Consultation Open: Energy Policy WA has published a Consultation Paper that presents the findings and policy proposals of the Coordinator of Energy ARF Review. Stakeholders are invited to provide feedback on the proposals
The Allowable Revenue Frameworks (ARF) Review was initiated by the Coordinator following two rule change proposals ( RC_2024_01 and GRC_2024_01 ) by the Australian Energy Market Operator (AEMO), which sought to address challenges with the ARFs and replace the current Allowable Revenue and Forecast Capital Expenditure processes.
The purpose of the review was to develop a new fit-for-purpose replacement framework for the determination of AEMO's Allowable Revenue and Forecast Capital Expenditure under the ESM and GSI Rules.
In collaboration with AEMO and the ERA, Energy Policy WA has released a Consultation Paper presenting the findings and policy proposals from Stages 1 and 2 of the review, including the proposed replacement framework.
The paper includes proposals for:
- A revised funding framework separating business-as-usual (BAU) and non-BAU expenditure:
- BAU expenditure will continue to be approved by the ERA, with baseline funding adjusted annually by indexation less an efficiency target. Further ERA review is only required if the adjusted baseline exceeds a 10% or $5 million ($0.25 million for GSI Rules) threshold
- Non-BAU project plans and budgets will be reviewed by a new Independent Panel but ultimately approved by AEMO. The Panel (established by the Coordinator) must publish the outcomes of its review, to which AEMO must publicly respond before approving its plans and budgets.
- Enhanced governance and reporting to strengthen reputational incentives supported by the Independent Panel:
- AEMO will publish audited WA financial accounts
- AEMO will publish executive KPIs linked to cost efficiency and timely project delivery
- The Independent Panel will assess and report on AEMO's delivery performance annually, and review quarterly project reports against approved plans and budgets.
