Commission Announces Inquiry into Electricity Line Business Pricing

'The Commerce Commission is initiating an inquiry into pricing by electricity line businesses', announced Commission Chair, John Belgrave.

The Commission's announcement follows that of the Government in which it outlined a comprehensive policy package for the electricity industry, which contains additional functions for the Commission, including the operation of a price control regime for electricity line services.

The inquiry, which will be carried out pursuant to s 54(3) of the Commerce Act, will be conducted with a view to putting the Commission in a position where it can report to the Minister of Energy on price control for electricity line services. Information obtained in the course of the inquiry will also provide a basis for the Commission to exercise its future price control function.

The inquiry will examine pricing issues in respect of both local electricity line businesses and the State-owned Transpower, which runs the national transmission grid. Attached is a preliminary issues paper outlining the steps the Commission proposes to take and the procedures it proposes to adopt in conducting its inquiry. Submissions are sought on this paper.

The Government has also announced that it will be transferring responsibility for the information disclosure regime that applies to electricity line businesses from the Ministry of Economic Development to the Commission. In addition the Commission will be responsible for reviewing the methodology for valuing line business assets, for mandating any changes as appropriate, and for undertaking a re-calculation of asset values. The Commission will take up these responsibilities when the necessary legislative changes have been effected.