The cost allocation method (CAM) governs the manner in which Ergon Energy (distribution) is allowed to allocate costs to the distribution services it provides. Allocation of costs between services is required to accurately represent the costs incurred in providing those services. This prevents cross-subsidisation between regulated distribution services and other services that Ergon provides.
On 18 October 2018 Ergon Energy applied to amend its CAM mainly to reflect its new corporate structure. It proposed to make the amended CAM effective from 1 December 2018. Ergon also submitted a combined Ergon Energy and Energex CAM to be effective from 1 July 2020, the next regulatory control period. We assessed both proposed CAMs against the requirements of the National Electricity Rules and the AER’s Cost Allocation Guideline. We approved Ergon’s CAMs and the details of our assessment are set out in the AER decision paper.