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Lines Regime Threatens Commercial Confidence

Lines Regime Threatens Commercial Confidence

Draft decisions outlined by the Commerce Commission in its Lines Industry Regulation Discussion Paper would create commercial uncertainty and are inconsistent with the Government’s wider policy objectives for the lines industry, according to the Electricity Networks Association (ENA).

The association, which represents the lines companies targeted by the Commission’s thresholds and control regime, believes the proposed regime sends confused or distorted signals to the lines industry, particularly in relation to the Government’s stated desire for energy supply security and sustainable investment.

“Key aspects of the proposed profit, price and quality thresholds are diametrically opposed to the Government’s policy on the lines industry. Sustainable use of resources, proper and efficient management of security of supply, and innovation in technology and renewable energy will be undermined by the Commission’s heavy handed approach to regulation.

“The Commissions proposals will negatively impact on the fundamental consumer requirement for an assured and sustainable flow of power at a time when New Zealand is potentially facing power shortages in the near term,” said association chairman, Warren Moyes.

“Lines companies must be encouraged to focus on their core line maintenance and investment businesses in order to get the most out of available generation. The Commission’s proposals, by contrast, will stifle investment and innovation because they will penalise lines companies through application of thresholds and control investigations.

“The regime will set up perverse conditions in which lines companies will be forced to act against the national interest. The Government needs to heed our calls and ask itself whether the minimal gains to be achieved from price, profit and quality controls outweigh their negative impact on the national interest.”

The association is calling for a pause on the introduction of controls. It wants to give all parties the opportunity to properly consider the economic and security of supply impacts of the Commission’s proposals.

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