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Commission to fast track customised price path amendments
7 August 2015
Commission to fast track
customised price path amendments
The Commerce
Commission has decided to fast track the consideration of
amendments to certain rules relating to customised
price-quality paths (CPPs), as part of the input
methodologies review announced in June.
Electricity distributors and gas pipelines businesses are subject to price-quality regulation. Default price-quality paths limit the revenues these businesses can earn, or the maximum average prices they can charge. After the default path is set, they can apply to the Commission for a CPP that is tailored to their specific circumstances.
The Commission will fast track consideration of specific changes to how suppliers apply for and the Commission evaluates and determines CPPs.
Commission Chair Dr Mark Berry said the Commission was responding to requests from regulated businesses to complete this work ahead of the main review. The Commission will firstly consider specific amendments to add flexibility to the CPP requirements. Secondly, it will consider whether the cost of capital used should be aligned with that used for default paths.
“We plan to complete our consideration of the first limb of these amendments by early November 2015 and the second limb by the end of February next year, so that suppliers seeking to apply for a CPP in 2016 are not unnecessarily deterred,” Dr Berry said.
The fast track will not consider amendments to the underlying cost of capital input methodologies, which will be considered as part of the main review. The Commission explained details of the fast track at its Input Methodology Forum last month.
“We are committed to reducing the barriers suppliers say they face when considering whether to apply for a CPP, where it is to the long term benefit of consumers,” Dr Berry said.
“Suppliers have made it clear that they consider the difference between the cost of capital used for a CPP and a default path to be the single biggest impediment to applying for a CPP. Fast tracking this issue will provide certainty for suppliers that may be considering this option in 2016.
“We will also consider a number of amendments aimed at simplifying the process and reducing the cost of making an application.”
Further information on the input methodologies review can be found here.
ends
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