Operating an electricity network is a monopoly business. As such, the rules of operation are closely regulated by the Australian Energy Regulator (AER).

Every five years each Distribution Network System Operator (DNSP) agrees the investments that are necessary, the costs of running the business and the allowable profits. The DNSPs must seek endorsement from customers of their proposals. The regulator has the final say over issues such as:

• Total revenue over the period
• Tariff structures
• Network performance and reliability
• Consumer protections and engagement

The main impact of network regulation is that the network costs and operation are heavily regulated. This can mean that investment is poorly targeted at the transformation that is taking place.