Regulator trims 2015 national electricity line prices 1.1%   28 Nov 2014

Article - BusinessDesk

NZ regulator ruling set to trim national electricity line prices by 1.1% in 2015

By Paul McBeth

Nov. 28 (BusinessDesk) - The Commerce Commission's final decision on default prices for 16 electricity lines companies should bring down distribution prices by 1.1 percent in 2015, with future increases for the following four years to be at the rate of inflation.

The commission today set out the maximum revenue the regulated lines companies can earn from April 1, 2015, until March 31, 2020, with a modest reduction expected nationally, varying across the distributors, the antitrust regulator said in a statement. The commission will also introduce a quality incentive scheme to improve energy efficiency and demand-side management initiatives that would reward distributors with an increase of up to 1 percent in the company's maximum allowable revenue if they beat a target, or penalise them by up to the same amount if they miss the target.

"The final pricing decisions are fairly close to those announced in the draft decision in July, which shows that the reset process is working as intended in providing a degree of predictability for distributors," deputy chair Sue Begg said. "This is important in ensuring distributors have the right incentives to innovate, invest and improve their efficiency for the benefit of New Zealand."

The default price quality path regulates 17 companies, setting out the maximum prices and revenues firms can charge and earn during the regulated period, the annual rate of change they can increase pricing relative to the consumers price index, and minimum standards that have to be met. Christchurch lines company Orion New Zealand was excluded from today's determination after seeking a customised price path to let it recover earthquake rebuilding costs.

Begg said the decision reflects a reduction in the weighted average cost of capital (WACC) used for regulated businesses announced in October, which had been further influenced by changing interest rates since then.

"That means the cost of capital has fallen from 7.6 (percent) in the draft decision to 7.2 (percent) in the final," she said.

The decision will let Vector increase prices 0.8 percent in the 2015/16 year with a maximum allowable revenue of $395.2 million and future increases at the rate of CPI. Last month, the Auckland lines company complained that the regulator's forecasting doesn't recognise consumer trends, and will cost it about $80 million over the 2013 to 2015 period. Shares of Vector rose 0.3 percent to $2.92.

New Plymouth-based Powerco, the country's second biggest gas and electricity network company, can increase prices 0.16 percent in the 2015 year with a maximum allowable revenue of $250.4 million, and future increases at the rate of inflation.

The firms allowed to claw back under-recovered costs from the prior period include Alpine Energy, which can lift prices 12.5 percent in 2015 then CPI plus 11 percent in subsequent years, Centralines, with 8.9 percent in 2015 and CPI plus 7 percent thereafter, Top Energy with 8.3 percent in 2015 and CPI plus 7 percent in out-years and Eastland with a 6.7 percent allowable increase in 2015 with CPI plus 3 percent after that.

Network Tasman faces a 14 percent price cut with allowable revenue of $28.1 million in 2015, with future increases limited to the rate of inflation and Wellington Electricity a price reduction of 14 percent, with allowable revenue $98.8 million and future increases at the rate of inflation.

Lines company prices make up about 23 percent of the average power bill, and the regulation is averaged across all customers, giving distributors flexibility on how to set prices for different customers.

(BusinessDesk)

Add a comment

News

Hilary Timmins' Award-Winning UK Documentary Series To Inspire NZ Students

29 Jun 2020 Education
Dream Catchers, produced and directed by Hilary Timmins, celebrates the success stories of more than thirty inspirational New... more

New Zealand reaffirms support for Flight MH17 judicial process

7 Mar 2020 News By Rt HON WINSTON PETERS
Ahead of the start of the criminal trial in the Netherlands on 9 March, Foreign Minister Winston Peters has reaffirmed the need to... more

Business

NZ Government's Economic package to fight COVID-19

17 Mar 2020 Business News By RT HON JACINDA ARDERN
The Coalition Government has launched the most significant peace-time economic plan in modern New Zealand history to cushion the... more

NZ Government announces aviation relief package

19 Mar 2020 Business News By Hon Phil Twyford
Transport Minister Phil Twyford today outlined the first tranche of the $600 million aviation sector relief package announced earlier... more

Living

Diversity was Key at New Zealand Trade Tasting in London

6 Jun 2022 Food & Wine
New Zealand Winegrowers Annual Trade Tasting was recently held in London, on Wednesday 4 May, in Lindley Hall. It was the first... more

Kiwi author stuns Behind the Butterfly Gate

12 Jan 2022 Arts By Charlotte Everett
Hidden behind the Butterfly Gate is where the secret has been kept for 76 years...  New Zealand writer Merryn Corcoran’s... more

Property

Fairer rules for tenants and landlords

17 Nov 2019 Property By Minister Kris Faafoi
17 NOVEMBER 2019 The Government has delivered on its promise to the over one million New Zealanders who now rent to make it fairer... more

New Zealand Government will not implement a Capital Gains Tax

17 Apr 2019 Property By RT HON JACINDA ARDERN
The Coalition Government will not proceed with the Tax Working Group’s recommendation for a capital gains tax, Jacinda Ardern... more

Migration

Boosting border security with electronic travel authority – now over 500,000 issued

19 Nov 2019 Migration By Hon Iain Lees-Galloway
19 NOVEMBER 2019 We’ve improved border security with the NZeTA, New Zealand Electronic Travel Authority, which helps us to... more

Christchurch reinstated as refugee settlement location

18 Aug 2018 Migration
18 AUGUST 2018 HON IAIN LEES-GALLOWAY The announcement that Christchurch can once again be a settlement location for refugees... more

Travel

Gallipoli Anzac Day services cancelled

19 Mar 2020 Travel & Tourism By RT HON JACINDA ARDERN
The New Zealand and Australian Governments have announced this year’s joint Anzac Day services at Gallipoli will be cancelled... more

New Zealanders advised not to travel overseas

19 Mar 2020 Travel & Tourism
New Zealanders advised not to travel overseas more

Sport

The Skipper's Diary: Sir Richard Hadlee honouring his father and NZ's Forty-Niners

27 Oct 2019 Cricket By Charlotte Everett
NZNewsUK London Editor Charlotte Everett spoke to Sir Richard Hadlee about why he’s chosen to publish his father’s... more

PREVIEW: All Blacks v England semi-final

26 Oct 2019 Rugby
The two most convincing quarterfinals winners are set to square off in a semifinal showdown for the ages when the All Blacks meet old... more

Columns

Gordon Campbell on the Gareth Morgan crusade

11 Nov 2016 Opinion
Gordon Campbell on the Gareth Morgan crusade First published on Werewolf The ghastly likes of Marine Le Pen in France and Geert ... more

Gordon Campbell on the US election outcome

10 Nov 2016 Opinion
Column - Gordon Campbell   Gordon Campbell on the US election outcome Well um.. on the bright side, there (probably)... more

Kiwi Success

Congratulations to Loder Cup winner

26 Sep 2018 People By Hon Eugenie Sage
25 SEPTEMBER 2018 The Loder Cup, one of New Zealand’s oldest conservation awards, has been awarded to Robert McGowan for 2018... more

Appointments to New Zealand National Commission for UNESCO

16 Aug 2018 Appointments
16 AUGUST 2018Appointments to New Zealand National Commission for UNESCO HON JENNY SALESA Associate Education Minister Jenny Salesa is... more

Recruitment

Historic pay equity settlement for education support workers

14 Aug 2018 Recruitment By RT HON JACINDA ARDERN
14 AUGUST 2018Historic pay equity settlement for education support workers RT HON JACINDA ARDERN HON CHRIS HIPKINS Prime Minister The... more

Historic pay equity settlement for education support workers

22 Aug 2018 Recruitment By RT HON JACINDA ARDERN
14 AUGUST 2018Historic pay equity settlement for education support workers RT HON JACINDA ARDERN HON CHRIS HIPKINS Prime Minister The... more