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Powerco Disappointed By Commerce Commission

Thursday, August 25, 2005

Powerco Disappointed By Commerce Commission Provisional Authorisation

Powerco today expressed disappointment at the Commerce Commission’s provisional authorisation to control its gas line prices.

Powerco Chief Operating Officer Richard Krogh said the Company would be reviewing its options but was clearly disappointed by the Commerce Commission’s provisional authorisation given the judicial review proceedings are still on foot and that Powerco believes these proceedings will result in the price control decision (the Order in Council) being set aside.

Mr Krogh noted that the Commerce Commission had itself calculated that imposing price control on Powerco would have a negative impact on New Zealand as a whole

“The Commerce Commission calculated that there would be a loss of $732,000 to the economy. The Ministry of Economic Development’s advice to the Minister of Energy noted that the results of the Commerce Commission’s net public benefits test showed “that across all business there is a net public cost, that is New Zealand as a whole is worse off from control being imposed” (see para 72 of 7 July 2005 paper).”

Mr Krogh further noted that Treasury recommended that the Minister of Energy not impose control.

Powerco is New Zealand’s second largest electricity and gas distribution utility with around 400,000 consumers connected to its networks. Powerco’s electricity networks are in Tauranga, Thames, Coromandel, Eastern and Southern Waikato, Taranaki, Wanganui, Rangitikei, Manawatu and the Wairarapa. Its gas pipeline networks are in Taranaki, Hutt Valley, Porirua, Wellington, Horowhenua, Manawatu and the Hawke’s Bay.


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