Chapter 1Introduction
Referral of the inquiry
1.1On 24 July 2025, the Senate referred the provisions of the Competition and Consumer Amendment (Australian Energy Regulator Separation) Bill 2025 (the bill) to the Senate Economics Legislation Committee (the committee) for inquiry and report by 21 August 2025.
1.2The first chapter of this report outlines the purpose and provisions of the bill. Chapter two of the report outlines views on the bill, as well asproviding the committee view and recommendation.
Purpose of the bill
1.3The bill will amend the Competition and Consumer Act 2010 (the CC Act) to separate the Australian Energy Regulator (the AER) from the Australian Competition and Consumer Commission (the ACCC). This will have the effect of establishing the AER as a non-corporate Commonwealth entity, with operational control over its own resources, staff and governance arrangements. It will also have the effect of the AER Board being its own accountable authority under the Public Governance, Performance and Accountability Act 2013 (PGPA Act).
Background
The AER
1.4The AER is one of the three market bodies which oversee the national electricity and gas markets in Australia, the other two being the Australian Energy Market Commission (AEMC) and the Australian Energy Market Operator (AEMO). The roles of these three bodies are as follows:
the AEMC develops rules by which the energy market must operate;
the AEMO manages day-to-day operations of the markets; and
the AER monitors compliance with the rules and market performance.
1.5The AER monitors the electricity and gas networks by setting the maximum amount of revenue they can earn from consumers. It also regulates the wholesale and retail energy markets.
1.6Under current arrangements, the AER is constituted as a body corporate made up of five members under the CC Act. However, sections of the CC Act also ensure that the AER and the ACCC are listed as a single entity for the purposes of finance law, with the Chairperson of the ACCC as the accountable authority and the head of agency for the AER.
1.7In effect, the AER is currently a constituent part of the ACCC, with both organisations sharing staff, facilities and other resources. Currently, the staff of the AER are employed by the ACCC and made available to the AER to assist it to perform its functions. The AER does not share any regulatory functions with the ACCC.
1.8According to the EM, these statutory arrangements were appropriate when the AER was established in 2005; however, as the AER’s functions have grown and changed over time, they are now no longer appropriate. As noted in a 2017 review of the Australian Energy Market:
Compared to 2005, the AER now enforces more than three times as many laws and rules, monitors more than four times as many market participants, regulates more than four times as many networks, and is responsible for monitoring 58 retailers.
Previous reviews
1.9The changes to be implemented by the bill give effect to recommendations of several independent reviews.
1.10In 2015, the Review of Governance Arrangements for Australian Energy Markets (the Vertigan Review) recommended that the AER ‘should have full management and financial autonomy, which would be most effectively achieved by re-establishing it as a stand-alone regulatory body’.
1.11This recommendation, and that it had not yet been implemented, was noted in Blueprint for the Future: Independent Review into the Future Security of the National Electricity Market (the Finkel Review). The Finkel Review was completed in June 2017, and although it did not make a recommendation in relation to splitting the ACCC and the AER, it stated that implementing this, and other outstanding recommendations from the Vertigan Review, would strengthen National Energy Market governance.
1.12The 2020 Review of the Energy Security Board also had many participants noting the need for a structural separation of the AER and the ACCC, as well as raising broader concerns about governance of the energy market.
Provisions of the bill
1.13The bill contains two schedules.
Schedule 1
1.14Schedule 1 contains the main amendments to the CC Act, giving effect to the separation of the AER from the ACCC.
1.15Many of the clauses in schedule 1 relate to the changes made to the AER’s governance and changes made for the purposes of finance law (as defined in the PGPA Act). This includes clause 5, which creates the AER as a listed entity for the purposes of the PGPA Act and makes the members of the AER an accountable authority. Clause 6 creates the AER as a non-corporate Commonwealth entity for the purposes of finance law.
1.16Similarly, other clauses of the bill would repeal sections of the CC Act so that members of the AER are no longer taken to be associate members of the ACCC.
1.17Further, clause 14 amends the CC Act to establish the AER Chair and employees as a Statutory Agency under the Public Service Act 1999, with the Chair as the head of the Agency. This clause also allows the AER to engage its own staff, facilitates the transfer of staff from the ACCC to the AER, and allows the AER to engage consultants and other Commonwealth and State and Territory government employees to assist with its work.
1.18The bill also defines an ‘AER State/Territory energy law’ in clause 4 to ensure there is a clear distinction between State and Territory energy laws that are relevant to the AER’s functions and those that are relevant to the ACCC’s functions. Consequently, various clauses in schedule 1 change references from the generic ‘State/Territory energy law’ to the more specific ‘AER State/Territory energy law’.
1.19Additionally, clause 3 would allow the ACCC to assist in the administration of the AER by providing it with supports and resources, including corporate and information technology services.
Schedule 2
1.20Schedule 2 of the bill includes the application, saving and transitional provisions necessary for the AER to be separated from the ACCC. These provisions include:
ensuring that delegations made under the CC Act prior to the commencement of the bill continue to be in force as if they were made under the amended bill;
allowing for the transfer of relevant documents from the ACCC to the AER;
allowing for the continued application of the ACCC’s current enterprise agreement for staff transferring from the ACCC to the AER;
allowing the Minister to create rules by way of legislative instrument that are necessary or convenient to be prescribed in order to give effect to this schedule of the bill; and
items which allow that regulations prescribing ‘State/Territory energy laws’ have the same effect as if they were made as ‘AER State/Territory energy laws’ made under the relevant sections of the CC Act. These items are required so that the AER can continue to perform its functions during the transitional period, until the relevant regulations are amended to reflect the passed bill.
Consultation
1.21The Australian Energy Market Agreement requires that Australian Energy Market Legislation (Part IIIAA of the CC Act, which establishes the AER, is deemed to be such legislation) can only be amended with the agreement of the Energy and Climate Change Ministerial Council (the Energy Ministers).
1.22The EM confirms that the bill was developed in consultation with the Energy Ministers. Consultation was initially undertaken on 19 May 2023, when the Energy Ministers agreed that the AER should be separated from the ACCC. The Energy Ministers also noted the intention of the Commonwealth Government to introduce legislation into the Parliament to effect this separation.
Commencement
1.23The bill would commence on 1 July 2026.
Financial impact
1.24According to the EM, the bill will have nil financial impact on the Australian Government Budget. The ACCC and AER have ‘proposed a nil net cost to the government for the proposed separation.’
Legislative scrutiny
1.25As at the time of writing, the Senate Standing Committee for the Scrutiny of Bills has not commented on the provisions of the bill.
Human rights implications
1.26As at the time of writing the Parliamentary Joint Committee on Human Rights has not commented on the provisions of the bill.
1.27The EM includes a discussion of the human rights implications of the bill. According to the EM’s Statement of Compatibility with Human Rights, the bill engages with the right to privacy (article 17 of the International Covenant on Civil and Political Rights (ICCPR)) and the right to the enjoyment of just and favourable conditions of work (articles 6 and 7 of the International Covenant on Economic, Social and Cultural Rights (ICESCR)).
1.28According to the EM, the bill is compatible with human rights and freedoms.
Regulatory impact
1.29The EM to the bill does not include a regulatory impact statement. However, the EM states that the bill would allow for relevant AER State and Territory energy laws to be prescribed in regulations. The development or amendment of any such regulations would be undertaken through consultation, and the usual disallowance provisions would apply.
Conduct of the inquiry
1.30The committee advertised the inquiry on its website and wrote to relevant stakeholders and interested parties inviting written submissions by 7 August 2025.
1.31The committee received four submissions as well as answers to questions on notice, which are listed at Appendix 1.
1.32The committee held one public hearing for the inquiry in Melbourne on 12 August 2025. The names of witnesses who appeared at the hearing can be found at Appendix 2.
Acknowledgments
1.33The committee thanks all individuals and organisations who assisted with the inquiry, especially those who made written submissions and participated in the public hearing.