Energy Regulatory Authority was established according to the Energy Law adopted in 2001.

On 09 December 2011 Parliament of Mongolia approved amendments to the Energy law of Mongolia. According to the newly amended law Energy Regulatory Authority has been reorganized as an Energy Regulatory Commission.

Energy Regulatory Authority shall regulate generation, transmission, distribution, dispatching and supply of energy.

Commission’ objective is to issue the operational licenses, to review and approve the tariffs of the licensees, to protect equally the rights of the consumers and licensees as well as to create condition for fair competition among the generators and suppliers in accordance with the Law on Energy.

The Authority shall operate in conformity with the Law on Energy, other related legal acts and this rule and shall operate in conformity with the general guidelines of the socio-economic development of Mongolia, the national security, and the state policies on the natural environment and energy generation and supply.

According to Energy Law ERC shall have the following full powers:

• To set the terms and conditions to obtain a license;
• To set operational and licensing terms and requirements for licensees, to monitor compliance with these terms and requirements;
• To develop methodology for determining tariffs, to review and approve tariffs of licensees, to set selling tariffs to consumer, to implement tariff indexation;
• To establish a pricing and tariff system that enables supply of energy at the lowest possible cost and allows an adequate rate of return;
• To approve methodology for setting fuel price  used for energy generation, and review its calculation;
• To review investment plan of licensee on expanding or renew the electricity or heat transmission lines and distribution networks and to decide that investment  issue by tariff regulation;
• To approve tariff indexation procedure;
• To resolve disputes between licensees and disputes between licensees and consumers in accordance with its jurisdiction
• To submit to the Government its proposal  on subsidies for licensees related to their tariff losses  for the purpose of  relieving load  that  comes in on consumer;

According to Renewable Energy Law ERC shall have the following full powers:

• Review tariff applications of a generating licensee that uses a renewable energy power source connected to the grid in accordance with this law;
• Approve a sample agreement to be concluded by and between a transmitter and a generator that uses a renewable energy power source and monitor the contract implementation;