Further consultation on the financeability of electricity distribution services

Consultation overview

The Commerce Commission (the Commission) released an issues paper, “Financeability of electricity distribution services in the default price-quality path” for consultation in February 2024. They requested submissions on this paper, which we provided in mid March 2024. 

Financeability of electricity distribution services

At the end of the consultation period, the Commission invited interested parties to make a cross-submission on the responses to the issues paper, taking into account the feedback provided. We provided a cross-submission on this consultation on 2 April 2024.

Commerce Commission consultation: Cross-submissions on the issues paper “Financeability of electricity distribution services in the default price-quality path”(external link)

Our recommendations

In our cross-submission to the Commission, we noted the following points made by other parties in their original submissions on the issues paper.

• We support the point made by the Major Electricity Users’ Group (MEUG) that a ‘sense check’ remains an appropriate mechanism for the Commerce Commission to use to assess the extent to which finance issues may or may not be relevant to this reset, and to inform how it might take this into account in its decision making.  
• We agree with points made in other submissions about the need for additional clarity on the ‘sense check’ process and how it will work. This clarity is important to ensure both consumers and lines companies have good information about the process and the matters that will be considered in the price reset.  
• We support the points made by MEUG and Fonterra that the existing regime already provides for regulated businesses to generate ‘acceptable’ returns. In this respect, we think the regulatory framework provides a favourable environment in which companies can operate and manage their financial sustainability.  
• Fonterra’s submission also makes the point that “electricity users are facing significant pricing pressure from both the sustained high cost of electricity via wholesale electricity market prices and increased transmission and distribution costs”. Minimising further price rises in this reset is essential to ensure consumers have access to affordable electricity, both now and long-term.  
• We note the Oxera Consulting report that the ‘big 6’ lines companies have commissioned and submitted. In the limited time available for cross-submissions, we have not had the opportunity to review this report. However, we wish to stress that any proposed changes to this reset, whether based on the Oxera report or other information, would require public consultation.