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Commission Requires Vector To Reduce Future Gas Prices

Commission Requires Vector To Reduce Future Gas Prices

The Commerce Commission’s final gas distribution and transmission price decisions are in line with the draft gas price path decisions released in October 2012 and are no surprise, according to Vector’s Chief Executive, Simon Mackenzie.

Today’s announcement by the Commission requires a reduction in gas distribution and transmission prices, however the future revenues the Commission allows Vector are largely unchanged from their draft decision.

Mr Mackenzie said it was timely to recap the events leading to the Commission’s decision:

Vector’s gas pipeline businesses have been regulated by the Commission since 2005 and Vector has complied with the various price control regimes.

As part of the regulatory re-set process, the Commission has reduced our future prices in line with their view on future capital expenditure, costs and allowable returns for the next five year period.

Mr Mackenzie said Vector’s focus remained on the Merits Appeal process in which the Commission’s input methodologies are being challenged. A key reason for the appeal is to ensure the regulatory regime provides appropriate incentives to invest and deliver resilient essential infrastructure. The Merit Review process is drawing to a close with court judgments expected to be delivered in the second quarter of this calendar year.

“The Commission’s decision will need to be revised if the Merits Appeal action taken by Vector and others is successful,” he said.

ENDS

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