Input methodologies for electricity, gas and airports
This page was updated4 months ago
Input methodologies are the rules, requirements and processes we must determine for services that are regulated under Part 4 of the Commerce Act. They are important building blocks in how prices are set for electricity lines, gas pipelines and certain airport services.
Input methodologies (IMs) provide increased certainty on how price-quality paths will be set for electricity lines and gas pipelines services and how information disclosure requirements will be set for electricity lines, gas pipelines and certain airport services.
Input methodologies underpin the price-quality paths and information disclosure requirements that regulated suppliers are subject to under Part 4 and have the purpose of promoting certainty for suppliers and consumers about the rules, requirements, and processes applying to regulation or proposed regulation.
Our focus in setting the IMs is to increase certainty by maintaining regulations that are stable, provide suppliers with incentives to invest in long-lived infrastructure and deliver long-term benefits to New Zealanders. IMs include important decisions on matters such as how regulated businesses' assets are valued and the values will be rolled forward over time, costs are allocated and the estimated rate of return investors will require to fund infrastructure investments.
IMs are one part of the regulatory framework we work with. They bind both us and suppliers of the regulated services. They do not take effect at the time they are determined but flow through into our price-setting processes under price-quality regulation and the information disclosure requirements regulated businesses face.
IMs were first determined in December 2010 for specified airport services, electricity distribution and transmission, and gas pipelines services. The Transpower capital expenditure IM was determined in January 2012. These are both separate to IMs for Fibre under Part 6 of the Telecommunications Act which were first determined in 2020.
We are required to review each IM within 7 years of its date of publication and, after that, at intervals of no more than 7 years. The first review was completed in December 2016 for all IMs except the Transpower capital expenditure IM review which was completed in May 2018. The second review was completed in December 2023.
Reviewing the IMs is a significant undertaking. We recognise the importance of maintaining regulations that are stable, provide incentives to invest in long-lived infrastructure and deliver long-term benefits to New Zealanders.
These reviews give us the opportunity to assess whether there are any necessary changes to the IMs to more effectively promote the purpose of Part 4, the purpose of the IMs, or significantly reduce complexity and compliance costs, for the long-term benefit of consumers. We do these reviews in consultation with all stakeholders.
2023 input methodologies review
The most recent review of the rules and processes that underpin the Commission’s regulation of airport services, electricity lines services, and gas pipeline services was completed in December 2023.
Input methodologies amendments 2017 to 2023
Here you will find input methodologies amendments projects we have completed between the 2015/16 input methodologies review and the 2023 input methodologies review.
2017/18 Transpower capital expenditure IM review
We reviewed the Transpower capital expenditure input methodology in 2017/18 to assess whether any changes were necessary to more effectively promote the purpose of Part 4, the purpose of the IMs, or significantly reduce complexity and compliance costs, for the long-term benefit of consumers. We completed our review in May 2018.
Related party transactions provisions
We reviewed the related party transactions provisions as part of the 2015/16 Input Methodologies (IM) review and completed our review in December 2017.
Customised price-quality path requirements
We reviewed the CPP information requirements for gas pipeline businesses as part of the 2015/16 Input Methodologies (IM) review and completed our review in December 2017.
Transpower IRIS provisions
We reviewed the Transpower IRIS provisions as part of the 2015/16 Input Methodologies (IM) review and completed our review in June 2017.
2015/16 input methodologies review
We are required to review the input methodologies for specified airport services, electricity distribution and transmission, and gas pipelines every 7 years. We completed our first review in December 2016.
Input Methodologies consultation prior to February 2012
The Commission was required (under subpart 3 of Part 4) to determine input methodologies to apply to the regulation of specified airport services, electricity distribution and transmission, and gas pipeline services by 31 December 2010 and Transpower’s capital expenditure proposals by 1 February 2012.
Input Methodologies Projects
Here you will find input methodologies projects we are currently working on and those we have completed.
Airports input methodologies
Input methodologies are the rules, requirements and processes that underpin regulation under Part 4 of the Commerce Act.
Electricity distribution input methodologies
Input methodologies are the rules, requirements and processes that underpin regulation under Part 4 of the Commerce Act.
Gas pipelines input methodologies
Input methodologies are the rules, requirements and processes that underpin regulation under Part 4 of the Commerce Act.
Transpower input methodologies
Input methodologies are the rules, requirements and processes that underpin regulation under Part 4 of the Commerce Act.
Cost of capital guidelines and determinations
The cost of capital is the financial return investors require from an investment.