Status Quo Confirmed for Gas Companies Seeking Customised Price-Quality Paths
The Commerce Commission has released its final decision not to amend the information requirements applying to gas
pipeline businesses who apply for a customised price-quality path (CPP).
The decision is part of the review of Input Methodologies (IMs), which are the upfront rules, requirements and processes
that apply to businesses the Commission regulates in markets with little or no competition.
Commission Deputy Chair Sue Begg said the information requirements ensure regulated gas companies provide the Commission
with sufficient information to assess applications for a CPP.
“We have carefully considered feedback received from the industry about aligning the requirements with information
disclosure requirements and those that exist for regulated electricity lines businesses,” Ms Begg said.
“However, we consider it would be more cost efficient and in the best interest of consumers to conduct a single review
of the requirements following a CPP application by a gas pipeline business.”
“In the meantime, we believe the modifications and exemption provisions provide for a flexible approach to CPP
information requirements. This flexibility is likely to reduce time and costs, making for a more cost-effective CPP
process overall.”
The final decision can be found on our website.
Background
What is the IM review?
The IMs under review were determined in December 2010 and must be reviewed within seven years of being set. The IM
Review is the opportunity to assess whether there are any necessary changes to more effectively promote the long-term
benefit of consumers.
What is price-quality regulation?
Price-quality regulation is designed to ensure businesses operating in markets with little or no competition have
similar incentives and pressures to those operating in competitive markets to innovate, invest, and improve their
efficiency. It aims to limit the ability of suppliers to earn excessive profits by setting the maximum revenue they can
recover from their customers and the minimum quality standards they must meet.
What is a customised price-quality path?
Regulated businesses subject to price-quality regulation usually have their maximum revenue and minimum quality
standards set in a default way. However, in applying for a customised price-quality path, the Commission must take
account of their specific circumstances to determine a new set of prices and quality standards. More information about
customised price-quality regulation can be found on ourwebsite.
ENDS