Transpower’s individual price-quality path for the next regulatory control period
Date published 21 Feb 2024, 09:00 am
We provided feedback to the Commerce Commission on their issues paper outlining the key issues it will focus on as it works to set a price quality path for Transpower from 2025.
Consultation overview
Transpower is the operator of New Zealand’s national grid. It’s subject to price-quality regulations, set by the Commerce Commission (the Commission) that define:
- the total amount of revenue it can earn from its customers, and
- the minimum standards of quality it must deliver in return.
Transpower submitted their spending proposal for the 2025-2030 period to the Commission at the end of 2023. They proposed an increase of 32% in capital expenditure and 20% in operating expenditure, to allow them to replace or upgrade ageing assets and maintain a reliable and secure electricity grid.
The Commission is currently assessing the proposal and is seeking feedback from others in the energy sector on the potential issues it has identified with it. They'll be publishing a draft decision on the proposal in May 2024, and their final decision on Transpower’s price-quality path in November 2024.
Submissions on the Commission’s issues paper closed on 21 February 2024.
Commerce Commission consultation: 2025 Transpower individual price-quality path(external link)
Our recommendations
We submitted a response to the Commission on this consultation with the following recommendations and notes.
- We noted that the proposed increase in Transpower’s spending for the period 2025-2030 is significant. We would like the Commission to scrutinise the proposal to see if the spending increase is justified.
- We agree with the Commission on the areas where further investigation is required or additional information is needed from Transpower before a decision can be made.
- We also agree with their comments that there are grounds for concern about Transpower’s ability to deliver its proposed work programme, in addition to the major projects it has signalled.
- In principle we agree with the Commission’s identification of the price path scenarios that merit further consideration, but have not identified a preferred option from our perspective. However, we would welcome future opportunities to contribute to this.
We have also provided feedback to the Commission on default price-quality paths for NZ’s electricity distribution businesses from 1 April 2025.
Default price-quality paths for electricity distribution businesses