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

 

Draft Decision To Reduce Wellington Electricity’s Allowable Revenue

Draft Decision To Reduce Wellington Electricity’s Allowable Revenue As It Transitions To A Default Price-quality Path

The Commerce Commission has released a draft decision on how it proposes to move Wellington Electricity Lines Limited from a customised price-quality path (CPP) to a default price-quality path from 1 April 2021.

Wellington Electricity has been on a customised price-quality path since April 2018. This has enabled it to spend $31 million to improve its network’s resilience to a major earthquake. The CPP period is due to end on 31 March 2021.

“Wellington Electricity will soon complete its CPP earthquake readiness programme and is moving back to a default price-quality path,” Commission deputy chair Sue Begg said.

“The draft decision released today outlines two options for setting the revenue that Wellington Electricity can recover from consumers. We can either roll over prices from the CPP or set a new revenue allowance. We propose to set a new revenue allowance for the regulatory period from 1 April 2021, to better reflect Wellington Electricity’s expected future costs.

“Our proposal would see a 2.5% reduction in net allowable revenue for Wellington Electricity relative to the current year’s CPP value.

“This decision provides a relatively low-cost way of managing how Wellington Electricity transitions to the final four years of the 2020-2025 DPP, Ms Begg said.”

A copy of the draft decision is available on the Commerce Commission website. A final decision is expected by November 2020.

Changes to the line charges for electricity consumers in the Wellington region will be advised by Wellington Electricity prior to 1 April 2021, and we expect they will be reflected in consumers’ electricity bills from the same date. 
 

 

Background

Under the Commerce Act, the Commission regulates monopoly infrastructure providers, including most local lines companies, to ensure they deliver strong and sustainable services for the long-term benefit of consumers.

The Commission’s price-quality regulation sets rules about how much the lines companies can earn from their customers and the minimum reliability standards they must deliver. The companies must also publicly disclose information about their financial and physical performance of their networks to increase transparency. Community-owned lines companies are exempt from price-quality regulation.

The Commission only sets the maximum overall revenue these companies can earn each year and does not control what lines companies charge individual consumers or what electricity retailers charge their customers. We expect that electricity retailers will be transparent on the extent to which changes in distribution changes are reflected in a consumer’s bill, consistent with the Electricity Authority’s Guidelines for communications about price changes. The Electricity Authority’s guidelines can be found here.

Default price-quality paths compared to customised price-quality paths
DPPs are intended to be a relatively low-cost regulatory option and are not designed to meet the exact needs of every lines company. Where more significant infrastructure investment might be needed, a customised price-quality path is likely to be a more suitable option as it can be tailored to a lines company’s specific circumstances.

Wellington Electricity’s CPP
Wellington Electricity owns and manages the Wellington electricity network which connects to approximately 166,000 homes and businesses in the Wellington, Hutt Valley and Porirua regions. In March 2018, the Commission approved $31 million of spending to allow Wellington Electricity to improve its network’s resilience to a major earthquake.

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

RNZ: Porirua Most Expensive Region To Rent, According To Trade Me

A rental website shows this town is now New Zealand's most expensive region to rent a house, ahead of Wellington and Auckland cities. More>>

ALSO:


Stats NZ: Nearly 1,000 More Big Businesses Now Than Two Decades Ago – Media Release

There are now 2,690 big businesses in New Zealand employing more than 100 staff – nearly 1,000 or 58 percent more than 20 years ago, Stats NZ said today. Over the 20 years to February 2020, the total number of enterprises in New Zealand increased ... More>>

ALSO:

RNZ: Housing Boom Could Get Worse, Economist Warns

Economists are calling on the Reserve Bank to reinstate lending restrictions, warning the housing market is spiralling out of control. More>>

ALSO:

Westpac: Sets Out Plan To Go Cheque-Free

Westpac NZ has announced details of its plan to phase out cheques, after signalling in May that it would be supporting a move to other forms of payment. Cheques will cease to be available as a means of payment after 25 June 2021. Westpac NZ General ... More>>

ALSO:

NZTA: Major New Zealand Upgrade Programme Projects Go To Tender

Two major New Zealand Upgrade Programme projects are beginning tenders for construction. The New Zealand Upgrade Programme is a $6.8 billion investment to get our cities moving, to save lives and boost productivity in growth areas. The first Auckland ... More>>

Reserve Bank: RBNZ Seeks To Preserve Benefits Of Cash

The Reserve Bank – Te Pūtea Matua is taking on a new role of steward of the cash system “to preserve the benefits of cash for all who need them”, Assistant Governor Christian Hawkesby told the Royal Numismatics Society of New Zealand annual conference ... More>>

ALSO:


CERT NZ: Malicious Computer Virus Targeting New Zealanders

CERT NZ, the government agency which supports organisations and individuals affected by cyber security incidents, says a recent surge of increasingly sophisticated malware attacks is affecting everyday New Zealanders as well as large organisations. The ... More>>

ALSO:

Economy: NZ Small Business Recovery Continues In September

Xero, the global small business platform, today released its Small Business Insights (XSBI) for September revealing an uptick in small business jobs and year-on-year revenue growth in New Zealand. Nationwide, the average number of jobs in the small ... More>>

ALSO:


Courts: Businessman Eric Watson Sentenced To A Four-Month Jail Term

New Zealand businessman Eric Watson has been sentenced to a four-month jail term in the UK for contempt of court, TVNZ reports. More>>

OECD: Area Employment Rate Falls By 4.0 Percentage Points, To 64.6% In Second Quarter Of 2020

The OECD area employment rate – the share of the working-age population with jobs – fell by 4.0 percentage points, to 64.6%, in the second quarter of 2020, its lowest level since the fourth quarter of 2010. Across the OECD area, 560 million persons ... More>>

Spark: Turns On 5G In Auckland And Offers A Glimpse Into The Future Of Smart Cities

Spark turned on 5G in downtown Auckland today and has partnered with Auckland Transport (AT) to showcase some of the latest in IoT (Internet of Things) technology and demonstrate what the future could look like for Auckland’s CBD with the power of 5G. 5G is ... More>>

Stats NZ: Monthly Migration Remains Low

Since the border closed in late-March 2020, net migration has averaged about 300 a month, Stats NZ said today. In the five months from April to August 2020, overall net migration was provisionally estimated at 1,700. This was made up of a net gain ... More>>