Essential Energy’s cost allocation method (CAM) governs the manner in which Essential Energy is allowed to allocate costs to the distribution services it provides. Allocation of costs between services is required to accurately represent costs incurred in providing those services. This prevents cross-subsidisation between distribution services and other services Essential Energy provides.
On 2 June 2017 Essential Energy submitted an amended CAM for approval. The amended CAM reflects changes in Essential Energy’s organisational structure. It also incorporates a new single allocator for shared costs to replace the eight allocators used previously. We assessed Essential Energy’s proposed CAM amendments against the requirements of the National Electricity Rules and our Distribution Cost Allocation Guideline. On 6 June 2017 we approved Essential Energy’s CAM amendments. Details of our assessment are set out in the AER decision paper.