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Process kicked off for reset of price-quality paths

Press Release – Commerce Commission

The Commerce Commission has released the key milestones and consultation steps for the 2020 reset of 17 electricity lines companies price-quality paths.14 June 2018
Process kicked off for 2020 reset of electricity lines companies’ price-quality paths

The Commerce Commission has released the key milestones and consultation steps for the 2020 reset of 17 electricity lines companies’ price-quality paths.

As monopoly electricity lines companies regulated under the Commerce Act, the Commission sets the maximum revenues lines companies can earn from their customers and the minimum quality standards they must meet. The current five-year price-quality paths expire on 31 March 2020.

“This reset is important as it affects the price and quality of electricity lines services that consumers can expect from 2020. We’re exploring ways to increase consumer engagement in the process, as well as ensuring electricity sector stakeholders can have significant input,” Commission Deputy Chair Sue Begg said.

The first major milestone in the process is an issues paper expected to be released in November, which will provide early views on the key topics for the default price-quality paths. This includes how the priorities the Commission signalled in its November 2017 open letter to the electricity distribution sector, and subsequent submissions, should be taken into account.

Electricity distribution services make up approximately 26% of a consumer’s average monthly power bill.

Submissions on the process paper can be made by email to regulation.branch@comcom.govt.nz by 5pmon Tuesday 17 July 2018.

The paper can be found here.

Background

Regulation of electricity lines companies

As monopoly utilities, all 29 of the country’s electricity lines companies are regulated by the Commerce Commission under Part 4 of the Commerce Act. This requires each to publicly disclose information on its performance. 17 of the 29 lines companies also have their maximum revenues and quality standards set by the Commission. Price paths determine the maximum revenue the company can earn from its customers, while quality is measured in power outages. If a lines company breaches its price-quality path it may face prosecution under the Commerce Act. The remaining 12 lines companies are exempt from price-quality regulation as they meet community ownership criteria.
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