Lines industry study demonstrates increasing value

Lines industry study demonstrates increasing value

The PriceWaterhousCoopers study into price trends among the country’s 29 electricity distribution companies shows the sector is increasingly delivering efficiency-based value to consumers, says Electricity Networks Association Chairman, Warren Moyes.

“Consistent reduction in line charges, lower connection costs and improved service show that the lines industry is delivering service and value to New Zealanders.

“It is a vote of confidence in an industry that has shown it is possible to reduce prices over the medium term. Average line prices have fallen consistently over six years; the cost per connection has fallen by 37 per cent over seven years. Few other industries can make a similar claim,” Mr. Moyes said.

Mr Moyes added that the information in the PriceCoopersWaterhouse report would be used in the industry’s discussions with the Commerce Commission, which is recommending the imposition of differential price controls, as well as profit and quality controls, on the electricity lines industry.

“The data show that heavy-handed regulation is unnecessary in the line industry. The trend towards lower prices and better service is now well established, and will continue as the industry is further rationalised.

“This has been achieved in a climate of restrained profits, where the median return on investment in 2002 was just 4.2 per cent. No-one in the industry is making monopoly profits, and the call for controls on profitability are unjustified and unnecessary. Such calls could result in reduced investment and the potential for a reduction in service standards.”

The study confirms the success of the lines industry, which already offers prices which are amongst the lowest in the developed world.

“The lines industry is an increasingly important player in delivering cost-effective energy to industry,” Mr Moyes said. “Impositions on the industry in the form of regulatory burdens will result in high regulatory costs, a diversion of the focus of the industry, a no additional gain to consumers.