The new industry funded Australian Energy Market Operator
(AEMO) was established on 1 July 2009. AEMO is responsible for the operation of electricity and gas markets throughout much of Australia and is the culmination of major energy market reforms proposed by the Council of Australian Government’s (COAG) Energy Reform Implementation Group (ERIG). ERIG’s recommendations were agreed to by COAG in April 2007.
These reforms are world-leading, combining both electricity and gas market operators under a single skills-based board. The fundamental role industry plays in the energy market has been recognised by providing industry with a 40 per cent share of the membership of AEMO. This arrangement helps to ensure AEMO’s relevance in the energy sector and enable closer collaboration with Australia’s energy market participants.
The creation of AEMO further improves the governance arrangements in the National Energy Market by enhancing the roles of the three market bodies - the market operator (AEMO), the market development and rule making body (the Australian Energy Market Commission) and the regulator (the Australian Energy Regulator).
The Ministerial Council on Energy (MCE), which was tasked by COAG with AEMO’s establishment, achieved this important institutional reform in just over three years, without disruption to energy markets. AEMO now has over 300 employees and assumes the functions of five existing market operators including; the National Electricity Market Management Company (NEMMCO), the Victorian Energy Networks Corporation (VENCorp), the Gas Market Company in NSW and the ACT, the Retail Energy Market Company (REMCo) in South Australia, and the Queensland Gas Retail Market Operator (GRMO), plus the Electricity Supply Industry Planning Council in South Australia.
AEMO is also responsible for new functions to improve the operation of energy markets. AEMO has adopted the new National Transmission Planner, which is responsible for a 20 year National Transmission Network Development Plan to provide greater information to market participants and potential investors in the energy sector. AEMO has also assumed responsibility for the gas market Bulletin Board, the new Gas Market Statement of Opportunities (forecasting long term supply and demand in the gas industry) and the gas Short Term Trading Market (from June 2010). These are substantial reforms to improve the transparency and operation of the gas market.