• History

History

The Australian Energy Market Operator (AEMO) was established to manage the NEM and gas markets from 1 July 2009.

AEMO’s core functions can be grouped into the following areas:

  • Electricity Market - Power System and Market Operator
  • Gas Markets Operator
  • National Transmission Planner
  • Transmission Services
  • Energy Market Development

Created by the Council of Australian Governments (COAG) and developed under the guidance of the Ministerial Council on Energy (MCE), AEMO strengthens the national character of energy market governance by drawing together under the one operational framework responsibility for electricity and gas market functions, NEM system operations, management of Victoria’s gas transmission network and national transmission planning.

AEMO carries out the electricity functions previously undertaken by the National Electricity Market Management Company (NEMMCO) with respect to the NEM and the planning responsibilities of the Electricity Supply Industry Planning Council (ESIPC, South Australia). Additionally, AEMO assumed the retail and wholesale gas market responsibilities of the Victorian Energy Networks Corporation (VENCorp), Retail Energy Market Company (REMCO), Gas Market Company (GMC) and Gas Retail Market Operator (GRMO).

As part of its gas market functions, AEMO is responsible for the establishment of a Short Term Trading Market, due to commence in 2010 (initially in the New South Wales and South Australia hubs), which sets a daily wholesale price for natural gas.

AEMO operates on a cost recovery basis as a corporate entity limited by guarantee under the Corporations Law. Its membership structure is split between government and industry, respectively 60 and 40 percent, with this arrangement to be reviewed after three years of operation. Government members of AEMO include the Queensland, New South Wales, Victorian, South Australian and Tasmanian state governments, the Commonwealth and the Australian Capital Territory.

AEMO and the NEM

The National Electricity Law and the Rules were amended to replace NEMMCO with AEMO as the national electricity market and system operator.

AEMO’s functions are prescribed in the National Electricity Law while procedures and processes for market operations, power system security, network connection and access, pricing for network services in the NEM and national transmission planning are all prescribed in the Rules.

National Electricity Law and Rules

When the NEM commenced, a National Electricity Code provided guidelines for how the market was to operate. These guidelines were developed following comprehensive consultation and extensive trials conducted between governments, the electricity supply industry and electricity users as part of a government-driven deregulation and reform agenda.

In June 2005, the National Electricity Code was replaced by the National Electricity Law and Rules. The Law and Rules were recently amended to replace NEMMCO with AEMO as the national electricity market and system operator.

AEMO’s functions are prescribed in the National Electricity Law while procedures and processes for market operations, power system security, network connection and access, pricing for network services in the NEM and national transmission planning are all prescribed in the Rules.