AEMO: Allowable revenue and capital expenditure 2016-2019

ERA – Economic Regulation Authority

Nov 07
AEMO: Allowable revenue and capital expenditure 2016-2019

On 16 September 2016, the Australian Energy Market Operator (WA) (AEMO) provided its forecast allowable revenue and capital expenditure for the period 1 July 2016 – 30 June 2019 to the Economic Regulation Authority (ERA) for review.  This is AEMO’s first revenue submission since taking responsibility for wholesale market operations on 30 November 2015 as part of the changes undertaken as part of the current Electricity Market Review.  The proposal covers funding for AEMO’s Market Operations and System Management functions and for its Gas Services Information (GSI) functions.

The proposal is higher than for previous (IMO) expenditure periods to cover discrete one-off costs associated with transferring the system management function from Western Power to AEMO ($8.1m) and the operational costs of market reform projects ($15.4m).  Business as usual costs are forecast at ($90.8m), $4m (4%) lower than BAU costs for the previous 3-year period.

Capital expenditure for the 3 years is forecast at $51.3m:

  • BAU capex $7.9m (down $2.8m from previous period);
  • Market reform project $36.1m;
  • System Management transition $3.2m; and
  • Office fitout $4m.

On 27 October, the ERA published an issues paper on the proposal, with submissions due from interested parties by 11 November 2016.  The ERA is required to make a determination on AEMO’s proposal by 16 December 2016.