Ergon Energy's cost allocation method (CAM) governs the manner in which Ergon Energy is allowed to allocate costs to the services it provides. Allocation of costs between services is required to accurately represent costs incurred in providing the respective services. This prevents cross-subsidisation between distribution services and other services Ergon Energy provides.
On 15 August 2014, the AER approved the revised CAM submitted by Ergon Energy in accordance with chapter six of the National Electricity Rules. Its revised CAM replaces Ergon Energy’s current CAM which was approved by the AER under transitional arrangements which expire at the end of the 2010-15 regulatory control period. Ergon Energy’s new CAM will take effect from 1 July 2015, the first day of the 2015-20 regulatory control period.
Ergon Energy submitted its revised CAM for approval ahead of the upcoming regulatory control period, so its regulatory proposal for the new control period may be prepared accordingly. The CAM approved by the AER on 15 August 2014 is the first for Ergon Energy prepared entirely in accordance with the National Electricity Rules’ cost allocation requirements.