Transpower cooperates with Commerce Commission

29 November 2005

Transpower cooperates with Commerce Commission investigation

Transpower is cooperating fully with the Commerce Commission’s investigation into the planned price rises to take effect from 1 April 2006.

Transpower is required to calculate its prices according to the Electricity (Transpower’s Pricing Methodology) Regulations 2004. Using this methodology results in an overall increase of 19% from 1 April 2006. This is due to the significant level of investment that is needed in the National Grid to ensure consumers have a secure electricity supply. Transpower is also subject to a Commerce Commission revenue threshold, which increases yearly at the rate of inflation minus one percent. Any revenue collected above this threshold has to be justified to the Commission.

Yesterday the Commerce Commission asked Transpower to supply it with all relevant documents relating to the planned price changes. Transpower chief executive Ralph Craven says those documents have been delivered to the Commission today.

“Transpower will cooperate fully with the Commerce Commission, as we have done during their ongoing investigation into our revenue from previous years.

“I strongly reject any suggestion that Transpower has failed to respond appropriately during that investigation. We have provided all the information asked of us to date.

“The Commerce Commission sets a revenue threshold, and Transpower is required to justify any revenue collected above that threshold. Transpower believes that it can fully justify its investment plans.

“Transpower is not putting up its prices to increase profits or generate excessive returns. We need to borrow more, retain more earnings and pay the government much smaller dividends, and increase our prices, to fund urgently needed investment in critical New Zealand infrastructure,” Dr Craven said.

Transpower’s customers include generators and lines companies. If the
Transpower increase from 1 April 2006 is fully passed on to end-users, a typical domestic consumer could see an increase of around $2.00 a month in their electricity bill. Transmission charges will still be less than they were in the mid-1990s, as a result of significant reductions in Transpower’s prices since 1999.

ENDS

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