On 16th December, the Economic Regulation Authority (ERA) published its determination on the Australian Energy Market Operator’s (AEMO) allowable revenue and forecast capital expenditure for the period 1 July 2016 to 30 June 2019. The ERA has approved, with only minor adjustments, the allowable revenue and forecast capital expenditure for all ‘business as usual’ functions, including the transfer of System Management out of Western Power’s premises.
|3 years 2016-2019 ($’000)|
|AEMO proposed||ERA approved||Variance|
The slight variance between proposed and approved costs relates to the removal of the IMO Board labour costs and a reforecast of supply and service costs based on 2015/16 actuals.
The ERA has not approved any capital expenditure or allowable revenue associated with the Energy Market Review (EMR). AEMO’s original proposal for expenditure related to the electricity market reforms anticipated to be implemented on 1 July 2018. Given that the legislation required to implement the reforms did not pass during the last Parliamentary period, AEMO resubmitted its cost forecast to identify those costs incurred regardless of the final timing or detail of market reforms and defer remaining forecast costs.
|3 years 2016-2019 ($’000s)|
|AEMO initial proposal||AEMO revised proposal||Deferred costs|
The ERA notes that elements of the EMR are still under consultation with stakeholders and there is potential for change to the EMR following the State Election in March 2017. Therefore, the ERA, in consultation with AEMO, the EMR and other market participants will undertake further review of AEMO’s revised proposal over the next few months.