Regulator to fast-track one-off cost of capital rules for networks

Friday 7th August 2015

The Commerce Commission will fast track its decisions on new rules covering one-off "customised price-quality paths" (CPPs) for monopoly electricity and gas networks, with cost of capital considerations a main issue.

Gas and electricity networks are governed by price quality rules that control how much they can earn from their assets while ensuring they can charge enough to run a reliable service. In special cases, customised pricing is allowed to deal with special circumstances.

Orion Energy, the Christchurch electricity network owner, is on a CPP because of rebuild requirements created by the 2010 and 2011 Canterbury earthquakes.

In a statement this morning, the commission said it would examine requests for more flexibility in CPP requirements and "whether the cost of capital used should be aligned with that used for default paths" - the regulated pricing applied to all other networks.

"We plan to complete our consideration of the first limb of these amendments by early November 2015 and the second limb by the end of February next year, so that suppliers seeking to apply for a CPP in 2016 are not unnecessarily deterred," commission chair Mark Berry said.

"The fast track will not consider amendments to the underlying cost of capital input methodologies, which will be considered as part of the main review."

BusinessDesk.co.nz

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