Automated bidding is now a governance question

The AER's 5 August 2026 Compliance Bulletin, and what it asks of generators and storage operators.

On 5 August 2026 the Australian Energy Regulator published a Compliance Bulletin on automated bidding and the utilisation of third party services. It creates no new obligations. That is the part most easily missed: everything it describes was already required. What has changed is that the AER has now set out, in writing, what it expects to see when it looks.

Automated bidding was flagged as a key risk in the NEM wholesale market settings review chaired by Associate Professor Tim Nelson. The Bulletin confirms that scrutiny is increasing.

Circuit Energy reviews how generation and storage assets are bid and dispatched, independently and from AEMO data alone. What follows is what the Bulletin actually says, and where the practical exposure sits.

Responsibility does not move with the algorithm

A Market Participant remains responsible for every bid and rebid submitted in its name, whether lodged manually, through software it developed itself, or through a third party optimiser. Non-compliance arising from an automated system remains the participant's non-compliance. The obligations the AER points to are the familiar ones: the requirement to explain a rebid, the prohibition on false or misleading bids and rebids, and the requirement that plant capability aligns with what was offered.

"Verify or adjust" is now an explicit risk marker

The Bulletin singles out systems that submit bids directly to AEMO without the participant being able to independently verify or adjust them, and describes that configuration as higher compliance risk. For a desk that has outsourced dispatch optimisation, this is the sentence to read twice. It is less a question about the quality of the software than about whether a human retains the ability to intervene, and whether anyone has tested that they can.

Records must explain the decision, not merely record it

On record keeping for automated rebids, the AER indicates contemporaneous records should ideally capture the instructions or algorithms the system relied on, the triggering events or conditions that prompted the rebid, the thresholds used, and any standing instructions given to a provider. System generated logs may be sufficient where they adequately record the inputs, the decision logic applied, and the outputs produced for each rebid decision.

These are not yet mandatory. The AER signals they are likely to inform future amendments to the Rebidding and Technical Parameters Guidelines, which is a reasonable basis for treating them as the direction of travel rather than a suggestion.

The competition law point that is being under-read

Bids submitted through a third party provider should be developed independently for each participant, reflecting that participant's own technical parameters, portfolio constraints and commercial strategy. The AER points to the risk of arrangements that could facilitate cartel conduct, bid rigging or concerted practices under the Competition and Consumer Act 2010 (Cth). Where a single provider bids for several participants in the same region, that is a question worth putting directly, and worth documenting the answer.

Providers are exposed as well

The Bulletin reminds third party bidding providers that they may face accessorial liability where their services contribute to a Market Participant's breach of the National Electricity Law. That materially changes the negotiating position on audit rights and compliance warranties in an optimisation contract.

The step that carries the most weight

The Bulletin sets out a due diligence framework for engaging third party bidding, automated bidding or self forecasting services. Among its steps (due diligence on the provider, understanding how the service supports NER compliance, contractual arrangements that support compliance obligations, retaining the ability to tailor settings to the site, confirming the provider updates for rule changes, and maintaining contingency plans), one is different in kind from the rest: regularly monitor, audit and review the service.

Every other step can be discharged once, at contract signature. That one cannot. A board that satisfied itself about its optimiser eighteen months ago, and has seen nothing independent since, has not done what the Bulletin describes, and would struggle to evidence that it had.

Where Circuit Energy fits

This is the gap QFM (Questions For Management) was built to close. QFM is an independent monthly review of how a nominated asset or portfolio was actually bid and dispatched, reconstructed entirely from AEMO's public market data, with no reliance on the participant's systems and no reliance on the optimiser's own reporting. It examines whether late price rebids carry a specific, verifiable reason, tracks offered availability against what was bid, and produces a minute-able record with a curated set of evidenced questions to put to management or to the provider.

It is, in substance, the routine monitoring the Bulletin describes, carried out by a party with no stake in the trading outcome. Circuit Energy does not bid, does not operate auto-bidding software, and holds no position.

To discuss an independent review of your own assets, contact admin@circuitenergy.org.

Sources: AER, Automated bidding and utilisation of third-party services, Compliance Bulletin, 5 August 2026 (aer.gov.au). Secondary summary: K&L Gates, "Electricity Market Participants on Notice", 10 August 2026.

This article is general market commentary prepared from public sources. It is not legal advice, and it is not financial product advice. Circuit Energy Pty Ltd holds AFSL No. 700432 (wholesale clients only) and is not authorised to provide financial product advice. Readers should obtain their own advice on their particular circumstances.