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Monday, November 30

Determination for electricity distribution businesses’ price-quality path released

The Commerce Commission has today released its determination and decisions paper for the price-quality path which will apply to electricity distribution businesses from 1 April 2010. This marks the first determination published by the Commission under the Commerce Act’s new Part 4 regime and announces significant decisions for electricity distribution businesses on price and quality.

These decisions include the confirmation of the Commission’s earlier draft decisions to allow a rate of change in aggregate prices of 0 per cent relative to inflation and to set annual reliability limits based on historic reliability performance. This will allow businesses to increase prices by the rate of inflation whilst ensuring the quality of supply to consumers is at least maintained.

“The determination and the accompanying decisions paper are the result of a substantial consultation process and represent an important milestone in the transition to the new Part 4 regulatory regime,” said Dr Mark Berry , Commerce Commission Chair. “The Commission anticipates this determination will provide significant benefits to both regulated businesses and their consumers through greater certainty and shared efficiency gains.”

Part 4 of the Commerce Act 1986 regulates suppliers of electricity lines services, including the 29 electricity distribution businesses currently operating in New Zealand . Default price-quality regulation, in the form of price-quality paths, applies to all electricity distribution businesses other than those exempt on the basis of consumer ownership. Under the Commerce Act, the Commission must reset the current default price-quality path to specify prices and quality standards that will apply from 1 April 2010.

The determination and the decisions paper will be available on the Commission’s website under Industry Regulation/Electricity/Distribution Price-Quality/2010-2015 Default Price Path.

A summary of the Commission’s decisions will be published in the New Zealand Gazette today. The Commission also intends to release a process paper on future work in relation to the reset default price-quality path, including starting price adjustments, in the first quarter of 2010.