Media Release
Issued 9 November 2017
Release No. 47
Asset management of electricity distributors key focus for Commission
The Commerce Commission has today published an open letter outlining how asset management is a key priority for the
Commission’s work in the electricity distribution sector over the coming year.
Asset management was signalled as a focus area at the Commission’s annual stakeholder briefings in September, with
today’s letter providing more details.
“Focusing on asset management of regulated energy suppliers is the logical next step now the upfront rules, processes,
and price-quality paths are bedded in,” Commission General Manager of Regulation Nick Russ said.
“It’s increasingly important that electricity distributors prioritise investment and maintenance of their assets to
ensure their networks provide the reliability, safety, and resilience consumers expect.”
“This priority is about us becoming increasingly proactive in working with electricity distribution businesses to ensure
we and other stakeholders understand the extent to which electricity distributors are investing appropriately in their
networks and managing them well.”
“We also recognise that sunlight is a powerful tool for incentivising good performance, which is why in conjunction with
the open letter, we’ve also launched a new online tool to help make performance information about electricity
distributors more accessible.”
The data visualisation tool can be found here.
The open letter can be found here.
The Commission welcomes feedback on the open letter and online tool toregulation.branch@comcom.govt.nz by the end of the year.
Background
Regulation of electricity distribution businesses
As monopoly utilities, all 29 of the country’s electricity distribution businesses are regulated by the Commission under
Part 4 of the Commerce Act. The aim of this regulation is to ensure they have similar incentives and pressures to those
operating in competitive markets to innovate, invest, and improve their efficiency. Each distribution business is
required to publicly disclose information on its performance. 17 of the 29 also have revenue limits and quality
standards set by the Commission. Revenue limits determine the maximum revenue the company can collect from customers to
limit their ability to earn excessive profits, while minimum quality is measured in power outages. If a business
breaches its quality standards (eg, asset degradation leads to more outages on its network than is allowed), it may face
prosecution under the Commerce Act. The remaining 12 distribution businesses are exempt from price-quality regulation as
they are consumer-owned.
ends