Transpower to get individualised price control regime

Wednesday 14th April 2010

The Commerce Commission will regulate Transpower's pricing using a regime that recognises the national grid operator's unique circumstances and huge capital investment programme.

The decision announced this morning ends a lengthy process that began mid-decade to appropriately regulate the monopoly transmission service provider's pricing.

The move to individual price-quality regulation will follow the expiry of Transpower's earlier administrative settlement with the commission.

The comission was required to mandate either default/customised price-quality regulation or individual price-quality regulation, the latter being a more formulaic approach to monopoly network pricing.

"The commission believes individual price-quality regulation... allows more flexibility to accommodate Transpower's large and uncertain capital expenditure programme into a revenue path, and provides a more stable environment for setting and implementing long-term performance incentives," said Brent Alderton, General Manager Regulation, for the Commerce Commission.

"Relative to the other types of regulation considered by the commission, individual price-quality regulation is, over time, likely to be the most efficient and cost-effective type of regulation for Transpower and in the best interests of consumers."

Transpower supported the recommendation, the commission said.

Businesswire.co.nz

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