Notification of Commerce Commission’s Final Determination on Wellington Electricity Lines Limited’s Proposal to Customise its Prices and Quality Standards

Notice Type: Authorities/Other Agencies of State
Notice Title: Notification of Commerce Commission’s Final Determination on Wellington Electricity Lines Limited’s Proposal to Customise its Prices and Quality Standards

The Commerce Commission (“Commission”) gives the following notice under Part 4 of the Commerce Act 1986 (“Act”).

Notice of determination

On 28 March 2018, the Commission made a determination to customise Wellington Electricity Lines Limited’s prices and quality standards pursuant to section 52P of the Act.
The determination sets out the Customised Price-Quality Path (“CPP”) applicable to Wellington Electricity Lines Limited (“WELL”).
The determination is made in accordance with the Commission’s input methodologies.
This notice summarises the determination in accordance with section 52P(7)(b) of the Act.

The determination applies for the regulatory period starting 1 April 2018 and expiring 31 March 2021.
The Commission allowed for WELL’s proposed expenditure of $31.2 million to deliver a more resilient network that is less susceptible to earthquake damage. The Commission is satisfied that the expenditure is needed and that it has been costed appropriately in line with its purpose.
WELL’s maximum allowable revenue has been approved at $105.2 million in the first year of the CPP, and CPI increases for subsequent years of the CPP period.
WELL will be subject to the same reliability quality standards and incentives that applied under the DPP we set for WELL in 2014.
We have also set additional quality requirements that incentivise WELL to meet the objectives of the additional resilience expenditure.
The new quality standard requires WELL to deliver a minimum level of the resilience improvements set out in its CPP proposal. If WELL fails to meet this minimum resilience level, WELL will breach its quality path and we may take enforcement action.
Under the revenue linked quality incentive, if WELL does not deliver the resilience improvements, as outlined in its proposal, its revenue will be proportionately reduced in the next regulatory period.

A copy of the determination and the reasons paper is available on the Commission’s website: http://comcom.govt.nz/regulated-industries/electricity/cpp/cpp-proposals-and-decisions/, and for inspection free of charge, or for purchase at a reasonable price, at the Commission’s Office at 44 The Terrace, Wellington (during ordinary office hours).

Date of Notice: 29 March 2018.

COMMERCE COMMISSION.