Market governance

The Council of Australian Governments (COAG) created a new governance structure to oversee the nation’s energy markets more than ten years ago. The AEMC and the Australian Energy Regulator (AER) were created in 2005 and the Australian Energy Market Operator (AEMO) in 2009. Separating the functions of broad policy direction, rule making and market development, economic regulation and compliance and market operations has resulted in independent decision-makers with clear accountabilities and objectives.

See an overview of how the energy markets are governed.

COAG Energy Council

The AEMC is accountable to the COAG Energy Council which reports to COAG.

The Energy Council is chaired by the Commonwealth Minister for Industry and includes energy and resources ministers from every state and territory.

The Energy Council seeks to ensure the safe, prudent and competitive development of the nation's mineral and energy resources and markets to optimise long-term economic, social and environmental benefits to the community.

It does this by:

Energy Security Board

The Energy Security Board is comprised of an Independent Chair, Independent Deputy Chair and the most senior leaders of the AEMC, AER and AEMO.

It's responsible for the implementation of recommendations from the Independent Review into the Future Security of the National Electricity Market (Finkel Review).

Australian Energy Market Commission

The Australian Energy Market Commission was established in 2005 as part of new governance arrangements to oversee the nation’s main energy markets.

We make and amend the National Electricity Rules, the National Gas Rules and the National Energy Retail Rules which govern the National Electricity Market, elements of natural gas markets and energy retail markets. We also support the development of these markets by conducting independent reviews and providing advice to the Standing Council on Energy and Resources.

Our objective is to promote efficient investment, use and operation of electricity and gas services in the long term interests of consumers. This helps consumers to have access to affordable, reliable, safe and secure energy services.

Our strategic priorities guide our market development work and inform the advice we provide to governments.
The AEMC is a member of the International Confederation of Energy Regulators, which provides a framework for cooperation between energy regulators around the world on global issues affecting energy markets.

Rule making

The AEMC makes rules under the National Electricity Law, the National Gas Law and the National Energy Retail Law. These rules cover areas such as participation in the wholesale spot market for electricity and similar markets for gas, economic regulation of network services and energy-specific consumer protections. Generally we make rules on the basis of rule change requests made by third parties. We do not propose rule changes ourselves, except for minor or non-material rules.

Reviews and advice

Australia’s energy markets need appropriate policy and regulatory arrangements to provide consumers with reliable supplies of electricity and gas at efficient prices. Energy markets also need to be adaptable to changing circumstances, such as the transformation of the natural gas sector and growth in renewable and distributed generation. They should be responsive to customers who want new services and more information on trade-offs between service and cost.

The AEMC provides governments with advice on improvements to energy market arrangements so that consumers can benefit from efficiently operating energy markets. In our reviews we consult widely on matters relating to energy market reform. We conduct reviews in accordance with terms of reference provided by the nation’s energy ministers and we can also initiate our own formal market reviews.

Australian Energy Regulator

The AER is the national energy market regulator. Its functions include:

The AER also regulates energy retail markets in some jurisdictions, where its role includes:

For more see the AER website.

Australian Energy Market Operator

AEMO is responsible for the day-to-day management of wholesale and retail energy market operations, including:

AEMO operates the electricity power system, which is largely integrated with its role as market operator of the NEM. AEMO operates the Victorian gas Declared Transmission System.

AEMO coordinates the strategic development of the national electricity grid. In gas, it delivers strategic planning advice and forecasting to guide long-term investment and resource management.

For more see the AEMO website.