The 2009-10 default price-quality path was the first path set for electricity distribution businesses (EDBs) under the new Part 4 following the passing of the Commerce Amendment Act in October 2008. The path was transitional in nature, effectively retaining the Part 4A thresholds that were in place on 31 March 2009.
On 1 April 2010, the 2009-10 default price-quality path was superseded by the 2010-15 default price-quality path.
Compliance under the DPP
Our assessment of the compliance statements for the 2009/10 period found that 12 of the 17 non-exempt EDBs breached the DPP during the period. The results of the assessment are summarised below:
|
Non-exempt EDB |
Price |
Quality |
|---|---|---|
|
Alpine Energy Limited |
|
Breach |
|
Centralines Limited |
Breach |
|
|
Eastland Network Limited |
Breach |
|
|
Horizon Energy Distribution Limited |
Breach |
Breach |
|
Nelson Electricity Limited |
Breach |
Breach |
|
Network Tasman Limited |
|
Breach |
|
Orion New Zealand Limited |
Breach |
|
|
OtagoNet Joint Venture |
Breach |
Breach |
|
Powerco Limited |
|
Breach |
|
The Lines Company Limited |
Breach |
|
|
Top Energy Limited |
Breach |
|
|
Wellington Electricity Lines Limited |
Breach |
Breach |
We made the decision not declare control of any of the 12 non-exempt EDBs that breached the DPP, and published our reasons in the New Zealand Gazette and Reasons Paper in April 2011. The reasons for our decision are summarised as follows:
- strong evidence that excessive profits are being made (thereby indicating a sustained problem) would need to exist before making an intention to declare control of any of the nine EDBs that breached the price path during the period
- as non-exempt EDBs are now subject to default price-quality regulation under Part 4, we took the view that any 2009/10 price path breach can potentially be more cost effectively resolved in the future through regulation under Part 4 than by declaring control under the transitional provisions
- we considered the performance trend of the seven non-exempt EDBs that breached the quality standards and took the view that the trends did not yet provide comprehensive evidence of a sustained problem with reliability.
However, we did have some concerns around Alpine Energy Limited's (AEL) overall performance trend. We appointed Strata Energy Consulting to conduct an onsite engineering review of its network to gain a full understanding of the nature and extent of the breaches, and to understand AEL's specific business needs, circumstances, and future intentions.
Copies of the Reasons Paper and Gazette are below in Supporting Documents.
More information on the AEL onsite engineering review can be found here.
