The Commerce Commission today announced that it will appeal against the recent High Court decision that it should have determined further input methodologies before seeking to reset starting prices for certain electricity distribution businesses (EDBs).

 

"We do not believe that an input methodology for starting prices was intended when Part 4 of the Commerce Act was enacted.   We are also concerned that the High Court's decision could potentially require the Commission to develop other process input methodologies that we do not believe were intended by Parliament," said Dr Mark Berry, Commerce Commission Chair.

 

"This leads to uncertainty and the potential for further legal challenges.   We believe that it is therefore in everyone's interests to address this concern now," Dr Berry said.    

 

The High Court decision has resulted in a delay to the proposed mid-period price reset of the Default Price-quality Path for EDBs that would have been effective from 1 April 2012.   The Commission is in the process of making submissions back to the Court regarding what work it can undertake while the appeal is pending to minimise any further delay to that reset.

 

Because the matter is before the Courts, the Commission will not be making any further comment.

 

Background

Part 4 of the Commerce Act regulates suppliers of electricity lines services, gas pipeline services and specified airport services supplied by Auckland, Wellington and Christchurch airports.

Input Methodologies involve setting upfront regulatory rules, processes and requirements that apply to the regulatory instruments under Part 4 of the Commerce Act. Input methodologies were determined by the Commission in December 2010 and can be viewed on the Commission's website at www.comcom.govt.nz/input-methodologies.

Default Price-quality Path (DPP) limits the amount a business can charge for regulated services by setting a maximum price cap or revenue cap, while maintaining certain minimum quality standards.   Various electricity distribution companies and gas pipeline businesses are subject to this type of price-quality regulation under Part 4 of the Commerce Act.

The High Court decision arose from an application for judicial review by Vector Limited of the Commission's decision not to determine an input methodology for starting prices.