The Australian Energy Market Operator went $4 million over budget in Western Australia last financial year, as it counted the cost of delivering a new wholesale electricity market.
The Australian Energy Market Operator went $4 million over budget in Western Australia last financial year, as it counted the cost of delivering a new wholesale electricity market.
The industry-funded gas and electricity market operator shared its financial year results today, with WA expenses coming in at $70 million against revenue of $59 million.
AEMO had forecast spending of $66 million for the period. Its spending in WA was 48 per cent higher than the previous financial year.
The uptick coincided with an energy transformation encompassing the wholesale market, starting in October 2023, which were designed to make the state’s market safer and more effective to modern standards.
AEMO EGM finance and governance Vanessa Hannan said the financial result in the local market came amid a period of transformation, and that a $12 million deficit reported in FY24 would be addressed in the periods ahead.
“Just like in the NEM, the operations team in WA are also tackling an ever-changing operating environment,” she said.
“From a finance point of view, we came in marginally overbudget in the discrete FY24 year.
“We are operating within the three-year budget horizon as determined by the WA regulator, however the budget for this period, which covers FY23 to FY25, has been adjusted through the regulator’s in-period submission process.
“These adjustments reflect the higher cost to implement WEM reform than initially estimated, as well as the associated amortisation expenditure for this program, which commenced in FY24."
AEMO had its capital expenditure budget for the three-year period increased by $46.9 million in September 2023, after putting its case to the Economic Regulation Authority, conceding it underestimated the complexity of reforming the state’s electricity market.
In March AEMO sought to have almost $100 million of further room added to its budgetary allowance by the ERA, and it was ultimately given a further $58.3 million towards its operating budget and an added $37.9 million for its capital expenditure budget late in June.
Depreciation and amortisation came in at $21 million of AEMO’s FY24 operating cost profile, with labour the other major cost at $34 million.
AEMO also runs the east coast gas and national electricity markets servicing Australia’s eastern states and has seen its expenditure grow from $271 million in the 2021 financial year to $525 million last financial year.
“AEMO is being asked to do more to support energy consumers through a major change in the composition and the operations of energy systems,” AEMO chief executive Daniel Westerman said.
The release of today’s financials comes days after AEMO’s most senior WA representative Kate Ryan finished up in her role.
Ms Ryan, who was AEMO executive general manager, Western Australia & strategy since February 2022, has been replaced by Nicola Falcon on an interim basis as a replacement is found.
“AEMO has delivered significant reforms to support the energy transition in Western Australia under Kate’s leadership,” Mr Westerman said in a statement earlier this month.
“Kate has been a valued member of the AEMO leadership and has also made a significant contribution to strengthening our strategy function across the organisation.
“We wish Kate every success in her next endeavours.”
