This page was updated1 year ago
We regulate both the transmission and distribution businesses that own and operate New Zealand's gas pipeline infrastructure.
Gas pipelines businesses do not face direct competition for their services and are therefore regulated under Part 4 of the Commerce Act.
There are four gas pipeline businesses in New Zealand. First Gas has transmission and distribution pipelines, while Powerco, Vector and GasNet are distributors only. These networks are limited to the North Island only.
First Gas' transmission services transport gas to large users of natural gas such as big industrial plants, electricity generators and the gas distribution businesses. The gas distributors then transport gas to smaller users, including domestic consumers.
Price-quality path regulation
We regulate gas transmission and distribution businesses through price-quality path regulation - the same regulation that applies to electricity lines companies. This means we set the maximum revenue each business can collect from electricity consumers and the minimum quality standards they must maintain. Price paths are reset every 5 years.
The intent of the Act is to ensure regulated gas businesses have incentives to invest and innovate in their networks, while preventing them from making excessive profits. Where one of these businesses collects more revenue than allowed, or fails to meet the minimum quality standards we have set, we can take enforcement action. This could take the form of a settlement where the excess money recovered is returned to consumers, or court action leading to substantial penalties in the case of serious breaches.
We do not oversee the daily operations of the gas sector or set the exact prices regulated businesses charge their customers. They are responsible for their own decisions on the operation and maintenance of their networks within the boundaries we set them.
Gas pipeline businesses are on default price-quality paths, which is a more generic and efficient assessment of their business needs. If a gas company believes the default path does not meet their needs or there is uncertainty around the costs of a major project, particularly in terms of future investment requirements, it can apply for a customised price-quality path. A customised path is tailored to the company's specific plans and requires us to complete a detailed assessment of its proposals before making a decision on what its price path should be.
We require every gas provider to publish information each year detailing their performance. This includes important data on pricing, future expenditure forecasts, outages and interruptions and financial statements. We provide an analysis of this information to help the public understand how their local gas company is performing individually and when compared to others, and to track changes over time.