The AER will come under the umbrella of the ACCC but operate as a separate entity with three Commissioners, two of whom will be appointed by the States. It will commence in July 2004, and progressively take responsibility for electricity and gas wholesale, network and retail regulation.

"Instead of having to negotiate a web of regulations that differ from state to state, investors will only have to knock on one door. Furthermore, there will be one body, the Australian Energy Market Commission (AEMC), responsible for developing the market - to guarantee electricity supply," said the Minister for Industry, Tourism and Resources, Ian Macfarlane.

Additionally gas transmission is also to come under the AER in 2005, while distribution and retail responsibility will fall in line in 2006. An Annual National Transmission Statement will also be compiled to forecast possible interconnection and supply problems.

"These changes will give the market every chance of attracting the $37 billion of new investment it needs to keep the lights on in Australia. I thank my state peers for the work they've put into this vital national reform," said Macfarlane.