2010-2015 Default Price-Quality Path

The 2010-15 default price-quality path is the default price-quality path that currently applies to electricity distribution businesses. It took effect on 1 April 2010 and expires 31 March 2015.

Components of the 2010-15 DPP

On 30 November 2009 the Commission issued a section 52P determination setting out the requirements of the 2010-15 DPP including:

the maximum prices/revenues that are allowed at the start of the regulatory period (ie starting prices)—these were specified as the prices that applied as at 31 March 2010
the annual rate at which all EDBs’ maximum allowed prices can increase (ie rate of change)—this was specified as CPI-0%
the minimum service quality standards that must be met—these are specified using reliability limits based on the historical averages of system average interruption duration index (SAIDI) and system average interruption frequency index (SAIFI) reliability for the period 2005 to 2009
the annual compliance reporting requirements.

The latest consolidated version of the 2010-15 DPP section 52P determination, including all amendments as at 31 March 2011, is available here.

Further general information on default/customised price-quality regulation is available here.

Proposed mid-period reset of the 2010-15 DPP to take account of input methodologies suspended

The Commission had proposed to reset prices and make other amendments to the 2010-15 DPP by 20 October 2011 to take account of the input methodologies for electricity distribution services. This process, however, was suspended following a decision by the High Court on 26 September 2011.

The proposed reset was unique as the Commission would not usually need to reset a DPP mid period to take account of input methodologies as these would already be available when the default price-quality was first set. However, as Part 4 is new, the Commission was required to set the 2010-15 DPP by 30 November 2009 and input methodologies for electricity distribution services were not published until 23 December 2010. The Act recognises this timing difference and provides powers for a reset under s 54K(3).

More information on the suspension of the reset process is available below under "Important Notices".

Additional input methodologies for DPPs

The Commission is now developing input methodologies for electricity distribution services and gas pipeline services that describe the way that starting prices could be adjusted when DPPs are reset.

The Commission must set these additional input methodologies before it may reset the 2010-15 DPP.

Further information on the process for setting these input methodologies can be found here.

Current Document

Project Timeline

Type	Description	Indicative date/s
Consultation	Submissions due on the Commission's Draft Decisions consultation package for resetting the 2010-15 DPP to take account of input methodologies published in December 2010	24/08/2011
Consultation	Cross submissions due on the Commission's Draft Decisions consultation package for resetting the 2010-15 DPP to take account of input methodologies published in December 2010	05/09/2011
Consultation	Submissions due on Electricity Volume Projections Consultation Paper by 5pm 21 September 2011	21/09/2011

Disclaimer

These dates are not official and may change. Please see the Terms and Conditions for further limitations.

Next Steps

Determine application window for making customised price-quality paths – further information is available here.
Develop starting prices adjustments input methodologies for DPPs – further information is available here.

IMPORTANT NOTICES

Price reset process suspended

On 26 September 2011 the High Court issued a judgment in favour of Vector in its Judicial Review application against the Commission’s decision not to include a process for setting starting prices in the input methodologies for electricity distribution services published in December 2010. In particular the judgment found that for electricity distribution default price-quality paths the Commission should:

specify valuation of assets, allocation of common costs and treatment of taxation input methodologies
consult on and determine a starting price input methodology.

The same also applies in respect of gas pipeline services.

A consequence of this ruling is that we suspended our proposed reset of the 2010-15 DPP, which was scheduled to be completed by 20 October 2011.

Supporting Documents

2010-2015 Electricity Distribution Price-Quality Path Refinements Discussion and Draft Decisions Paper

12/08/2010 (1 document)

2010 2015 Electricity Distribution Default Price Quality Path Refinements Discussion and Draft Decisions Paper 13 August 2010 Adobe Acrobat PDF (323 KB) (opens in a new window): This discussion and draft decisions paper sets out a proposed adjustment to the 2010-2015 DPP so that an EDB's pricing behaviour within the regulatory period cannot affect the trajectory of its price path.

Also included in this discussion and draft decisions paper are initial views on both the impact of the draft IMs and the increase in GST from 1 October 2010 on the 2010-2015 DPP.

Starting Price Adjustments for Default Price-Quality Paths Discussion Paper - 5 August 2010

05/08/2010 (2 documents)

Starting Price Adjustments for Default Price Quality Paths Discussion Paper 5 August 2010 Adobe Acrobat PDF (325 KB) (opens in a new window): A fundamental component of a default price-quality path is the starting prices that are specified for each regulated supplier. One option available to the Commission is to adjust starting prices based on the current and projected profitability of each supplier.

This discussion paper sets out the Commission's current views on key aspects of the starting price adjustment process for deault price-quality paths.
Default Price Quality Paths Model for SPA Illustrative Worked Example 5 August 2010 Microsoft Excel Spreadsheet (1.7 MB) (opens in a new window)

Updated Process Paper - Further Work on the Reset Default Price-quality Path for Electricity Distribution Businesses

03/05/2010 (1 document)

Updated Process Paper Further Work on the Reset Default Price quality Path for Electricity Distribution Businesses - Published 3 May 2010 Adobe Acrobat PDF (78 KB) (opens in a new window): On 5 February 2010 the Commerce Commission (“the Commission”) published a paper setting out the Commission’s proposed process for addressing further work on the Reset DPP. The matters identified for further work included:
- consistency with input methodology determinations (“IM consistency”);
- starting price adjustments;
- the use of an adjustment term within the allowable notional revenue formula (“headroom”);
- consideration of dedicated energy efficiency mechanisms;
- the potential use of quality incentives; and
- enforcement guidelines.
The Commission invited submissions on its proposed process and received a number of these from interested parties. The Commission has released this Updated Process Paper to update the process for addressing further work on the Reset DPP, having considered submissions.

2010-2015 Default Price-Quality Path

Components of the 2010-15 DPP

Proposed mid-period reset of the 2010-15 DPP to take account of input methodologies suspended

Current Document

Commerce Act Electricity Distribution Default Price Quality Path Determination 2010 Consolidated 7 April 2011 Adobe Acrobat PDF (174 KB)

Project Timeline

Disclaimer

Next Steps

Supporting Documents

Letter on DPP 2012-13 Pricing Year - 15 December 2011

Submissions on Consultation Paper on Electricity Volume Projections

Consultation Paper on Electricity Volume Projections - 15 September 2011

Correspondence - Decision Stage

Cross Submissions on Draft Decision to reset the 2010-15 DPP 5 September 2011

Submissions on the Draft Decision to reset the 2010-15 DPP August 2011

Draft Decision to reset the 2010-15 DPP July 2011

Correspondence on Draft Decisions

EDB Responses to Information Request Notice March and June 2011

Information Request for Starting Price Adjustments - 15 June 2011

Cross Submissions on Starting Price Adjustments & Other Amendments Update Paper

Submissions on Starting Price Adjustments & Other Amendments Update Paper (Industry-wide Assumptions)

Submissions on Starting Price Adjustments and Other Amendments – Update Paper

Extension to submission deadlines for SPA Update Paper

Starting Price Adjustments and Other Amendments – Update Paper

Default Price-Quality Path Determination

Information Request for Starting Price Adjustments

Submissions on Draft Information Request for Starting Price Adjustments

Draft Information Request for EDB Starting Price Adjustments

Submission on Starting Price Adjustment Process for Default Price-Quality Paths

Amendment to 2010-2015 Electricity Distribution DPP - Revenue Differential Term

Submissions on Electricity Distribution Price-Quality Path Refinements Discussion and Draft Decisions Paper

Cross Submissions on Starting Price Adjustments for Default Price Quality Paths Discussion Paper

Submissions on Starting Price Adjustments for Default Price Quality Paths for Discussion Paper

2010-2015 Electricity Distribution Price-Quality Path Refinements Discussion and Draft Decisions Paper

Starting Price Adjustments for Default Price-Quality Paths Discussion Paper - 5 August 2010

Updated Process Paper - Further Work on the Reset Default Price-quality Path for Electricity Distribution Businesses

Submissions on Further Work for Reset EDBs Process Paper

Further Work Process Paper

Initial Reset of the DPP - Determination

Initial Reset of the DPP - Decisions Paper

Submissions on the Update Paper for the Initial Reset DPP

Update Paper for the Initial Reset DPP

Submissions on Draft Determination for the Initial Reset DPP

Cross-submissions on Draft Decisions Paper for the Initial Reset DPP

Submissions on Draft Decisions Paper for the Initial Reset DPP

Draft Determination for the Initial Reset DPP

Draft Decisions Paper for the Initial Reset DPP

Submissions on Discussion Paper for the Initial Reset DPP

Discussion Paper for the Initial Reset DPP

Submissions on Process Paper for the Initial Reset DPP

Process Paper for the Initial Reset DPP