Q: In your ENA address, you said Australia has been handed an assignment with a distinctly Mission: Impossible quality, which is to transform our energy system while continuing to power and grow the country.
Can you expand on what you meant by that?
The challenge we face is significant. We need to connect new generation and rapidly growing demand loads, make more dynamic use of distribution networks, unlock flexible demand and consumer energy resources, and strengthen resilience, all while maintaining reliability and keeping costs as low as possible.
Success will not only depend on consumer needs, choices and resources shaping the transition, but on governments, market bodies, regulators, network businesses and service providers coordinating their decisions with consumers’ long-term interests in view.
This challenge raises important questions about the role of distribution networks, how new services should be provided, and whether the regulatory framework is equipped for a more dynamic energy system.
These are some of the issues the AER explored in its submission to the AEMC’s Electricity Network Regulation Review, and which I unpacked further in my speech.
Q: So just on the changing role of distribution networks then, what are they going to have to do to make better use of the system as a whole?
Distribution networks will need to play a more active coordination role, not only in operating their own assets, but in helping the broader system work more efficiently and more intelligently.
Networks are moving beyond simple connection decisions or static charges for network use towards active distribution system operation. They are increasingly being called upon to coordinate rooftop solar, batteries, electric vehicles, flexible industrial demand and other connected resources.
Visibility of these resources is critical to transmission planning and operation, as decisions about flexibility and constraint management at the distribution level can have consequences at the transmission interface, and vice versa. As a result, coordination between transmission and distribution systems will need to deepen.
The same coordination challenge is emerging from the demand side with large new loads, including data centres seeking connection at scale.
Responding to these issues will require clearer information, earlier coordination and regulatory arrangements that support efficient use of capacity while protecting consumers’ long-term interests. Distribution networks will play an important role in this.
Q: As new network services emerge, how do we decide whether they are best provided through a contestable market or through regulation?
The purpose of economic regulation to protect the long-term interests of consumers remains enduring, but what is changing is how regulation applies to new functions, technologies and services.
As new network services emerge, the question should not be competition versus regulation, or whether an asset is labelled as “regulated” or “contestable”. Instead, we need to examine the function being performed, the benefits it could deliver, the risks it creates, and which model is most likely to produce an efficient outcome for consumers.
In some cases, competition will deliver the best result. In others, network scale, integration or access to essential infrastructure may create efficiencies that are difficult to achieve another way. And in some cases, we don’t yet know what the right mix of approaches may be.
Where the answer is uncertain, carefully designed trials, such as those exploring network-led orchestration and coordination through our policy-led sandboxing initiative, can help build the evidence needed to make decisions in consumers’ long-term interests.
The AER recently published an information paper on the future of electricity network regulation in which we asked if the regulatory framework was still suited to the system now taking shape. I encourage people to have a read of it, as it explores how the framework may need to evolve as the energy system changes, and whether what we regulate and how we regulate still aligns with why we regulate.
Q: You talked about the importance of looking at the tools of network regulation as a system, rather than in isolation. Why is this so critical?
Currently, the AEMC is considering the future scope of regulated electricity network services and the ring-fencing framework, alongside rule-change proposals from the Department of Climate Change, Energy, the Environment and Water (DCCEEW), Energy Networks Australia and Nexa Advisory.
DCCEEW’s Consumer Energy Resources taskforce is developing the initial policy design for distribution system operation expectations, rights and obligations, while we are reviewing our Distribution Ring-fencing Guideline and Shared Asset Guideline, testing emerging models through trial waivers, and progressing the 2026 Rate of Return Instrument review.
These processes have different mandates, but they return to the same issues: efficient investment, appropriate risk allocation, fair access and the role of competition in delivering efficient outcomes for consumers. They must therefore be considered together because changes in one part of the framework can have implications elsewhere.
The AEMC’s review of electricity network regulation provides a valuable forum in which to work through these connections. We support the review and our submission does not argue for a wholesale rewrite of that framework, but for a careful assessment of whether the existing tools are still doing the job we need them to do.
Read Clare's full speech to the ENA 2026 Regulation Seminar
Read the AER's Future of network regulation information paper
Read the AER's submission to the AEMC's Electricity Network Regulation Review