Sharechat Logo

Vector, Powerco ordered to reduce pipeline charges

Friday 31st October 2008

Text too small?
Vector, New Zealand's biggest power and gas distributor, and Powerco, a unit of Australia's Babcock & Brown Infrastructure, were ordered to reduce their pipeline charges by the Commerce Commission.

Vector must lower its fees by 3.7% and Powerco by 11%, and hold the charges unchanged, in real terms, until 2012, the commission said today, confirming an interim ruling in September.

The announcement marks the second such order from the regulator, which forced the pipeline operators to reduce the charges by about 9% in 2005 after accusing them of over-charging for what are monopoly networks.

Since the first cuts, prices have been held constant in nominal terms, resulting in real price reductions to date of about 19%, commission chair Paula Rebstock said in a statement.

"When combined with earlier price reductions imposed by the Commission in October 2005, the reductions announced today will result in total price cuts of 30% for Powerco and 22% for Vector on average," Rebstock said.

"The key public policy concern underpinning the regulatory provisions in the Commerce Act is the potential for abuse of market power by suppliers of monopoly services where competition is limited."

Shares of Vector were unchanged at $2.04 and have fallen about 6% this year.

By Jonathan Underhill

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Vector ekes out 2.3% gain in FY profit as technology unit bolsters earnings
Vector may beat guidance for FY 2013, suffer 2014 earnings drop
Vector cleared to buy Contact Energy's gas metering business for $63M
Vector to cut gas distribution prices by 18 percent
Vector 1H result up 10.8 percent in flat economy
ComCom takes issue with Vector on regulated rates of return
Vector credit rating may come under scrutiny
Vector profit steady, underpined by revenue growth
Long-running battle over power line prices coming to a head
Vector appoints Beddoe as chief risk officer