Final Decision Values Chorus Regulated Asset Base At $5.4 Billion

The Commerce Commission (the Commission) has today issued its final decision on the value of the assets Chorus uses for delivering regulated fibre services to New Zealand consumers. This is known as the Regulatory Asset Base (RAB).

The Commission has valued the initial RAB at $5.413 billion as at 1 January 2022 – which is $12 million lower than the transitional value given in the Commission’s decisions implementing the new regime in December 2021.

Telecommunications Commissioner, Tristan Gilbertson, says this decision finalises the initial settings of the new regulatory regime for fibre services, a process that began in 2018 with the passing of the new legislation.

“With today’s decision, we’re locking-down the final initial RAB values for the new fibre regime, and in turn providing the certainty the new regime is designed to give Chorus as a long-term infrastructure investor,” he says.

The Commission has updated the RAB value used on a transitional basis in December 2021 primarily to reflect actual figures for the last financial year now that these are available from Chorus. Actual figures have replaced forecast figures where they had been used in December 2021.

Now that the initial RAB value has been set, it cannot be changed, and is a key factor in the Commission’s process for determining the maximum revenue Chorus can earn from providing regulated fibre services.

“We now have in place an interlocking series of measures designed to incentivise Chorus to keep investing in world class fibre services while constraining its ability to reduce quality or make excessive returns to the detriment of consumers,” Mr Gilbertson says.

The Commission will wash-up the difference between the transitional and final RAB values when it sets Chorus’ price-quality pathway for the next regulatory period in 2025. This process is expected to commence later next year.

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