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Vector mulls appeal options on regulated pricing decision

Vector mulls appeal options on regulated pricing decision

By Pattrick Smellie

Dec. 23 (BusinessDesk) – Vector Ltd., the Auckland electricity and gas distribution company, is considering its options for challenging the Commerce Commission’s final decisions on natural monopolies’ allowable rates of return.

The competition watchdog released its final determination on so-called “input methodologies” for calculating regulated rates of return on such natural monopoly businesses as national and regional electricity grid owners, airports, and ports.

Vector has opposed previous draft determinations, and argues that New Zealand monopolies are not being allowed to earn as much as Australian counterparts – a claim rejected by the Major Electricity Users Group, which says the two regimes are not directly comparable.

Vector shares dropped 2.1% to trade at $2.30, while Auckland International Airport Ltd. was down 1% to $2.15 on an otherwise positive day for the NZX, with investors shrugging off dismal Gross Domestic Product figures. Lyttelton Port Co. and Port of Tauranga Ltd. both gained slightly.

Vector has 20 working days to seek a “merit review” of the commission’s decision, under new appeal provisions that Vector’s chief executive, Simon Mackenzie, spearheaded.

“We now need time to consider what our next steps will be and whether we will pursue any of the appeal options provided under the Commerce Act,” said Mackenzie. “We have consistently said in all submissions and interactions with the commission that regulated companies need a stable and robust regime to deliver investor confidence, and provide better outcomes for consumers.”

However, Vector said it was “not surprising” that the commission had not changed its mind from earlier draft determinations.


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