Media Releases

Commission updates process for input methodologies review

30 October 2015

The Commerce Commission has today released a process update paper confirming the key topics and next steps for the input methodologies review.

Input methodologies are the rules, requirements and processes that apply to the Commission and some of the sectors it regulates. They were determined for specified airport services, gas pipelines and electricity distribution and transmission in December 2010 and must be reviewed within seven years of publication.

Deputy Chair Sue Begg said the Commission will continue working towards completing the review by December 2016, with draft decisions now set down for mid-June 2016.

“We have been encouraged by the high level of engagement from stakeholders during the problem definition stage and look forward to that continuing. The submissions received have enabled us to clarify the key topics we need to focus on to further develop the process for this review. There are specific issues we want to discuss further with stakeholders and we intend to hold workshops to draw on their specialised knowledge and practical experience prior to making the draft decisions,” Ms Begg said.

The topics identified in the problem definition paper remain the key focus for the review with a few minor changes and additions. Prior to reaching draft decisions, the Commission intends to engage with stakeholders on cost of capital issues, airports profitability, gas pipeline issues, related party transactions and the customised price-quality path requirements.

The Commission also intends to hold a workshop focused on the future impact of emerging technologies in the energy sector. The workshop will be held on 14 December 2015 with specialist industry representatives to build a shared understanding of how the current rules treat the costs and revenues associated with investment in new technologies.

The process update paper outlines the next steps and expected timeframes for further engagement and decisions. The Commission remains open to including additional engagement steps on specific topics if there is value in doing so before making draft decisions.

A copy of the process update paper can be found on the review page.

Background

What are the input methodologies (IMs)?

The IMs are the upfront rules, requirements and processes that apply to regulation in New Zealand. Under Part 4 of the Commerce Act, the Commission is required to set and apply IMs to regulated electricity lines services (distribution and transmission), gas pipelines (distribution and transmission) and specified airport services.

What is the IM review?

The IM review is the opportunity to assess whether there are any necessary changes to the IMs to more effectively promote the long term benefit of consumers. We do this review in consultation with all stakeholders. The Commerce Act requires the Commission to review each IM within seven years of its date of publication and, after that, at intervals of no more than seven years.

What has the IM review process been to date?

On 27 February 2015, we issued an open letter seeking comment on the timing, approach and possible focus areas for the IM review.

Having reviewed feedback on that letter, we issued a notice of intention to commence the current IM review on 10 June 2015.

On 16 June 2015, we released an invitation to contribute to the problem definition for the IM review (problem definition paper). We held an industry forum in July to give interested parties an opportunity to develop and test their views on the problems for the review prior to making formal written submissions.

Having now analysed submissions and cross-submissions on our problem definition paper, we have been able to further develop the process for the review.

Previous media releases

This is the seventh media release from the Commission on the input methodologies review. All previous releases can be found here.