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COST ALLOCATION METHOD

 

The National Electricity Rules (NER) requires Distribution and Transmission Network Service Providers (DNSPs) to develop and submit a proposed Cost Allocation Method (CAM) to the Australian Energy Regulator (AER) for approval.

 

Our CAM documents the principles, policies and approach for attributing direct costs to, and allocating shared costs between the categories of electricity distribution and transmission services that it provides. The method has been developed in accordance with the requirements of the NER and the AER’s Cost Allocation Guidelines for Victorian Electricity DNSPs (the Guidelines).

 

The CAM supports the purpose of the AER’s Guidelines (the Guidelines) by promoting the principles of effective cost allocation, which in turn supports the national electricity objective by: 

  • ensuring that only efficient costs are allocated to different services; 
  • ensuring that prices paid by end customers for these services are not inappropriately inflated or discounted; and 
  • promoting transparency in information provided to the AER, and in the decisions made by the AER.

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