STEM help / Calculation framework

10.3.5 Cost Dependent tariffs

To determine the influence of costs on tariffs, you can specify:

  • a Cost Independent Tariff, which is specified directly as a time series – see 10.3.31 Tariffs and revenues.
  • a Cost Allocation, which governs what proportions of the costs of providing a Service are to be recovered from each of the separate tariffs
  • a Charge Multiplier, which is used to calculate a Cost Dependent Tariff, based on the previous years’ Service costs
  • an Initial Cost Dependent Tariff, which defines the Cost Dependent Tariff in the first year that a Service has demand, when there are no costs to feed back from the previous year.

The actual tariff levied is a weighted average of the two tariffs, calculated according to the Independence Weighting input.

 

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