Another step for electricity distribution regulation
Fri, 18 Jun 2010 8:12p.m.
The Commerce Commission has taken another step in meeting its responsibilities for regulating electricity distribution businesses under amendments to legislation made in 2008.
The commission today released a paper setting out its draft decisions and reasons on the input methodologies to be applied to the businesses.
The purpose of input methodologies is to promote certainty for suppliers and consumers under Part Four of the Commerce Act. Part Four aims to promote the long term benefit of consumers in markets with little or no competition, or no likelihood of a substantial increase in competition.
The issues covered by today's paper include such areas as cost allocation, asset values, depreciation, tax obligations, and cost of capital estimates.
Commission chairman Mark Berry said the input methodologies work would, in the long term, provide greater certainty for regulated businesses.
"In that context, today's release of these draft decisions and reasons is another important milestone in the establishment of the new regime under Part Four."
Vector chief executive Simon Mackenzie said his company's initial impression was that the commission's decisions varied from those previously articulated.
"We believe the commission hasn't taken sufficient account of the global financial crisis and ongoing market volatility. While the commission has referenced the need for long-term certainty, there is little recognition of the need to attract offshore capital to New Zealand for investment in growth and security of supply."
Mr Mackenzie said that any move to a regime based on the input decisions expressed in the draft reasons paper also must reflect investor expectations set by the commission previously.
"Clearly the release of the draft input methodology reasons paper is only a starting point and we intend to continue to be pro-actively involved in the process which still has a long way to go," Mr Mackenzie said.
The commission's final decisions on input methodologies are expected by the end of the year.
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