Formulae for control mechanism We are required to set out our proposed approach to the formulae that give effect to the control mechanisms for standard control services in the F&A paper. We must include the formulae in our final F&A in our distribution determination, unless we consider that unforeseen circumstances justify departing from the formulae as set out in the F&A. Below is a preliminary formulae to apply to standard control services. We consider that the formula gives effect to the revenue cap. (1) i=1,...,n and j=1,...,m and t=1,...,5 (2) (3) Where: is the maximum allowable revenue in year t. is the price of component i of tariff j in year t. is the forecast quantity of component i of tariff j in year t. is the annual smoothed revenue requirement in the Post Tax Revenue Model for year t. is the sum of incentive scheme adjustments in year t. To be decided upon in the final decision. is the sum of transitional adjustments in year t. Likely to incorporate but not limited to adjustments from the transitional regulatory control period. To be decided upon in the final decision. is the sum of annual adjustment factors in year t. Likely to incorporate but not limited to adjustments for the and unders account. To be decided upon in the final decision. is the percentage increase in the consumer price index. To be decided upon in the final decision. is the X-factor in year t. To be decided upon in the final decision. AER's reasons control mechanism for alternative control services — Our preliminary position is to apply caps on the prices of individual services in the next regulatory control period to all alternative control service. We propose classifying the following services as alternative control services: type 5 and 6 metering services ancillary network services public lighting. Our main consideration is that the benefit of caps on the prices of individual services is providing cost reflective pricing. We consider this benefit outweighs any detriment from increased administrative costs.
Formulae for control mechanism We are required to set out our proposed approach to the formulae that give effect to the control mechanisms for standard control services in the F&A paper. We must include the formulae in our final F&A in our distribution determination, unless we consider that unforeseen circumstances justify departing from the formulae as set out in the F&A. Below is a preliminary formulae to apply to standard control services. We consider that the formula gives effect to the revenue cap. (1) i=1,...,n and j=1,...,m and t=1,...,5 (2) (3) Where: is the maximum allowable revenue in year t. is the price of component i of tariff j in year t. is the forecast quantity of component i of tariff j in year t. is the annual smoothed revenue requirement in the Post Tax Revenue Model for year t. is the sum of incentive scheme adjustments in year t. To be decided upon in the final decision. is the sum of transitional adjustments in year t. Likely to incorporate but not limited to adjustments from the transitional regulatory control period. To be decided upon in the final decision. is the sum of annual adjustment factors in year t. Likely to incorporate but not limited to adjustments for the and unders account. To be decided upon in the final decision. is the percentage increase in the consumer price index. To be decided upon in the final decision. is the X-factor in year t. To be decided upon in the final decision. AER's reasons — control mechanism for alternative control services Our preliminary position is to apply caps on the prices of individual services in the next regulatory control period to all alternative control service. We propose classifying the following services as alternative control services: type 5 and 6 metering services ancillary network services public lighting. Our main consideration is that the benefit of caps on the prices of individual services is providing cost reflective pricing. We consider this benefit outweighs any detriment from increased administrative costs.
AER%20-%20Preliminary%20positions%20framework%20and%20approach%20-%20Energex%20and%20Ergon%20Energy%20-%20December%202013.docx