A structural separation of the AER and ACCC: refitting energy regulation

On 1 July 2026, the Australian Energy Regulator (AER), the independent statutory authority of the Commonwealth responsible for regulating wholesale energy markets, retail energy markets, and energy networks in accordance with national energy laws and regulations, will formally sever its long-standing administrative ties with the Australian Competition and Consumer Commission (ACCC).

The AER currently operates as a combined entity with the ACCC under the Public Governance, Performance and Accountability Act 2013, with the ACCC Chair serving as its accountable authority. However, the Competition and Consumer Amendment (Australian Energy Regulator Separation) Act 2025 has now been passed. When it comes into effect, the AER will become a standalone non-corporate Commonwealth entity with its own accountable authority, staffing, and budgetary autonomy.

Why the split between the AER and ACCC was needed

The impending changes to legally separate the AER from the ACCC are seen as necessary to improve regulatory outcomes in the energy sector by establishing dedicated governance and accountability structures tailored specifically to energy market regulation. Currently, the AER operates as part of the ACCC, sharing staff, resources, and facilities, which limits its ability to independently manage its growing regulatory responsibilities.

The genesis of this reform can be traced to a trio of governance reviews: the Vertigan Review (2015), Finkel Review (2017), and Edwards Review (2020), each of which made recommendations regarding the separation of the AER from the ACCC. For example, the Vertigan Review commented that "The independence of the regulator, in perception as well as in fact, is a primary theme of international studies on good regulatory governance because reputation and credibility are critically important factors for effective regulation."

As the energy market becomes increasingly complex and the AER’s functions expand, the need for financial and operational autonomy is seen as critical. The separation will allow the AER to directly control its resources, set its strategic direction, and better manage its budget, human resources, and risk oversight. This autonomy is important for the AER to effectively oversee wholesale and retail energy markets, regulate networks, and address challenges such as energy affordability and the transition to net zero emissions. A standalone AER is seen as likely to better facilitate the effective management of access and pricing regulation in the face of the challenges that lie ahead.

The reform aligns with the Government’s broader energy policy under the National Energy Transformation Partnership, which sets a framework for Commonwealth, State, and Territory Governments to work together on reforms to help transform Australia's energy system to achieve net zero greenhouse gas emissions by 2050. By creating a standalone AER, the changes are intended to ensure the regulator is better equipped to meet the demands of the evolving energy landscape and serve the best interests of the Australian community.

What the relationship between the AER and ACCC will look like post-split

The Act ensures that ongoing cooperation between the two entities is facilitated, empowering the ACCC to continue providing support and resources to the AER, including corporate services, information technology, and the sharing of premises.

There are also amendments necessary to retain information-sharing channels between the AER and the ACCC. For example, there is provision for the disclosure of protected information by an authorised official from the ACCC to the AER, on the condition that the ACCC Chairperson is satisfied that the information is necessary for the AER to perform or exercise its functions or powers. Similarly, there is provision for the disclosure of energy-related information by the ACCC to a member of the AER. These powers are important for the seamless enforcement of competition and energy laws.

The legislation is set to commence on 1 July 2026, with transitional schedules to preserve existing delegations, maintain continuity of State and Territory energy-law coverage, and permit document transfers from the ACCC to the AER.