The Electricity Supply Industry Act 1995 (ESI Act) provides that a person must not carry on generation, transmission, distribution or retailing operations in the electricity supply industry unless that person is the holder of a licence. Those operations for which a licence is not required are contained in the Electricity Supply Industry Regulations 1996.

Pursuant to the ESI Act, the Regulator is responsible for administering the licensing system for electricity entities. The Regulator has the authority to consider and determine licence applications, and can refuse or issue licences for the generation, transmission, distribution and retailing of electricity.

The ESI Act outlines the matters that the Regulator may consider in deciding whether to grant a licence. The Regulator’s jurisdiction does not include local government, planning or environmental issues.

Those entities holding an electricity licence and a copy of the licence itself are contained in the Electricity Licence Register.

Aurora Energy is the only electricity entity in Tasmania to hold both a distribution licence and a retail licence. Under the terms and conditions of its retail licence, Aurora Energy has been granted an exclusive retail franchise for all non-contestable customers on mainland Tasmania and Bruny Island. A retail franchise is an interim measure which may be phased out subject to a contestability timetable. Information regarding the timetable for the rollout of contestability in Tasmania can be found on the notification of contestability status webpage. For further information regarding retail contestability please refer to the Regulator's power to choose website www.power.tas.gov.au.

The general approach adopted in the licences is to establish a framework to be supplemented by various management plans. These plans are developed by the relevant entities. This ensures that the Regulator does not intrude on the management of the businesses. At the same time, the licences provide a reporting framework allowing the Regulator to monitor performance of the businesses.

The terms and conditions of the licences have been developed through a process of consultation with licensees and interested parties.

The Regulator undertook a review of electricity licences in 2004.