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Update: Regulation of electricity lines businesses

Update: Regulation of electricity lines businesses

The Commerce Commission has released a discussion paper on its review of methodologies that could be used to value the fixed assets of electricity lines businesses. The Commission has invited submissions on all matters covered by the paper.

The Commission also outlined a revised process for its work on the thresholds and control regime, which provides further opportunity for comment by interested parties. The Commission’s work on regulation of electricity lines businesses is under Part 4A of the Commerce Act.

Asset valuation In preparing the asset valuation discussion paper, the Commission considered submissions on its Issues Paper, and had the paper reviewed by independent experts.

Written submissions on the asset valuation discussion paper are invited by 4 November 2002. The Commission will then hold a conference from 25-29 November 2002 in Wellington where submitters can present their views orally. The Commission intends to release a paper announcing the results of the review of asset valuation methodologies by the end of the year.

The discussion paper considers the different methodologies possible for preparing opening and ongoing asset valuations. The Commission has no firm view on which asset valuation methodology should be used and seeks submissions to assist its deliberations.

The discussion paper can be downloaded from: Thresholds for control The Commission has considered feedback on an earlier discussion paper on the thresholds and control regime for electricity lines businesses (March 2002), particularly in respect of the interface between asset valuation and threshold design. As a result of submissions made, the Commission has undertaken to further consult on the detail of thresholds for the declaration of control.

Before the end of this year, alongside the paper announcing the results of the review of asset valuation methodologies, the Commission intends to release a high-level paper outlining the Commission’s final decisions on the form of the thresholds.

The Commission will further consult on the implementation details of the thresholds early in 2003, and expects to hold a conference in early March 2003.

The Commission intends to publish the thresholds in the Gazette before the end of March 2003 to coincide with the existing information disclosure regime for distribution companies (1 April –
31 March each year). This would allow the Commission to make its first assessment of lines businesses’ performance against the thresholds as early as 31 March 2003, although the Commission has not made a final decision on when the first assessments should take place. Transpower’s reporting year is different (1 July – 30 June each year), and the regulatory assessment period for Transpower will reflect this.

A timetable and background is attached to this release.

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