Transpower’s maximum allowable revenues reviewed

Media Release

Issued 11 November 2015

Transpower’s maximum allowable revenues reviewed and adjusted for 2016/17 to 2019/20 pricing years

The Commerce Commission has completed its review of Transpower’s proposed update to the forecast maximum allowable revenue (forecast MAR) for the 2016/17 to 2019/20 pricing years.

The yearly adjustments ensure that Transpower does not under or over-charge consumers.

In this decision the Commission has reduced the forecast MAR for 2016/17 from $918.6 million to $911.7 million.

The amendment determination giving effect to these changes, along with the Companion Paper providing further information and background on the review and update process, can be found on the Commission’s website here.

Background
Transpower is the sole owner and operator of the New Zealand national electricity transmission grid. Since April 2011, Transpower has been regulated under Part 4 of the Commerce Act 1986 by way of individual price-quality path (IPP) regulation. The IPP regulation governs Transpower's forecast MAR for each pricing year, with the IPP being reset every five years.

The Commission is responsible for determining the IPP for the electricity line services supplied by Transpower. This ensures that, as a monopoly, Transpower does not earn excessive profits from the service it provides consumers. The Commission does this by setting a forecast MAR. Each year an update to the forecast MAR is proposed by Transpower and reviewed and determined by the Commission.

Transpower’s total revenue is the forecast MAR plus pass-through and recoverable costs, and less any voluntary revenue reductions Transpower makes. The total revenue is allocated to consumers under the Transmission Pricing Methodology administered by the Electricity Authority.

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