Retail margin methodology

HoustonKemp has prepared a report for ActewAGL Retail, in relation to the ICRC’s draft decision to change the methodology for determining the retail margin component of regulated electricity standing offer prices. We considered the adequacy of the ICRC’s approach in light of the factors that may be expected to affect the costs recovered by the retail margin, the rationale provided by the ICRC and the approach adopted by other regulators. Our conclusion is that the ICRC’s central assumption that retail margin costs move in line with changes to CPI is not supported by any evidence, and our own assessment indicates that there are other drivers of these costs.  Our report is available here.

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