Evoenergy’s cost allocation method (CAM) governs the manner in which Evoenergy is allowed to allocate costs to the distribution services it provides. Under Chapter 6 of the National Electricity Rules (NER) and clause 3.1 of the AER’s Cost Allocation Guidelines, Evoenergy is required to submit its CAM for approval to the AER.
On 18 September 2018, Evoenergy submitted its revised CAM for approval to the AER, mainly to reflect its new corporate structure which addresses its ring fencing obligations. ActewAGL Distribution supplies electricity and gas distribution services under the Evoenergy brand. The Evoenergy business unit is functionally separate from the contestable business operating under AcetwAGL distribution. 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 unregulated services provided by ActewAGL Distribution.
We reviewed Evoenergy’s proposed CAM to assess its compliance to the requirements of the NER and the AER’s Cost Allocation Guideline. We have approved Evoenergy’s CAM and the details of our assessment are set out in the AER decision paper.