Electricity lines default price-quality path
This page was updated2 months ago
The default price-quality path applies to most electricity distributors in New Zealand.
This type of path is intended to influence the behaviour of the businesses by setting the maximum average price or total allowable revenue that the businesses can charge. They also set standards for the quality of services that each business must meet. This ensures that businesses do not have incentives to reduce quality to maximise profits under their price-quality path.
What makes up a default price-quality path?
The main components of a default price-quality path (DPP) are:
- the maximum prices/revenues that are allowed at the start of the regulatory period (ie, starting prices)
- the annual rate at which all the businesses' maximum allowed prices can increase (ie, rate of change) – this is expressed in the form of 'CPI-X', meaning prices are restricted from increasing each year by more than the rate of inflation less a certain number of percentage points (termed an 'X-factor')
- the minimum service quality standards that must be met. We must also reset the components of a DPP before it expires to create a new path for the next regulatory period. A DPP reset is an opportunity to determine appropriate price and quality controls for the future to promote the objectives of the Part 4 regulatory regime.
2025 reset of the electricity default price-quality path
The current default price quality path for electricity distribution businesses (DPP3) is due to expire on 31 March 2025 and we must make a decision by 30 November 2024 on the next default price-quality path to apply (DPP4).
2020-2025 electricity default price-quality path
On 27 November 2019 we set the third default price-quality path (DPP) for the 17 electricity distributors subject to price-quality regulation.
2015-2020 electricity default price-quality path
The 2015–2020 electricity default price-quality path currently applies to electricity distribution businesses. It took effect on 1 April 2015 and expires on 31 March 2020.
2010-2015 electricity default price-quality path
The 2010–2015 default price-quality path applied to electricity distribution businesses from 1 April 2010 to 31 March 2015.
2009-2010 electricity default price-quality path
The 2009–2010 default price-quality path applied to electricity distribution businesses from 1 April 2009 to 31 March 2010.
Complying with the default price-quality path
Each year electricity distribution businesses are required to assess their compliance with the price-quality paths.