Nexa Advisory welcomes the opportunity to provide input to the Review of AEMO’s governance arrangements, initiated by the Energy and Climate Change Ministerial Council (ECMC). This follows Nexa’s recommendation for an independent review of market bodies, submitted to the Select Committee on Energy Planning and Regulation in Australia in late 2024.
There is a clear need to provide greater strategic leadership within the energy sector in a way that re-examines how we are managing and meeting the current objectives of the system – including the roles and objectives of market and regulatory bodies – in a way which provides transparency and accountability, and contributes to the long-term interest of consumers.
To be effective, governance must ensure that independent market bodies do not become de facto policy‑makers. Ministers must allow market bodies to independently set clear strategic priorities, and subsequently show how their work programs, major initiatives and other activities align to those priorities and deliver consumer outcomes.
Without this line of sight, market bodies can self‑initiate significant programs and reforms without a transparent case for why they are necessary, why that body is best placed to lead them, or how success will be measured. This also requires clearer role boundaries across AEMO, the AEMC and the AER – and stronger transparency in decision‑making so stakeholders can understand who is responsible for what outcomes and how decisions were reached.
For these reasons, Nexa’s submission focuses on a small set of governance reforms that lift the baseline standard of strategic alignment, transparency, engagement and accountability across market bodies, while preserving their operational independence.
Key recommendations
- Expand this review to ensure role clarity and separation across market bodies
- Reduce ambiguity and perceived conflicts by clearly delineating responsibilities and decision rights across AEMO, the AEMC and the AER, with transparent boundaries to avoid overlapping mandates.
- Separate investment scheme administration (ASL) from independent national system planning (AEMO via the ISP), with clear separation of decision rights, accountabilities and transparency obligations to protect the independence and credibility of both the ISP and investment programs such as the Capacity Investment Scheme, NSW Electricity Infrastructure Roadmap, SA Firm Energy Reliability Mechanism.
- Set refreshed Statements of Role / Expectations and performance reporting
- Refresh and operationalise Statements of Role/Expectations for AEMO, with measurable outcomes and consistent annual public reporting, program performance can be assessed against strategic priorities and consumer outcomes.
- Budget transparency and independent scrutiny
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- Lift budget transparency from top‑line reporting to program‑level transparency for material initiatives (especially major digital/IT programs). Apply a transparent test for new initiatives, and introduce independent scrutiny and/or audit of major programs (ex‑ante and/or ex‑post).
Read our submission here: Nexa Advisory submission – DCCEEW – AEMO Governance Review