Federal Labor has launched a major review of the “governance arrangements” of the Australian Energy Market Operator, nearly 17 years after the independent body was first established to manage the nation’s rapidly evolving electricity and gas markets.
Federal energy minister Chris Bowen announced the review of AEMO on Friday, after it was agreed to at the latest Energy and Climate Change Ministerial Council (ECMC) meeting in December.
Bowen says the review, to be led by senior governance expert Nigel Ray, aims to ensure that AEMO remains “fit for purpose” as Australia’s national electricity grid transitions to 82 per cent renewables by 2030 and net zero by 2050.
AEMO was originally established in 2009 to manage the day-today operation and administration of both the power system and electricity wholesale spot market in the NEM, the retail electricity markets, the retail and wholesale gas markets and planning and development of transmission.
Since 2018, AEMO also has been charged with publishing a regularly updated Integrated System Plan (ISP) – an “actionable” 20-year roadmap for the National Electricity Market to supply affordable and reliable electricity while transitioning to net zero. The ISP was itself the subject of a review launched in 2024.
Further, the market operator’s responsibilities have bloated out to include governing grid system strength, reliability and reserve trading; gas market reliability and security; market and system advisory and analysis services, and; services to jurisdictional energy investment schemes.
As Renew Economy has reported, AEMO has argued since the release of the very first editions of the ISP – under the then Coalition government – that renewables and storage offer the lowest cost and most reliable replacement for the country’s ageing coal fired power stations.
Its modelling and planning blueprint were largely ignored by the Coalition government which, since being relegated to Opposition benches, has used AEMO as something of a punching bag in its push for nuclear and baseload. But Labor has adopted the blueprint and used it as a basis for its renewable and climate targets.
In a statement on LinkedIn on Friday, the minister described AEMO as “a world class institution,” but said that now was the right time to review its governance model.
“Australia’s energy ministers have agreed to review the governance arrangements of AEMO to ensure they remain fit-for-purpose now and into the future, particularly in the context of other bodies of work the NEM Review, the Gas Market Review and proposed expansion of gas powers,” Bowen said.
AEMO said on Friday that its role continues to evolve to support the energy transition in the interest of energy consumers.
“We welcome the opportunity to consider if AEMO’s governance arrangements are fit for purpose through this next phase of the energy transition,” a spokesperson said.
According to the Terms of Reference for the review, transparency and accountability at AEMO will come under scrutiny, and questions asked about whether the body needs to streamline its processes.
The review will also evaluate and make recommendations to Energy Ministers on whether changes should be made to the formal corporate legal structure of AEMO, including its associated entities, “and if so, the options compared to status quo, acknowledging AEMO’s evolving role and increasing influence as system planner, market operator and policy delivery body.”
The review will also rake over AEMO’s membership and corporate structure and consider whether a new statutory establishment under the South Australian Parliament should provide the governing legislative framework for AEMO and its board.
Currently, membership of AEMO is split between government (60%) and industry (40%). According to its 2025 annual report, around 1,800 people work for AEMO across Australia, including engineers, scientists, economists, digital specialists and corporate support.
Also under review will be AEMO’s budget, any “perceived conflicts of interests” within the organisation, possible measures to enhance transparency, board appointment processes, and how AEMO receives and responds to instructions/directions from energy ministers.
“Mr Ray will report back to Energy Ministers with governance options at their first meeting in 2026,” Bowen said on Friday.
“The review secretariat will undertake consultation with key stakeholder groups, including the Commonwealth, state and territory governments, the Australian Energy Market Commission, the Australian Energy Regulator, industry participants, unions and consumer representatives on relevant matters.”
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