Electricity Distributors Welcome Report

ELECTRICITY NETWORKS ASSOCIATION
13th Floor, 45 Johnston Street
PO Box 1017
Wellington, New Zealand
Telephone: 64-4-471 1335 Fax: 64-4-496 5209
E-mail adj@electricity.org.nz

31 January 2001

ELECTRICITY DISTRIBUTORS WELCOME REPORT

The overwhelming message from the Cap Gemini Company Analysis of the New Zealand electricity distribution industry in 2000 is that lines companies have been delivering more for less, says Electricity Networks Association chairman Warren Moyes. Among the points made in the report, which was released today, are:

„Ì Lower line charges. While the static distribution prices reported for 2000 represent a price reduction in real terms of about 2%, Cap Gemini estimate that the true real reduction was closer to 5% once missing data (from some of the companies that sold their networks to become energy traders) in 1999 is adjusted for.

„Ì Moderate profit levels. In Cap Gemini's words "The returns reported by local government and publicly owned companies appear to be reasonable and give no evidence of monopoly profit-taking. Trust-owned companies continued to disclose much lower returns, consistent with their non-commercial profit strategies."

„Ì Increased efficiency. Costs have continued to fall but at an accelerated rate (down 17% compared with 1999, and down 32% over the 6 years from 1995).
Warren Moyes says that it is pleasing to see the efforts that the lines industry has made to improve its performance being recognised by independent analysts. Its also pleasing to see that none of the 30 companies covered in the report has been identified as a bad performer. The Cap Gemini analysis also indicates that there are no individual lines businesses which stand out as being significantly under-valued or over-valued "when compared with the expected trend."

The report is the 6th in a series initiated by Ernst & young before they sold their energy analysis business to Cap Gemini last year.

ENDS

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