AEMC – our role in the transition of energy markets

Australia’s energy markets need appropriate policy and regulatory arrangements to provide consumers with reliable supplies of electricity and gas at the best price

Energy markets also need to be adaptable to changing circumstances, such as the transformation of the natural gas sector, new technologies and growth in renewable and distributed generation.

They must be responsive to customers who want information and access to new services so they can decide what deals suit them the best, and get more control over their energy spending.

Electricity and gas market governance in Australia

  • Governments, through the COAG Energy Council, set the policy objectives and desired outcomes in line with energy laws – the national electricity law, the national gas law and the national energy retail law
  • the AEMC makes and changes the rules so they continually evolve as the market transforms – enabling new technologies and business models - while still complying with the energy laws

COAG Energy Council

For almost 20 years, the Council of Australian Governments (COAG) has supervised the nation’s energy markets, ensuring they adapt to the evolving needs of consumers.

COAG is the peak intergovernmental forum in Australia. It initiates, develops and monitors the implementation of policies which are nationally significant and which require cooperative action by federal state and territory governments. It was established in 1992.

COAG has appointed a series of ministerial councils to guide energy market development. Today this task is the responsibility of the COAG Energy Council.

  • The COAG Energy Council includes all state, territory and Commonwealth Ministers responsible for energy and resources.  It reports to the ‘first ministers’ of COAG – State Premiers and the Prime Minister.
  • Like all COAG Councils, the Energy Council addresses issues of national significance. The Council directs the AMEC and other national bodies to develop markets so energy is supplied to consumers in the best ways to improve the lives of all Australians.
  • The Council is chaired by the Commonwealth Minister for the Environment and Energy. It includes energy and resources ministers from every state and territory.
  • Over the past decade, the COAG Energy Council (and its predecessors) have created three agencies (AEMC, AER and AEMO) to separate the three major functions of policy, rules and regulation, and compliance and market operations. These independent decision-makers have clear accountabilities and objectives.
  • They are all guided by the overarching legal requirement to operate in the long-term interests of consumers.

Australian Energy Market Commission (AEMC)

The AEMC is a national body responsible to the COAG Energy Council. The AEMC has two main roles:

  • We provide advice to the COAG Energy Council on developing energy markets in ways that will benefit energy consumers.
  • We also have a statutory role: we make the National Electricity Rules, the National Gas Rules and the National Energy Retail Rules that govern how energy markets operate.

Our work must have regard to the National Electricity Objective, the National Gas Objective, and the National Energy Retail Objective – the “energy objectives”.

Each of these requires an explicit focus on the long-term interests of energy consumers with respect to price, quality, safety, reliability, and security of supply of electricity; and the reliability, safety and security of the national electricity system.

Australian Energy Regulator (AER)

The AER is the national energy market regulator. Among other things it:

  • sets the revenues that regulated network businesses can recover as well as the maximum prices they can charge.
  • publishes reports on network business performance in providing energy services to Australians
  • monitors markets and enforces compliance with rules and legislation.

The AER also regulates energy retail markets in some jurisdictions, where it can:

  • authorise retailers to sell energy
  • approve retailers’ policies for dealing with customers in hardship
  • administer a national retailer of last resort scheme

Australian Energy Market Operator (AEMO)

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

  • the National Electricity Market
  • the Victorian Declared Wholesale Gas Market
  • the Short Term Trading Market
  • retail markets that facilitate retail competition, allowing customers to purchase energy from a supplier of their choice

AEMO also 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.

State-based regulators

Depending on their legislation and energy market arrangements, states and territories have their own regulators to deal with matters specific to their communities.

The following authorities have a regulatory role in their state or territory. 

In addition, State and Territory Ombudsmen and Administrative Decisions Tribunals may take a role in resolving disputes at a local level. The Australian Energy Regulator has a fact sheet about dispute resolution on its website.