Compliance Review Of Electricity Distribution

Compliance Review Of Electricity Distribution Business Asset Management Plans For 2009 Released

The Commerce Commission has today released a review of the asset management plans disclosed by electricity distribution businesses for the period beginning 1 April 2009. The Commission notes the continued progress made by many electricity distribution businesses toward achieving best practice in asset management planning.

This is the first year that electricity distribution businesses have been required to disclose their asset management plans (AMP) under the new Electricity Distribution (Information Disclosure) Requirements (2008). The new disclosure requirements stipulate that AMPs must be disclosed in advance of the planning period to which they relate. Because of this amendment, businesses were not required to disclose AMPs for the period commencing 1 April 2008.

The Commission’s review has been informed by a report prepared by Strata Energy Consulting Ltd. The report assesses each AMP, identifying planning areas that are well developed and places where disclosure could be improved. The report also compares the level of compliance between electricity distribution businesses and between successive years’ AMPs.

“Although the average assessed level of compliance has remained relatively unchanged since the Commission’s last review, most sections of the asset management plans have improved. The Commission expects that future disclosures will continue to benefit from the review process,” said Commerce Commission Chair Dr Mark Berry.

“The review shows that some electricity distribution businesses have made significant improvements to their asset management plans over the past years. This is welcomed, as these plans are the principal documents that drive investment planning by the network businesses,” said Dr Berry.

This year’s review has revealed the following notable performances:  the top performers were The Lines Company, Mainpower and Unison Networks;  the suppliers that made the most significant gains from last year’s review were Electra, Mainpower and Centralines; and  the lines businesses with the greatest room for improvement are Horizon Energy, Wellington Electricity and Counties Power. This is the first year Wellington Electricity has been required to disclose an AMP.

More generally, the review found that:  the sections of the AMPs needing improvement are mainly those that deal with the disclosure of network development plans, target levels of service and performance, and the newly required expenditure forecasts and reconciliation information;  the lowest performing plans of previous years have continued to improve, which has resulted in a more consistent level of asset management planning by the 29 electricity distribution businesses; and  greater attention paid to the structure and readability of some of the asset management plans would assist readers in their understanding of the plans.

“This latest review identifies areas in which more focus is required, particularly the section in the asset management plans that relates to network development planning. This would provide a marked improvement in the quality of the distribution businesses’ asset management plans,” Dr Berry said.

The assessment process, by its nature, involves an exercise of discretion and the term ‘compliance’ is used in the broad sense to reflect the practices set out in the Requirements and the Commission’s Electricity Information Disclosure Handbook.

The Commission’s review, the Strata report and other related documents regarding disclosure requirements are available on the Commission’s web site www.comcom.govt.nz under Industry regulation/Electricity/Electricity Information Disclosure

Background

The Commerce Commission’s review has been informed by a report prepared by Strata Energy Consulting. The report assesses the publicly disclosed asset management plans (AMPs) of 29 EDBs against the Electricity Distribution (Information Disclosure) Requirements (2008) (Requirements) and the Electricity Information Disclosure Handbook (2004) (Handbook), and their amendments.

As with previous AMP reviews, this year’s review evaluates each AMP against a set of compliance criteria derived from the provisions of the Requirements and the Handbook.

The Commission updated the Requirements and the Handbook in October 2008. Changes affecting the 2009 AMPs include the new disclosure date for AMPs and a new requirement to disclose expenditure forecasts and reconciliation information.

There are 29 electricity distribution businesses currently providing distribution services between Transpower and end users in New Zealand. Until July 2008, Wellington Electricity was part of the Vector network.

The chart below compares the assessed performance of the electricity distribution businesses’ 2006, 2007, and 2009 AMPs. The AMPs each have a minimum planning horizon of ten years, commencing 1 April 2006, 1 April 2007, and 1 April 2009 respectively.

A graph showing the 2007, 2008 and 2009 AMP rating comparison is in the attached PDF>

ENDS

© Scoop Media