Commission seeks input on proposed price-quality path

7 February 2018

Commission seeks input on Transpower's proposed price-quality path

The Commerce Commission has today released a consultation paper seeking feedback on the key issues it will be considering when resetting Transpower’s individual price-quality path.

As the operator of New Zealand’s national grid, Transpower is subject to price-quality regulation that sets the total amount of money it can collect from its customers and the minimum standards of quality it must deliver in return. Its next reset covers the five-year period from 2020 to 2025.

Deputy Chair Sue Begg said the Commission wants to hear stakeholders’ views on what aspects of Transpower’s final proposal and the independent verifier’s report they believe would benefit from more detailed review.

“The paper released today outlines a number of key issues we will be considering, including the usefulness of Transpower’s consultation with its customers; how we can set effective performance measures; and how we can encourage Transpower to further improve its asset management practices,” Ms Begg said.

“We particularly want to hear from gentailers, lines companies, major electricity users and consumer groups on the issues of concern to them and how consumers’ long-term interests can best be provided for.”

The issues paper, along with Transpower’s final proposal and the independent verifier’s report, can be found on the Commission’s website.

Submissions close on 28 February 2019, with cross-submissions due on 7 March 2019.

Background

Transpower is a State-Owned Enterprise that owns and operates the national high voltage electricity transmission network. Transpower is also the system operator, responsible for managing the real-time coordination of the electricity market.

As it is the monopoly supplier of electricity transmission services, the revenue that Transpower is allowed to earn from its customers and the quality standards it must meet are regulated by the Commission under Part 4 of the Commerce Act. The Electricity Authority estimates that transmission charges make up about 10% of a typical household electricity bill.

Price-quality regulation is designed to achieve similar outcomes to competitive markets so that consumers benefit in the long term. This includes making sure that monopoly suppliers are limited in their ability to earn excessive profits and have incentives to innovate and invest in their infrastructure and deliver services at a quality their consumers expect.

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