ETSA Utilities' cost allocation method (CAM) governs the manner in which ETSA Utilities is allowed to allocate costs to the distribution services that it provides. The allocation of costs between the services is required to accurately represent the costs incurred in providing those services. This prevents cross-subsidisation between the distribution and other services that ETSA Utilities provides.
On 18 September 2008, ETSA Utilities submitted its CAM for approval by the AER. The AER sought expert advice from McGrathNicol to assist with the review and considered that the CAM proposed by ETSA Utilities was consistent with the AER's Cost Allocation Guidelines and the National Electricity Rules.
In October 2011, ETSA Utilities proposed an amendment to its CAM, which was approved by the AER in November 2011 under chapter six of the National Electricity Rules. This cost allocation method replaces the CAM approved by the AER in February 2009.