On 11 December 2014, the Council of Australian Governments (COAG) Energy Council agreed to the Terms of Reference for a Review of Governance Arrangements for Australian Energy Markets (the Review). The Review was initiated in response to a COAG commitment to review the governance arrangements in the Australian energy market five years after the establishment of the Australian Energy Market Operator in 2009.
Issues paper
The review panel released an issues paper on 10 April 2015. The AER provided a submission in response to the issues paper on 15 May 2015.
The AER submission highlights that the governance arrangements are working well and have delivered outcomes in the long term interests of energy consumers. Whilst we consider that fundamental change to the current arrangements is not required, we have a number of suggestions which could make the current arrangements work more effectively.
The submission also responds to the issues paper questions on the AER. This discussion highlights key features of how the AER operates, including our internal governance arrangements, reporting and accountability frameworks, and relationships with the other institutions.
Draft report
The review panel released the draft report on 31 July 2015. The AER provided a submission in response to the draft report on 1 September 2015.
Our submission firstly focuses on the overall performance of the governance arrangements. We consider that the governance arrangements work well and deliver outcomes in the long term interests of energy consumers. We agree with the Review Panel, however, that there is scope to improve strategic policy setting arrangements in the market. We generally support the recommendations in the draft report to address this issue.
Our submission then focuses on the draft report’s findings and recommendations in relation to the AER. While we consider that we are an independent regulator with an organisational culture broadly appropriate to the exercise of our functions, we remain open to ideas to improve our performance. In this regard, we consider that a periodic ‘peer review’ of our performance could identify opportunities for improvement. We also highlight that these issues of how the AER operates and AER performance should be considered separately to the issue of the AER’s institutional arrangements.
More information
More information on the COAG Review of Governance Arrangements for Australian Energy Markets.