Assessment of electricity lines companies' asset management

Assessment of electricity lines companies' asset management

The Commerce Commission has released its high level observations from the 2016 and 2017 asset management plans of New Zealand’s 29 electricity lines companies, which cover the period from 2016 to 2027.

The work is part of the Commission’s current focus on assessing whether lines companies are investing in and maintaining their networks to provide the reliability, safety, and resilience that consumers expect.

“Over the past year, Commission staff have visited many of the country’s lines companies. Despite many companies facing similar challenges, our staff observed a variety of approaches to managing asset information, inspecting the networks, planning investment, managing risks, and engaging with customers,” Commissioner Dr Stephen Gale said.

“Each lines company is responsible for ensuring the reliability and safety of its network. Even so, we are seeking to ensure that we and other stakeholders understand the extent to which the necessary forward planning is in place to avoid any serious decline in the quality of service.”

Dr Gale said the paper is targeted at those responsible for asset management at lines companies. “We think sharing our observations will encourage lines companies to continue to learn from each other.”

The asset management plans in this review were prepared in 2016 and updated in 2017. The lines companies have recently disclosed their plans for 2018-2028. We are undertaking a more thorough review of these new plans later this year.

The paper can be found here.

Feedback on the paper is welcome via email to regulation.branch@comcom.govt.nz

A wide range of information about each lines company’s performance is also available in our Performance Accessibility Tool, which can be found here.

Background
Regulation of electricity lines companies
As monopoly utilities, all 29 of the country’s electricity lines companies 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 efficiency. Each lines company is required to publicly disclose information on its performance, including inputs such as its asset management plans.

17 of the 29 also have revenue limits and quality standards set by the Commission. Limits on the revenue the company can collect from customers limit excessive profits and quality standards are intended to prevent excessive power outages. If a business breaches its revenue limits or 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 community owned and exempted from price-quality regulation.

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