Offshore Electricity Infrastructure (Regulatory Levies) Act 2021

Executive summary of update

The Offshore Electricity Infrastructure (Regulatory Levies) Act 2021 is a new piece of legislation that introduces a mandatory offshore electricity infrastructure levy. This levy is imposed on all holders of offshore electricity infrastructure licences and any person engaging in prescribed offshore infrastructure activities. The primary purpose of the Act is to establish a legal basis for cost recovery by the Commonwealth for its regulatory and compliance functions. The specific amount of the levy and the method of calculation will be determined by future regulations. The most significant practical consequence is the introduction of a new, ongoing financial liability for all of our offshore electricity projects, which will impact project budgets and financial modelling.

Impacted parties

This update most significantly impacts offshore electricity infrastructure licence holders and entities engaging in offshore infrastructure activities, creating new financial and compliance obligations for these parties.

Change Analysis

Provision	Change	Impact on Operations
Section 8: Imposition of levy	New provision. The Act formally imposes a levy on offshore electricity infrastructure licence holders and those engaging in prescribed activities. It allows for different kinds of levies related to the licence duration or specific regulatory actions.	This creates a new, direct financial liability for all relevant projects. Operational and project budgets must be updated to account for this cost. The levy applies for the duration of a licence, establishing it as a recurring operational expense.
Section 9: Amount of levy	New provision. The Act stipulates that the amount of the levy will not be detailed in the Act itself, but will be prescribed in, or calculated according to, methods detailed in subsequent regulations.	The full financial impact on operations remains uncertain until the supporting regulations are published. This requires flexible financial planning and introduces a new variable cost risk to project forecasting and profitability assessments.
Section 10: Regulations	New provision. This section grants the Governor-General the power to create regulations to implement the Act’s provisions.	This confirms that all critical operational details (e.g., levy amount, payment schedules, specific activities subject to the levy) will be contained in subordinate legislation. This requires ongoing regulatory monitoring to ensure compliance.

Corrective and preventive actions

Government & Regulatory Affairs

• Section 9 & 10: Immediately establish a monitoring process for the development and release of the associated regulations which will define the levy amount, calculation method, and applicable activities.
• Section 8: Liaise with the Regulator and Registrar to gain clarity on the scope of regulatory and compliance activities the levy is intended to fund.

Finance

• Section 8 & 9: Create a provisional line item in all current and future offshore project budgets to account for the new levy.
• Section 9: Develop a framework for tracking, verifying, and processing levy payments, to be finalised once the regulations are released.

Legal

• Section 7 & 8: Review the definitions in this Act and the parent Offshore Electricity Infrastructure Act 2021 to provide a formal opinion on which of the company’s activities will be subject to the levy.
• Section 9 & 10: Prepare to conduct a detailed analysis of the forthcoming regulations to advise the business on its specific compliance obligations.

Project Management

• Section 8 & 9: Update all financial models, business cases, and feasibility studies for prospective offshore electricity projects to include the anticipated cost of this levy.

Commercial and Procurement

• Section 8: Review standard commercial agreements and project financing documents to ensure the new levy is appropriately accounted for as an operational expense or pass-through cost.

Risks & opportunities assessment

Risks

• Financial Uncertainty: The primary risk stems from the unknown amount of the levy (Section 9). This introduces financial uncertainty into long-term project planning and investment decisions until the regulations are finalised. The levy may be variable, making future operational expenditure difficult to predict.
• Compliance Risk: Failure to monitor for the release of the regulations and subsequently implement processes for payment could result in non-compliance, leading to potential financial penalties and reputational damage.

Opportunities

• Advocacy: Proactive engagement with the government during the consultation for the new regulations (Section 10) provides an opportunity to advocate for a levy structure that is transparent, predictable, and equitable for the industry.
• Regulatory Certainty: The establishment of a formal cost-recovery framework signals a maturing regulatory environment. This can enhance long-term investor confidence by providing greater clarity on the ongoing costs of regulatory oversight in the Australian offshore electricity sector.