Recovering costs for regulating the gas industry

The EPA will move to cost recovery for regulation of the gas industry, completing the NSW Government's commitments to the Chief Scientist’s and Engineer’s recommendations in the Final Report of the Independent Review of Coal Seam Gas Activities in NSW.

Recommendation 4 included that the full cost to Government of the regulation and support of the gas industry be covered by the fees, levies, royalties and taxes paid by industry and this was supported by the NSW Government with a phase-in over time.

Commencing in 2022, the EPA will change the annual fees paid by petroleum environment protection licence holders. These are currently based on production volumes. The new fees will consist of an annual base charge, with an additional charge linked to the number of wells in the licensed area.

The new cost recovery arrangements will be phased-in over a three-year period, leading to full cost recovery from 2025-26 onwards.

EPA Executive Director of Regulatory Policy, Initiatives and Advice Nancy Chang said the model was consistent with the user-pays principle.

“This approach will provide certainty about costs to licensees and allow the EPA to maintain its strong regulatory approach while minimising impacts on project development,” Ms Chang said.

“It follows consultation by the EPA earlier this year with licence holders and NSW government agencies involved in managing the industry. It is also based on an independently verified analysis of the minimum costs necessary for the EPA to deliver gas regulatory activities.”

The appropriate level of fees needed to recover the costs of the EPA’s efficient risk-based regulation for the industry will be reviewed every four years, starting in 2024.