We can set a customised price-quality path to better suit the specific needs of a regulated business and those of its consumers.
Each of the price-quality regulated electricity distributors can apply for its own customised price-quality path (CPP), as a more tailored option than the default price-quality path (DPP). For example, if a business needs to invest more in its network than provided for under the DPP. Customised price‐quality paths are based on our analysis of information specific to the business, and require in‐depth audit, verification, and evaluation of the information provided by the regulated business.
What is a customised price-quality path?
Electricity distribution businesses initially start on a DPP, which relies on relatively low cost approaches for setting price or revenue limits and minimum standards for quality of service. If a business believes the default path does not meet its needs, particularly in terms of future investment requirements, it can apply for a CPP. A customised path is tailored to the company's specific plans and requires us to complete a detailed assessment of its proposal before making a decision on what its price path and quality standards should be.
The rules and processes for a CPP proposal, including the requirements for a proposal and the criteria we must consider when evaluating a proposal, are set out in input methodologies that we have developed. Input methodologies are rules, processes, requirements and evaluation criteria for services that are regulated under Part 4 of the Commerce Act.
We have received four CPP proposals to date – one from Orion in 2013, one each from Powerco and Wellington Electricity in 2017, and one from Aurora Energy in 2020.
