Lines company performance data highlights emerging trends

The Commerce Commission has published its third set of one-page summaries of key performance measures for each of New Zealand’s 29 electricity lines companies.

The summaries are designed to promote a better understanding of each lines company’s performance by providing high-level statistics such as profitability, capital and operating expenditure, asset condition, revenue and network reliability. The data released today is for the year ending 31 March 2018.

Deputy Chair Sue Begg said with three full sets of summaries now published, the data allowed for stronger year-on-year comparisons across both the sector as a whole and individual lines companies.

“The purpose of these summaries is to shine a light on lines companies’ performances and with a third set of data now published there are some interesting trends emerging,” Ms Begg said.

“Through our own analysis when comparing the data sets, we have seen that overall demand has increased over the past year in terms of total energy delivered, peak demand, network capacity and customer numbers.

“Across the sector, capital expenditure has increased by 16% and operational expenditure is up 5%, which is significantly higher than the three year average. In 2018, total revenue has also increased by nearly 4%; however lines companies’ collective return on investment has dropped 1% and regulatory profit decreased by nearly $100 million (12%).”

There remain differences between the performances of different lines companies, such as the health of assets including poles, lines and substation equipment, and also in the detailed knowledge they have of the condition their assets are in.

“Where we identify any specific performance issues, particularly in terms of the risk posed by aging assets, we will be following up with lines companies to ensure their management plans are properly accounting for their network requirements,” Ms Begg said.

The performance summaries are available on the Commission’s website.

Background

Where did the data for these summaries come from?
The summaries are based on the most recent information that was publicly disclosed by each electricity lines company under our information disclosure requirements (covering the year ended 31 March 2018). The data has been certified by directors, and the financial information has been subject to independent audit. However, we cannot guarantee that there are no errors in the data provided. We have not included Transpower, the national electricity transmission business.

What is the Commission doing to address potential issues of concern?
Lines companies themselves are ultimately responsible for managing their own networks. These summaries are part of a wider programme of performance analysis, which can shed light on the decisions of lines companies and any consequences.

Of the 29 lines companies in New Zealand subject to information disclosure regulation, 17 are also subject to price-quality regulation. If a regulated company breaches quality standards - for example if asset degradation leads to more outages on its network than is allowed - it may face proceedings under the Commerce Act. The remaining 12 lines companies are consumer-owned and are not subject to price-quality regulation.

For more information on our role in the electricity sector see our website.

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