2009-2010 Default Price-Quality Path

The 2009-10 default price-quality path applied to electricity distribution businesses for the period 1 April 2009 to 31 March 2010. More information can be found here.

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On 1 April 2010, the 2009-10 default price-quality path was superseded by the 2010-15 default price-quality path.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.