Explanatory Statement
Issued by the authority of the Assistant Minister for Climate Change and Energy
Offshore Electricity Infrastructure Act 2021
Offshore Electricity Infrastructure (Regulatory Levies) Act 2021
Offshore Electricity Infrastructure Amendment (Reduction of Fees and Levies and Other Measures) Regulations 2026
Legislative Authority
The Offshore Electricity Infrastructure Act 2021 (OEI Act) establishes a legal framework,
including a licensing scheme, to enable the construction, installation, commissioning, operation, maintenance, and decommissioning of offshore electricity infrastructure (OEI) in the Commonwealth offshore area.
Section 305 of the OEI Act provides that the Governor-General may make regulations on
matters required or permitted by the OEI Act to be prescribed by the regulations or necessary
or convenient to be prescribed for carrying out or giving effect to the Act. The OEI Act includes specific provision for certain matters to be addressed in regulations. These include:
- in section 29 of the OEI Act, a power to prescribe a licensing scheme and that the licensing scheme may include any other provisions that may be included in the regulations, including provisions about fees and levies;
- in subsection 189(2) of the OEI Act, that the amount of the fee for an application made under the OEI Act is the amount prescribed by the regulations;
- in subsection 190(1) of the OEI Act, that an OEI levy is due and payable in accordance with the regulations, with a note that a levy is imposed by the Offshore Electricity Infrastructure (Regulatory Levies) Act 2021 (OEI Levies Act).
The types of levies, their amounts and the periods for which they must be paid are prescribed in the Offshore Electricity Infrastructure (Regulatory Levies) Regulations 2022 (OEI Regulatory Levies Regulations). The OEI Levies Act provides that these regulations may:
- prescribe different kinds of levies (section 8);
- prescribe levies in the amount set out in the regulations (section 9);
- prescribe matters required or permitted by the Act to be prescribed by the regulations, or necessary or convenient to be prescribed for carrying out or giving effect to the Act (section 10).
The purpose of the OEI scheme is to regulate, and assist in the establishment of, an OEI industry in Commonwealth waters. This forms part of Australia’s efforts to decarbonise. OEI can include electricity-generating infrastructure, such as offshore wind farms, as well as infrastructure to transmit electricity. Fees and levies are charged under the OEI scheme in line with the Australian Government’s charging and cost recovery policies. A Cost Recovery Implementation Statement is periodically prepared, and reviewed, to ensure that levies charged reflect the cost of service provision.
Financial security is required to be held by the Commonwealth, under section 117 of the OEI Act, at all times when activities are being undertaken under a management plan approved for an OEI licence. The purpose of financial security is to ensure that the Commonwealth is not liable to pay costs or expenses associated with decommissioning infrastructure, removal of equipment, or remediation of licence areas where a licence holder is not able to do so.
Subsection 117(3) of the OEI Act provides that regulations may require for financial security to be provided in a form acceptable to the Minister, to be required at different times or to cease.
Subsection 117(4) of the OEI Act provides that the regulations may prescribe arrangements that may or may not be treated as financial security and methods for working out the amount of financial security. Subsection 117(4)(d) of the OEI Act provides that regulations may prescribe ‘circumstances in which the Minister may accept a reduced amount of financial security’.
Purpose
The Offshore Electricity Infrastructure Amendment (Reduction of Fees and Levies and Other Measures) Regulations 2026 (Amendment Regulations) reduce certain fees and levies charged under the OEI scheme, making it less costly in the future for licence holders to participate effectively in the OEI industry, which is still in its establishment phase.
The Amendment Regulations make changes to the administrative processes relating to financial security. In particular, they:
- remove an unnecessary step in the process that allows financial security to be returned to licence holders when it is no longer required;
- remove a prohibition on related corporate entities providing a guarantee as a form of financial security;
- modify a discretion available to the Minister, to allow the Minister to decide to accept a reduced amount of financial security under a licence where the entity that holds the licence is wholly or partly Commonwealth-owned.
Background
OEI Regulatory Framework
The OEI Act establishes the OEI regulatory framework for identifying and declaring areas as potentially suitable for offshore renewable projects, together with a licensing scheme for regulating the construction and operation of OEI projects and activities in Commonwealth waters.
Section 15 of the OEI Act prohibits the construction, installation, commissioning, maintaining and decommissioning of offshore infrastructure activities in the Commonwealth offshore areas without a licence or other authorisation.
The licensing scheme covers the whole lifecycle of offshore electricity projects and activities. The OEI Act provides for 4 types of licences: feasibility licences, commercial licences, research and demonstration licences and transmission and infrastructure licences.
Cost recovery charging arrangements
The OEI regulatory framework operates on a full cost recovery basis by charging fees and levies to regulated entities such as project developers. The framework is not designed to generate revenue above costs incurred by the Commonwealth, but to ensure that agencies involved (the Department of Climate Change, Energy, the Environment and Water (the Department), the Offshore Infrastructure Registrar (Registrar), and the Offshore Infrastructure Regulator (the Regulator)) are appropriately resourced to effectively and efficiently regulate the offshore industry and administer the OEI framework consistent with the Australian Government’s Charging Framework and Cost Recovery Policy.
Both the Charging Framework and the Cost Recovery Policy require entities to document cost recovered activities in a CRIS before charging begins, and for agencies to regularly review and update their CRIS to ensure transparency, accountability, and alignment between costs and revenue.
A CRIS was originally developed and approved by the Minister for Climate Change and Energy on 16 September 2022 (2022 CRIS). The fees and levies prescribed in the current OEI Regulations and the OEI Regulatory Levies Regulations reflect the rates set out in the 2022 CRIS.
The Department and the Registrar have each separately developed revisions to the 2022 CRIS capturing 2025-26 to 2028-29 financial years. Amendments are now required to the OEI Regulations and to the OEI Regulatory Levies Regulations to align the fee and levy amounts in both instruments with the rates provided for in the recently updated CRIS.
OEI Regulatory framework - Financial security
Section 117 of the OEI Act imposes an obligation on licence holders with a management plan to, at all times while the licence is in force, provide the Commonwealth with financial security sufficient to pay any costs, expenses and liabilities that may arise in connection with, or as a result of:
- the decommissioning of licence infrastructure; and
- the removal of equipment and other property from the licence area or a vacated area; and
- the remediation of the licence area and vacated areas, and any other area affected by activities carried out under the licence.
Section 119 of the OEI Act provides the Commonwealth, or the Regulator, the ability to recover costs, expenses and liabilities from the financial security provided by the licence holder. The financial security regime was designed in accordance with the “polluter pays” principle and is in place to protect the Australian Government should the licence holder be unable or unwilling to decommission and remediate a licence area or areas affected by activities carried out under a licence.
Impact and Effect
The Department obtained advice from the Office of Impact Analysis on 1 May 2026, which provided that an Impact Analysis is not necessary for these Amendment Regulations, as the proposal does not create significant new obligations for the regulated community, and largely focuses on clarifications, streamlining administrative processes and offering additional flexibility.
Consultation
The Department and the Registrar publicly consulted on their respective draft CRISs with the Department's consultation occurring from 28 April to 25 May 2026 and the Registrar's occurring from 5 February to 20 February 2026. The Department received 4 submissions from OEI licence holders. The feedback was considered in the finalisation of the Department’s CRIS. No submissions were received on the Registrar’s CRIS. The CRISs recommended updating the fees and levies as per the Amendment Regulations.
In relation to the amendments to finanical security, as financial security primarily affects OEI licence holders and licence applicants a targeted consultation process was undertaken with current licence holders and current applicants as well as with the Registrar and the Regulator. Feedback received was positive regarding the changes in the Amendment Regulations.
Details/ Operation
Details of the Amendment Regulations are at Attachment A.
Disallowance and Sunsetting
The Instrument is subject to the disallowance process under section 42 of the Legislation Act 2003 (Legislation Act) and the sunsetting regime set out in Part 4 of Chapter 3 of the Legislation Act. However, section 48A of the Legislation Act has the effect that, because the Instrument only amends the OEI Regulations and the Levies Regulations, if it is not disallowed it will be automatically repealed at the end of the disallowance period. Once repealed, the sunsetting regime has no practical effect on the Instrument.
Other
The Amendment Regulations are compatible with the human rights and freedoms recognised or declared under section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011. A full statement of compatibility is set out in Attachment B.
The Instrument is a legislative instrument for the purposes of the Legislation Act.
Authority: section 305 of the OEI Act and section 10 of the Levies Act.
Attachment A
Details of the Offshore Electricity Infrastructure Amendment (Reduction of Fees and Levies and Other Measures) Regulations 2026
Section 1 – Name
This section provides that the name of the instrument is the Offshore Electricity Infrastructure Amendment (Reduction of Fees and Levies and Other Measures) Regulations 2026 (Amendment Regulations).
Section 2 – Commencement
This section provides for the Amendment Regulations to commence on the day after it is registered on the Federal Register of Legislation.
Section 3 – Authority
This section provides that the Amendment Regulations is made under the Offshore Electricity Infrastructure Act 2021 and the Offshore Electricity Infrastructure (Regulatory Levies) Act 2021.
Section 4 – Schedules
This section provides that each instrument specified in a Schedule to the Amendment Regulations is amended or repealed as set out in the applicable items in the respective Schedule, and that any other item in a Schedule to the Amendment Regulations has effect according to its terms.
Schedule 1 – Amendments
Part 1 – Amendments relating to amounts of fees and levies
Amendments to the OEI Regulations
Item 1
This item omits “$300,000” at section 146, table item 3, column 2, and substitutes “$50,000”.
Amendments to the Levies Regulations
Item 2
This item omits “$513,342” at section 5, table item 3, under the column headed “Amount of levy” and substitutes “$318,920”.
Item 3
This item repeals the cell at table item 1, under the column headed “Amount of levy” in section 7 and substitutes “$50,000 plus $1,000 for each 10 km2 (or part thereof) of licence area over 50 km2”.
Item 4
This item omits “$295,186” at section 7, table item 3, under the column headed “Amount of levy” and substitutes “$13,268”.
Item 5
This item omits “$295,186” at section 8, table item 3, under the column headed “Amount of levy” and substitutes “$87,214”.
Item 6
This item adds a new Part 4, Division 1, section 12 which provides that the amendments of this instrument made by Part 1 of Schedule 1 to the Offshore Electricity Infrastructure Amendment (Reduction of Fees and Levies and Other Measures) Regulations 2026 apply in relation to a period for which a levy must be paid that begins on or after the commencement of that Part.
This item also inserts a note to the new section 12 which clarifies that a period for which a levy must be paid is each period of 12 months for which a licence is held. A period begins on the day the licence is granted or on an anniversary of that day.
Part 2 – Financial security arrangements
Amendments to the OEI Regulations
Item 7
This item repeals subsection 104(2) and substitutes a new subsection 104(2) of the OEI Regulations to remove the requirement that the Minister seek advice from the Regulator before considering whether to determine that a specified amount of financial security is no longer required under a licence. The requirement at existing subsection 104(2)(a) for the Minister to formally request advice from the Regulator adds an additional administrative step that is time consuming and unnecessary. The process of seeking advice from the Regulator could be managed administratively between agencies.
This item maintains the critical requirement for the Minister to consider advice from the Regulator before making any determination to return financial security. To inform its advice, the Regulator may undertake an inspection to confirm that relevant structures, equipment and property have been removed, the area remediated, and no further costs are likely to arise as the licence holder has complied with their obligations under the OEI Act.
Item 8
This item repeals and substitutes section 105 of the OEI Regulations to prescribe a circumstance in which the Minister may accept a reduced amount of financial security. The prescribed circumstance would be where a licence holder is wholly or partially owned or controlled by the Commonwealth. Subsection 117(4)(d) of the OEI Act provides authority for the regulations to prescribe circumstances in which the Minister may accept a reduced amount of financial security than would otherwise be required under subsection 117(1).
Subsection 105(3) is made in reliance on the necessary and convenient power in paragraph 305(b) of the OEI Act.
Section 105 of the OEI Regulations currently sets out that the Minister may determine, in writing, that the amount of financial security provided by a licence holder may be reduced by a particular amount, if the Minister is satisfied that the reduction would not result in the total amount of financial security provided by the licence holder in relation to the licence being insufficient to pay the costs, expenses and liabilities mentioned in subsection 117(1) of the OEI Act.
However, the current drafting of section 105, when read with subsection 117(1) of the OEI Act, effectively prevents the Minister from giving effect to the discretion. Specifically, section 105 requires that any reduced amount must still satisfy subsection 117(1), thereby limiting the Minister’s ability to approve a lower amount in circumstances contemplated by subsection 117(4)(d).
It is intended that one circumstance in which this discretion may be exercised is where a licence holder is wholly or partially owned or controlled by the Commonwealth. In such cases, the Commonwealth is likely to have ultimate responsibility to undertake and fund decommissioning, the removal of equipment or property or the remediation of the licence area. Requiring the Commonwealth to provide financial security in these cases may be unnecessary and inconsistent with the purpose of providing financial security, which is to protect the Commonwealth from the costs expenses and liabilities mentioned in subsection 117(1) of the Act.
Subsection 105(2) of the Amendment Regulations provides that the Minister must have regard to the extent of the Commonwealth’s ownership or control of the licence holder when considering a reduction in financial security. While this requires the Minister to consider the Commonwealth’s ownership or controlling stake in the licence holder, the reduction does not need to follow the same proportion of the ownership or control. It is intended that the Minister would be able to consider a broad range of relevant information in deciding whether to accept a reduced amount of financial security.
If the Minister decides to accept a reduce amount of financial security, subsections 105(3)(a) and (b) require the Minister to provide a copy of the written determination to the licence holder within 14 days and specify the amount of the reduction.
A note at the end of the section 105 references subsection 33(3) of the Acts Interpretation Act 1901. which enables the Minister to vary or revoke a determination where circumstances have changed. This power may be exercised where there is a change in the Commonwealth’s ownership or control of the licence holder. Following any variation or revocation, the licence holder will be notified of its revised financial security obligations, including the amount that must be provided and the timeframe for compliance.
Item 9
This item removes the requirement at subsections 107(3) and 107(4) of the OEI Regulations for a licence holder to apply directly to the Minister for a return of financial security following the transfer of a licence, and the requirement for the Minister to approve the manner and form of the application for the return of financial security. By removing these requirements, the administrative process to return financial security following the transfer of a licence can be streamlined.
Section 107 of the OEI Regulations sets out financial security arrangements for a licence that is being, or has been, transferred. Specifically, after receiving an application from the transferor (former licence holder) made in accordance with sections 107(3) and 107(4), the Minister may make a determination that the transferor of the licence may cease their financial security obligations under subsection 107(5) and have their financial security returned.
Under section 107(5) of the OEI Regulations, the transferor’s obligations in relation to financial security under sections 117 and 118 of the OEI Act cease at the later of when the Minister makes the determination or when the transfer of the licence takes effect.
Subsection 37(3) of the OEI Regulations provides that the Minister may issue a written notice to the transferor and transferee to determine that the transferor no longer needs to comply with sections 117 and 118 of the OEI Act under subsection 37(2) of the OEI Regulations. The Minister may only do so if they are satisfied that the transferee is in compliance with sections 117 and 118 of the OEI Act in relation to the licence.
The requirement under subsection 107(3) for the transferor of the licence to make an application to the Minister requesting the return of the financial security after a licence has been transferred is an unnecessary administrative step. Removing subsection 107(3) allows the Minister to consider whether to transfer the licence under section 37 of the OEI Regulations and at the same time make a determination to return financial security to the transferor under section 107(5) of the OEI Regulations. Such a change enables efficient decision making and the timely return of financial security to the transferor.
Item 10
This item repeals paragraphs 110(1)(b) and (c) and substitutes a new paragraph 110(1)(b) of the OEI Regulations removing a guarantee provided by a related body corporate (within the meaning of the Corporations Act 2001) of the licence holder as an arrangement that is not to be treated as financial security for the purposes of section 117 of the Act.
A guarantee provided by a related body corporate of the licence holder may include a parent company guarantee. A parent company guarantee is a contractual obligation made by a guarantor, usually a parent company of a subsidiary, that promises to step in and fulfil any contractual and financial obligations of the subsidiary in the event the subsidiary fails to meet its financial and contractual obligations or becomes insolvent.
The arrangements that may be treated as financial security are set out in section 109 of the OEI Regulations. However, note 1 at section 109 clarifies that the Commonwealth may also consider other arrangements.
Providing and maintaining an amount of financial security in a form set out in section 109 prior to construction and throughout the entire operational phase of a project (between 30 to 40 years) would place a cost burden on developers which would ultimately be passed onto electricity consumers. To reduce compliance costs and better align financial security arrangements to the risk profile of projects, the amendment would allow a parent company guarantee to be considered as a financial security arrangement on a case-by-case basis.
Despite the removal of ‘a guarantee provided by a related body corporate (within the meaning of the Corporations Act 2001) of the licence holder’ as an arrangement that is not to be treated as financial security, any proposed financial security arrangement must also not be prohibited by section 110(2). Therefore, it is anticipated that a parent company guarantee would only be accepted in limited circumstances.
OEI Act licence holders will still be required to provide the Commonwealth with the full amount of financial security required by section 117(1). However, this amendment provides flexibility for licence holders to be able to use a broader range of financial arrangements that would make up a licence holders financial security portfolio while protecting the Commonwealth from any costs associated with decommissioning, removal of infrastructure and remediation.
As an additional safeguard, existing section 102 of the OEI Regulations empowers the Minister to compel a licence holder to provide financial security in a specified form. By requiring that financial security is provided in a particular form the Minister can ensure that the risk to the Commonwealth can be reduced where there is uncertainty that the Commonwealth can recover the financial security.
Item 11
This item inserts a new section 167 which provides clarity and certainty that the repeal of subsections 107(3) and (4) by Part 2 of Schedule 1 to the Offshore Electricity Infrastructure Amendment (Reduction of Fees and Levies and Other Measures) Regulations 2026 applies in relation to a decision by the Minister to transfer a licence on or after the commencement of this section 167 or a transfer of a licence that occurs on or after the commencement of this section 167.
ATTACHMENT B
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Offshore Electricity Infrastructure Amendment (Reduction of Fees and Levies and Other Measures) Regulations 2026
This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Legislative Instrument
The Offshore Electricity Infrastructure Amendment (Reduction of Fees and Levies and Other Measures) Regulations 2026 (Amendment Regulations) amends the Offshore Electricity Infrastructure Regulations 2022 (OEI Regulations) and the Offshore Electricity Infrastructure (Regulatory Levies) Regulations 2022 (OEI Regulatory Levies Regulations) to adjust certain offshore electricity infrastructure fees and levies to align with the updated Cost Recovery Implementation Statements of the Department of Climate Change, Energy, the Environment and Water and the Offshore Infrastructure Registrar. The Amendment Regulations reduce the application fee for research and demonstration (R&D) licences, as prescribed by the OEI Regulations. The Amendment Regulations also reduce the annual licence levy applied to R&D licences, and the annual Commonwealth levies for feasibility, R&D and transmission and infrastructure licences as prescribed by the OEI Regulatory Levies Regulations.
The Amendment Regulations also streamline the operation of financial security. This includes providing for improved administration of the way the Minister receives advice to consider whether financial security is no longer required and streamlining administration to ensure decisions to return financial security are prompt and completed in the most efficient way. In addition, the Amendment Regulations will also provide greater flexibility for industry by allowing the Commonwealth to consider a broader range of financial security arrangements that make up a licence holders financial security portfolio, including a guarantee from a related body corporate of a licence holder such as a parent company guarantee.
Human rights implications
This Legislative Instrument does not engage any of the applicable rights or freedoms.
Conclusion
This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.
The Hon. Josh Wilson MP
Assistant Minister for Climate Change and Energy