Background
On 18 December 2025, the Australian Energy Market Commission (AEMC) announced it will undertake a review to examine the future of electricity network regulation in the National Electricity Market.
On 25 June 2026, the AEMC formally commenced the review into electricity network regulation under section 45 of the National Electricity Law.
Under the final terms of reference, the purpose of the review is to ensure that the economic regulatory framework governing electricity transmission and distribution network service providers is fit for purpose going forward.
Structure of the review
The review will include two packages of work:
- Package 1 will examine which services we need network service providers to provide in the future. It commenced with a consultation paper published on 25 June 2026. That consultation paper also initiated consideration of related rule change proposals from Energy Networks Australia and Nexa Advisory.
- Package 2 will examine how the regulatory framework seeks to promote consumers’ interests in the provision of regulated services by network service providers, including whether regulatory processes are efficient and support positive consumer outcomes, how the framework can best support efficient service delivery and whether it provides for appropriate risk allocation and compensation. The package 2 consultation paper was published on 13 August 2026.
We are engaging closely with the AEMC’s review and will publish all AER submissions to the review on this page.
Our submission to the Package 1 consultation paper
On 25 June 2026, the AEMC published a consultation paper for package 1 of the Electricity network regulation review. The consultation paper focused on the service classification and ring-fencing framework. It also initiated consultation on two related rule change proposals from Energy Networks Australia and Nexa Advisory.
The AER made a submission in response to the consultation paper on 23 July 2026 which supported the AEMC’s approach to the review. We suggested some reform design principles to guide the review and encouraged the AEMC to investigate areas where we have observed emerging or potential challenges to the current framework.
In particular, our submission encouraged the AEMC to consider challenges relating to third-party access to network-controlled inputs, enabling greater flexibility in service classification, and managing increasingly complex coordination and shared asset risks.
In relation to the rule change proposals, our submission emphasised that efficient outcomes (not market failure) should be the test for regulatory decisions and that the most efficient solution is context-specific. Therefore, the framework should enable flexible decision-making.
Rather than focusing narrowly on the circumstances in which regulated network businesses should or shouldn’t be able to deliver specific services, we encouraged the AEMC to consider more fundamental challenges about how to regulate services that perform coordination functions across both regulated and contestable services.
Our submission also clarified the interaction between the AEMC review and our review of the AER’s Ring-fencing guideline (electricity distribution) and Shared asset guideline (which applies to both distribution and transmission networks), which complements the AEMC review.