment, appointment, and direction.
• Section 19A: Commence mapping and analysis of potential “access areas” to identify future project opportunities and engagement priorities.
• Section 42A & Schedule 2: Monitor for the development of any new regulations modifying the National Electricity Rules for system security services and prepare for engagement on their content.

Project Management

• Part 5, Divisions 1 & 1AA: Redesign internal project gateway and approval workflows to align with the new authorisation and appointment process led by the infrastructure planner.
• Section 35: Ensure all project teams responsible for executing ministerial directions are briefed on the increased penalties for non-compliance and that compliance tracking is robust.

Community & Social

• Section 4: Review and update all community and Aboriginal engagement plans and procedures to ensure they align with the infrastructure planner’s new, explicit obligations under the Act.

Commercial and Procurement

• Section 31A: Revise procurement and bidding strategies for REZ network projects to align with the new appointment process managed directly by the infrastructure planner.

Risks & opportunities assessment

• Risks:

  • The new personal liability for directors and managers (Section 35AA) represents the most significant new risk, potentially impacting the company’s ability to attract and retain senior talent and requiring a major uplift in governance and compliance oversight.
  • The substantial increase in financial penalties (Section 35) heightens the financial consequences of project delivery failures or non-compliance with directions.
  • The new regulation-making power for system security services (Section 42A) creates potential for future regulatory uncertainty and new compliance costs.

• Opportunities:

  • The creation of “access areas” (Section 19A) opens new geographical markets for infrastructure development, allowing for investment in strategic locations outside the original REZs.
  • The centralisation of project assessment and appointment functions with the infrastructure planner (Part 5) could streamline the approval process, potentially reducing timelines and transaction costs for well-prepared proponents.