The Commerce Commission has published an open letter canvassing views on how it should prioritise its regulatory work programme to help the energy and airport sectors address upcoming issues including New Zealand’s transition to a low-carbon economy and managing any continuing impact of COVID-19.

Responses to the letter will inform the Commission’s regulatory work as it seeks to provide certainty to businesses while delivering long-term benefits for consumers in accordance with its mandate under Part 4 of the Commerce Act.

“As a result of changes aimed at reducing New Zealand’s carbon emissions, the energy sector is facing anticipated growth in demand for electricity, at the same time as there is a potential reduction in demand for gas,” Commerce Commission Deputy Chair Sue Begg said. 

“The recent draft advice to the Government from He Pou a Rangi, the Climate Change Commission, outlining a decarbonisation pathway may accelerate the pace of that change.

“We are at a pivotal moment for the energy sector. The expectations of consumers, businesses and the Government are changing and the industry needs to meet these expectations, especially around decarbonisation, the switch to alternative fuel sources and the adoption of new technologies and business models.” 

Ms Begg said COVID-19 has had a sustained impact on the three major international airports in Auckland, Wellington and Christchurch. Their views on how best to manage ongoing pressures and position themselves to respond post-pandemic will help the Commission shape its position on future regulation.

“We really want feedback from those with an interest in the energy and airports sectors as we set our work programme to ensure our regulation is fit for the future and delivers the right outcomes for New Zealanders.”

The Commission is particularly interested in feedback relating to the following areas:

• Our seven-yearly statutory review of the underlying regulatory rules and processes (called input methodologies, or IMs) for electricity lines companies, gas pipeline businesses, and the three major international airports. The Commission’s current intention is to formally start this review in 2022.
• Our five-yearly reset of the price-quality paths that will set the maximum revenues and minimum standards of quality that gas pipeline businesses must comply with. The Commission’s current intention is to start this project with publication of an issues paper around July 2021.
• A targeted review of the requirements for electricity lines companies to provide information about their performance to the public. There is no statutory due date for a review of these requirements, but the Commission will consider aspects that relate to decarbonisation and preparations for the next reset of the price-quality paths for electricity lines companies.

The open letter is available on the Commission’s website. Feedback is due by 5pm on 28 May 2021.

Background

Under the Commerce Act, the Commerce Commission regulates monopoly infrastructure providers, including electricity networks, gas networks, and three international airports to ensure they deliver strong and sustainable services for the long-term benefit of consumers.

The Commerce Commission’s price-quality regulation sets rules about how much the regulated businesses can earn from their customers and the minimum reliability standards they must deliver. Price-quality regulation does not apply to community-owned electricity networks or airports, but all regulated companies must publicly disclose information about their financial and physical performance of their businesses for transparency.

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