Commission releases final amendments to airport land valuation rules
The Commerce Commission has released its final decision on the application of the airport land valuation rules as part of the input methodologies review.
The Commerce Commission has released its final decision on the application of the airport land valuation rules as part of the input methodologies review.
The Commission announced in July last year that it would fast track this tranche of work ahead of the main review to provide greater certainty before the next airport price setting events in mid-2017.
Deputy Chair Sue Begg said the draft amendments released for consultation in November last year remain broadly unchanged in the Commission’s final decision. The amendments are designed to reduce ambiguity in the application of the market value alternative use (MVAU) valuation methodology for airport land, including the steps involved in determining MVAU, as well as special assumptions and practical valuation requirements.
“The airports and airlines have engaged positively with us throughout this fast-track process and we would like to thank those who made submissions. Transparency and predictability in relation to asset valuation are important for the industry, so we are pleased that completing this work early will enable Auckland and Christchurch airports to prepare updated land valuations ahead of their price-setting events next year, should they wish to do so,” Ms Begg said.
Background
What is the market value alternative use (MVAU) valuation methodology?
The MVAU is the valuation method airports are required to apply if they choose to revalue airport land under the Commerce Act (Specified Airports Services Methodologies) Determination 2010.
Is this decision related to Wellington Airport’s proposed runway extension?
Wellington Airport’s proposed runway extension is not directly relevant to the amendments released today and has no more of a bearing on the main input methodologies review than other assets owned by the airport.
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.
The Commission intends to release its draft decisions on the main IM review in June and complete the process by December 2016. Review of the application of the airport land valuation rules (the focus of this media release) was fast tracked for completion ahead of the main IM review to provide greater certainty before the next airport price setting events in mid-2017.
Previous media releases
All previous releases on the IM review can be found here.