In this paper, two methods for cost allocation were studied using actual cost data for the UANE "A" cogeneration plant. The two methods are the exergy cost accounting method, which costs energy streams based on their exergy content, and one indirect cost allocation method there called the WEA method), which separates all cost components between water and electricity according to functional considerations. The WEA method allocates all capital and O&M costs of electricity producing equipment (gas turbines) to electricity alone and all capital, fuel and O&M costs of steam producing and desalting equipment to water alone, while separating the fuel cost of electricity producing equipment between electricity and water. When compared with the exergy method, it is noted that the WEA method overcharges electricity and undercharges water, thus raising the cost of electricity by more than 40% and lowering the cost of water by about 25%. The exergy method is considered to be more equitable and rational than the WEA method.