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ComCom on emerging technology in lines companies

Open letter to better understand emerging technologies in monopoly parts of electricity sector

The Commerce Commission has written an open letter outlining its intention to gather information from regulated electricity distributors to better understand how they are planning, investing and accounting for emerging technologies.

“Emerging technologies like battery storage, solar, electric vehicles and home automation systems have the potential to revolutionise the way New Zealanders live and the types of energy we consume. This work is about ensuring our regulation keeps pace with these rapid changes,” Commission Deputy Chair Sue Begg said.

The information gathering process aims to develop a better understanding of what emerging technologies are being deployed in electricity distributors’ networks, including distributors’ own investments, what effect emerging technologies is having on the sector, and how investment in it is being accounted for in the regulated parts of the sector.

The letter also reminds electricity lines companies about how emerging technology costs and revenues should be accounted for in order to comply with their regulatory requirements. It includes new guidance on when investments in electric vehicle chargers can be included in their regulated asset base, which they can earn a return on from their customers.

“The main purpose of EV chargers is to charge cars, not transport electricity. Therefore, our starting point is that we do not expect the costs associated with chargers to be included in their regulated asset bases, as they are not a cost of providing regulated services that consumers ultimately pay for through their power bills,” Ms Begg said.

“We need to ensure that consumers benefit from advances in technology, while at the same time promoting the development of competitive energy markets. Regulated monopolies should not have an unfair advantage over existing and future competitors in this space.”

The letter also reminds electricity lines companies about their obligations under Part 2 of the Commerce Act to ensure they do not enter into agreements which will substantially lessen competition, or take advantage of market power for an anticompetitive purpose in unregulated and competitive energy services markets they are seeking to enter or already participate in.

The Commission welcomes feedback on its intention to gather further information by 18 May toregulation@comcom.govt.nz.

The letter can be found here.

Background
The Commission also participates in the Electricity Authority’s Innovation and Participation Advisory Group (IPAG), which is currently considering the competition, reliability and efficiency impacts relating to access to distribution and transmission networks. Information on IPAG is available here.

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