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Regulator wants feedback from Chch consumers over Orion's $86M rebuild plans

Wednesday 1st May 2013

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The Commerce Commission is giving the Christchurch public a say on local lines company Orion New Zealand's plan to claw back the extra $86 million it needs to rebuild its network, which was damaged by the Canterbury earthquakes.

The antitrust regulator has released an issues paper asking Canterbury electricity consumers their views on Orion's proposal, which would lift the average household bill by 5 percent, or $8.70 a month. The lines company, owned by the Christchurch and Selwyn councils, applied to the commission in February to increase its prices and reduce its quality targets.

"It is important that Canterbury electricity consumers have their say," deputy chair Sue Begg said in a statement. "We also have to allow Orion to charge prices sufficient to make the necessary investment in its network."

Thousands of Christchurch residents lost power during the spate of earthquakes through 2010 and 2011, costing Orion $20 million in extra operating costs and forcing it to signal it would have to increase indebtedness significantly in the coming years.

Submissions close on May 24, with a draft determination scheduled for mid-July and a final decision in November. That would mean Orion's new pricing plan could take effect from April next year.

Orion said the extra charges would be in addition to the usual inflationary creep in electricity prices, which climbed at an annual pace of 5.2 percent in the year ended March 31, ahead of the overall pace of 0.9 percent.

Retail electricity prices have been in the spotlight in recent weeks after the Labour and Green parties promised to introduce a central buying agency if they win the Treasury benches at next year's election in an effort to cut the cost for households.

While that may see an initial cut in retail prices, AMP Capital Investors head of equities Guy Elliffe told a media briefing last month the longer-term viability was less clear due to the cost of investing in New Zealand's transmission system through national grid operator Transpower and the lines companies.

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