Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

WACC draft decision constrains Vector investment

WACC draft decision constrains Vector investment


The Commerce Commission has released its draft decision on the proposed amendment to the Weighted Average Cost of Capital (WACC) percentile, recommending a decrease from the current 75th percentile to the 67th percentile.

This change would reduce the allowable return on our assets when all previous investment decisions have been based on the returns we would expect from a 75th percentile. A WACC setting at the 75th percentile is a position long-held by the Commission.

The draft decision reduces the investment returns from the network and, when added to other approaches by the Commission, places further pressure on our ability to invest in network sustainability and growth.

Current technology advances greatly increase risk and uncertainty in network investments, which should be increasing the allowable return on assets or WACC percentile, not reducing it.

The correct balance between lower prices for consumers and a suitable return on investment in the network is critical to maintaining the long-term, security of supply that is essential for Auckland’s growth and success.

The Commission has exercised considerable discretion in proposing the 67th percentile in light of two of its independent expert advisors recommending the status quo or higher percentiles.

Vector continues to engage with the Commerce Commission on the draft WACC percentile decision.

The draft decision can be found on the Commerce Commission website.


ENDS

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Auckland Port To Recapture Gas: Union Calls On Ports To Stop Spewing Methyl Bromide

The Maritime Union of New Zealand welcomes the decision by Ports of Auckland to stop releasing methyl bromide emissions into the air. The move to fully recapture the toxic gas after fumigation sets a new benchmark for industry best practice. More>>

ALSO:

Retail: Banks Shoes Calls In Receiver

Banks Group, which runs 14 stores across the country under the brands including Banks Shoes and Shoe Connection, has been tipped into receivership at the request of director John Bank. More>>

ALSO:

NZ's Space Programme: Rocket Lab Makes It To Space (But Not Orbit)

Electron lifted-off at 16:20 NZST from Rocket Lab Launch Complex 1 on the Mahia Peninsula in New Zealand. It was the first orbital-class rocket launched from from a private launch site in the world. More>>

ALSO:

Earlier:

Budget: Irrigate (Good Times, Come On!)

Additional grant funding of $26.7 million over the next three years plus a capital boost of $63 million towards irrigation investments in Budget 2017 will deliver economic and environmental benefits through better use of water... More>>

ALSO:

Silver Fern Farms: Proposal To Close Fairton Sheepmeat Plant

Silver Fern Farms has advised its people of the proposal to permanently close the site, and has discussed potential transfer options to its other sites in the region as part of the consultation process...
More>>

ALSO: