Canterbury power consumers’ opinions sought on proposed increase in prices

The Commerce Commission is seeking the views of Canterbury consumers on an application by the lines company Orion to increase its electricity prices as it rebuilds its network following the earthquakes. Orion is also seeking to recover lost revenue and extra costs incurred as a result of the quakes.

Orion has applied to the Commission for permission to increase its prices and reduce its quality targets. Electricity distribution companies have their prices and quality standards regulated by the Commission. The Commission is now considering Orion’s specific circumstances, which may require prices that are greater than those it is currently allowed.

Today’s issues paper asks Canterbury electricity consumers to consider 10 questions about Orion’s proposal. Orion’s proposal is to increase prices to fund its future expenditure in its network and to allow it to recover $86 million from consumers for additional costs and lost revenue.

“It is important that Canterbury electricity consumers have their say. It is the Commission’s job to make a balanced, informed decision that provides the best long-term outcomes for Canterbury electricity consumers. In doing that we also have to allow Orion to charge prices sufficient to make the necessary investment in its network,” said Commerce Commission Deputy Chair, Sue Begg.

Consumers wishing to make a submission to the Commission should read the Issues paper and consider the questions posed in the paper. The Issues paper and Orion’s proposal are available on the Orion CPP page.

Submissions should be sent to regulation.branch@comcom.govt.nz by 5pm on 24 May 2013.

The Commission intends to reach a draft decision by 19 July 2013. A fact sheet explaining the regulatory regime can be found on the CPP fact sheet page. 

Background

Orion’s current maximum prices and its quality targets are set in a price-quality path determined in 2009. To alter those prices and targets Orion has made a customised price-quality path (CPP) proposal which may lead to changes in its prices and quality standards from 1 April 2014, for the following five years.

The Commission has examined Orion’s proposal to decide whether the proposal complies with the Commission’s rules for the process and content for a CPP application. These are set out in the Electricity Distribution Services Input Methodologies Determination 2012 on the Electricity Distribution page. The Commission asked for more information from Orion to ensure that its proposal fully met the requirements of that determination. The additional information provided by Orion is set out in the Addendum of additional information provided by Orion. The Addendum is also available on the Commission’s website.

The Commission has decided that Orion’s CPP proposal, in combination with an Addendum of additional information, complies with the relevant rules.