Why a Bold New Plan Calls for Splitting AEMO and Bringing Transmission Back Under Public Control

A groundbreaking report has sparked fresh debate over the future of Australia’s National Electricity Market (NEM), proposing a radical restructuring that includes breaking up the Australian Energy Market Operator (AEMO) and returning transmission assets to public ownership. Critics label the current NEM as “failed,” and the report’s authors argue that only a fundamental overhaul can deliver reliable, affordable, and clean energy. Below, we unpack the key questions surrounding this proposal.

Why does the report say AEMO should be split in two?

The report argues that AEMO currently juggles conflicting roles that undermine its effectiveness. By splitting the operator into two separate entities, each could focus on a distinct mission. One body would oversee market operations and short-term reliability, while the other would manage long-term planning and transmission infrastructure. This separation, advocates claim, would eliminate conflicts of interest and allow each organization to develop specialized expertise. For example, strategic planning wouldn’t be compromised by day-to-day market pressures. The split is seen as essential to creating a system that can adapt to the rapid shift toward renewables and decentralized energy resources, ensuring both stability and forward-looking investment.

What’s the case for putting transmission back in public ownership?

According to the report, privatized transmission networks have prioritized shareholder returns over public good, leading to underinvestment and grid bottlenecks that delay renewable projects. Public ownership would align transmission development with national energy goals, such as reaching net-zero emissions and maintaining affordable electricity. By bringing transmission under government control, policymakers could directly oversee expansion to connect remote solar and wind farms to demand centers. It also removes profit margins that inflate costs for consumers. Supporters point to successful public transmission models in other countries that have delivered efficient, low-cost grid upgrades. The report contends that this shift is necessary to fix the “failed” NEM and prevent future energy crises.

How does the report assess the current National Electricity Market?

The report pulls no punches in labeling the NEM as “failed,” citing numerous shortcomings. It points to soaring wholesale electricity prices, frequent reliability scares, and a slow transition away from coal-fired power as evidence that the market design is broken. The current framework, it argues, was developed for a centralized, fossil-fuel-dominated system and cannot cope with the rise of rooftop solar, battery storage, and variable renewable generation. Investment signals are distorted, leading to inadequate transmission capacity and stranded assets. The report suggests that without fundamental reform, the NEM will continue to deliver poor outcomes for consumers and the environment, making a complete overhaul urgent.

Who authored the report and what prompted it?

The report was produced by a coalition of energy experts, economists, and public policy researchers who have been critical of Australia’s energy market reforms. Growing frustration with repeated price spikes, blackouts, and the slow pace of decarbonization motivated their work. They conducted a detailed analysis of market performance over the past decade, consulted with international peers, and reviewed alternative market models from places like Texas and Scandinavia. The result is a comprehensive blueprint for restructuring the NEM. The authors hope the report will catalyze serious government and industry discussion, moving beyond incremental tweaks to embrace bold, structural change.

What immediate changes would splitting AEMO and public transmission bring?

If implemented, consumers could see more predictable electricity bills, as transmission cost volatility would be managed by a public body. Renewable energy projects would find it easier to connect to the grid because planning would be integrated and free from shareholder-profit constraints. The two new market bodies would work in tandem: one ensuring real-time supply-demand balance, the other driving long-term network expansion. Over time, experts predict faster retirement of coal plants, replaced by clean energy backed by adequate transmission. Critics caution that transition costs could be high, but supporters argue the benefits of a stable, low-carbon grid far outweigh the initial investment.

Could this proposal actually become policy?

Political feasibility is uncertain. The report’s recommendations challenge decades of energy privatization and market liberalization. Both major parties have historically favored private ownership and competitive markets. However, growing public dissatisfaction with energy prices and reliability, combined with climate imperatives, might create momentum for change. State governments, which control planning approvals, could be early adopters for public transmission. Federal leadership would be needed to split AEMO, which is a national body. The report aims to shift the Overton window, making what was once unthinkable now debatable. Energy ministers have signaled they will examine the proposals, but concrete action remains years away without strong political will.