We conducted an inquiry into the supply of gas pipeline services and found in 2004 that price controls were warranted for certain services of Powerco and Vector Limited.
Our inquiry found that the gas pipeline businesses of Powerco and Vector had been earning significant excess profits and that control would be likely to result in significant reductions in gas distribution prices (on average) to consumers. We recommended to the Minister of Energy that the gas pipeline services of Powerco and Vector should be controlled. The Minister agreed and on 27 July 2005 announced the decision to declare control over those services.
Default price-quality regulation for gas pipeline services was legislated under the Commerce Amendment Act 2008. This applied default price-quality regulation to Powerco and Vector’s gas distribution services (as well as GasNet’s gas distribution services and Maui Development Limited and Vector’s gas transmission services).
Subsequent price controls
To give effect to the Minister’s decision, we set authorisations for Powerco and Vector to reduce prices for their gas pipeline services.
The Provisional Authorisation of 2005 imposed average price reductions of 9% for Powerco and 9.5% for Vector. The Final Authorisation issued in 2008 required further average price reductions of 11.1% for Powerco and 3.7% for Vector. The price controls set by the Final Authorisation expired on 1 July 2012.
Default price-quality regulation for gas pipeline services was legislated under the Commerce Amendment Act 2008. This applied default price-quality regulation to Powerco and Vector’s gas distribution services (as well as GasNet’s gas distribution services and Maui Development Limited and Vector’s gas transmission services).
