Exploring Australia’s proposed Offshore Electricity Infrastructure Amendment Regulations 2024

By Meg Lee and Sal Lennon

The Australian Government’s Department of Climate Change, Energy, the Environment and Water (the Department) released a consultation paper and exposure draft of the Offshore Electricity Infrastructure Amendment Regulations 2024 (proposed Regulations).

The Offshore Electricity Infrastructure Act 2021 (Cth) (OEI Act) established a regulatory framework for the construction, installation, operation and decommissioning of offshore electricity infrastructure (OEI).

The first set of regulations under the OEI Act, released in October 2022, included the licensing scheme, data provisions, and arrangements for pre-existing infrastructure. The proposed Regulations are the second set of regulations and will govern licence holders once they have received an OEI licence and commence the phase of feasibility, through to construction and operation.

Public consultation on the proposed Regulations is open until 12 May 2024.

Management plans

Under the OEI Act, licence holders are required to prepare a management plan for approval by the Offshore Infrastructure Regulator (the Regulator). A management plan is a legally enforceable document and must address certain matters, including:

• the OEI activities a licence holder intends to undertake for an offshore renewable energy project;
• how a licence holder intends to comply with relevant legislation; and
• how a licence holder proposes to manage work health and safety, and infrastructure integrity risks.

The proposed Regulations prescribe the remaining details around management plans.

Application processes for approval and revision of management plans are outlined in the proposed Regulations. Additionally, the proposed Regulations include consultation requirements and ongoing stakeholder engagement throughout a project’s lifecycle, as well as the provision for public release of management plan summaries.

The proposed Regulations also require licence holders to revise a management plan where:

• directed to do so by the Regulator;
• a revision would be appropriate in the circumstances (for example, licence activities significantly changing or where new risks or hazards are identified); and
• five years has passed since the management plan took effect.

The Regulator has 90 days to make a decision. During this time, it assesses compliance with specific matters and may request further information or amendments. The Regulator may refuse to approve a management plan if certain requirements aren’t met. Before refusing to approve a management plan, the Regulator must provide written notice to the licence holder of the proposed refusal, set out the reasons, and allow the licence holder to make a submission, which the Regulator must consider when reaching its final decision.

The proposed Regulations also require licence holders to prepare summaries of approved management plans, which are then published on the Regulator’s website to provide public access to information about OEI projects.

The Department is seeking feedback on:

• the appropriateness of the above revision triggers, including the five-year periodic review, and whether there are any triggers that should be added or removed; and
• whether management plan summaries are an efficient and effective way to make information available to the community.

Design notification scheme

The proposed Regulations also introduce a design notification scheme. The intention of the scheme is to allow the Regulator to provide feedback to a licence holder on certain OEI projects before the licence holder formally submits a management plan application.

The design notification scheme isn’t a regulatory decision point or approval document. Rather, it’s a process to facilitate early engagement with the Regulator on the design of an OEI project.

There are four types of licences under the OEI regime:

• feasibility licences;
• commercial licences;
• transmission and infrastructure licences; and
• research and demonstration licences.

The scheme applies exclusively to transmission and infrastructure licences, as well as commercial licences. For these licences, a design notification scheme must be submitted to the Regulator before seeking management plan approval. Upon receipt, the Regulator will review the scheme and provide feedback within 60 days. Licence holders, when compiling the subsequent management plan, must:

• set out any feedback provided by the Regulator on the design notification and describe how feedback has been addressed; and
• state whether the project is being carried out in a way that is broadly consistent with the design notification scheme. If the project is not being carried out in a way that is broadly consistent with the design notification scheme, describe how and why the project has changed.

The Department is seeking feedback on:

• whether the matters to be included in a design notification are appropriate (see subsection 93(2) of the proposed Regulations); and
• whether the design notifications scheme should be expanded to all types of licences.

Financial securities

The OEI Act requires licence holders with a management plan in place to provide financial security to the Commonwealth. The amount must be enough to cover certain costs, expenses, liabilities and debts, including those arising from decommissioning of infrastructure, removal of property and remediation of a licence area.

The operational details around financial securities are included in the proposed Regulations, including processes for:

• determining the amount of financial security required;
• determining the form in which financial security will be provided;
• determining when financial security will be provided; and
• varying the amount of financial security provided.

Under the proposed Regulations, licence holders will be required to calculate an appropriate amount of financial security. Licence holders must describe in the management plan the method used to calculate the sufficient amount. This calculation should identify and quantify certain minimum costs, expenses and liabilities. While licence holders have discretion in choosing the form of financial security, compliance with the prescribed principles within the proposed Regulations (section 102 and 103 of the proposed Regulations) is necessary. Acceptable forms may include direct amounts, third-party accounts, credit facilities, bank guarantees or insurance policies.

After licence holders decide an amount and form of financial security, and if the Regulator approves the arrangements described in the management plan, they must provide the financial security to the Commonwealth before any infrastructure is constructed or installed in the licence area. Once a financial security is in place for a licence, the Commonwealth may, in certain circumstances, draw on the security to recover debts, costs, expenses or liabilities connected with that licence. Sections 104 and 105 of the proposed Regulations govern these processes.

The Department is seeking feedback on multiple security-related issues, including acceptable forms of financial security and whether changes to a security amount ought to be handled by amending the management plan.

Safety and protection zones

Under the OEI Act, safety and protection zones can be established around OEI to ensure workers’ safety and other uses of the marine environment, and to safeguard infrastructure from potential damage. The proposed Regulations provide greater detail around the administration of these zones.

Under the OEI Act, safety zones, with a maximum radius of 500 metres around eligible infrastructure, are determined by the Regulator. A person can apply to the Regulator to request a safety zone determination, but the Regulator may also act independently to establish, modify or revoke these zones.

The proposed Regulations allow individuals to request that the Regulator make, vary or revoke a safety zone determination. The proposed Regulations require the Regulator to:

• consult with licence holders where a safety zone application is made in relation to their licence area by a third-party; and
• approve or refuse a safety zone application within 90 days. The decision period can be extended by written notice if necessary; and
• provide reasons to the applicant, if the Regulator proposes to refuse to approve a safety zone application. Following the provision of reasons, the Regulator must also allow the applicant to make a submission, which it must consider in reaching its final decision.

Protection zones are determined by the Regulator, under the OEI Act. They extend up to 1,852 metres (one nautical mile) on each side of OEI and aim to regulate activities posing a risk to infrastructure. Similar to safety zones, the proposed Regulations create a process for individuals to apply to the Regulator to request it makes, varies, or revokes a protection zone determination. Applications for protection zones follow a similar process to safety zones, including consultation with affected licensees, a 90-day decision window and the opportunity for applicants to respond to a potential refusal with submissions.

Work health and safety

The Work Health and Safety Act 2011 (Cth) (WHS Act) and Work Health and Safety Regulations 2011 (Cth) (WHS Regulations), along with modifications specified in the proposed Regulations, govern work health and safety (WHS) practices in the OEI context.

The OEI Act specifies that the WHS Act applies generally to OEI work, with some limited modifications to reflect the unique offshore environment. The WHS Regulations can apply to OEI work, but only to the extent specified in the OEI Regulations. Part 7 of the proposed Regulations sets out the application of the WHS Regulations to OEI work. The modifications include various aspects such as diving provisions, plant registration requirements, principal contractor duties, consultation with workers, incident notifications and reviewable decisions.

Record keeping and fees

To ensure compliance and facilitate regulatory oversight, licence holders must maintain comprehensive records under the proposed Regulations. The records relate to audit reports, work health and safety obligations and management plan compliance.

Records must be kept for a period of at least seven years after the record is made or modified. This obligation continues to apply to existing records even after a licence ceases. When a licence is transferred, the original holder (transferor) still has these responsibilities, but the new holder (transferee) doesn’t. The proposed Regulations introduce application fees for various processes, including initial and revised management plan approvals, safety and protection zone applications and design notifications. The Regulator will also impose assessment fees for evaluating applications or submissions. The fees cover expenses incurred during the assessment process.