The Commerce Commission (“Commission”) gives public notice under the Legislation Act 2019 in accordance with section 52W of the Commerce Act 1986 (“Act”) that it has amended, the Gas Distribution Services Input Methodologies Determination 2012 [2012] NZCC 27 and Gas Transmission Services Input Methodologies Determination 2012 [2012] NZCC 28, as previously amended (“gas IMs”).

Summary of the Amendments

The amendments have been published in the Gas Distribution Services Input Methodologies Amendment Determination (No.1) 2022 [2022] NZCC 5 and Gas Transmission Services Input Methodologies Amendment Determination (No.1) 2022 [2022] NZCC 6 (“amendment determinations”).

The amendment determinations amend the gas IMs in respect of certain parameter values the Commission uses when estimating the weighted average cost of capital for suppliers of gas distribution services and gas transmission services:

1. the “tax adjusted market risk premium” is 7.5%;
2. the debt issuance costs are 2% where a regulatory period is five years and 0.25% where a regulatory period is four years;
3. the methodology for estimating the risk free rate uses a residual period to maturity equal to the length of the regulatory period; and
4. other changes to the gas IMs to ensure that the WACC estimates will be able to reflect both a four-year and a five-year regulatory period.

Further Information

Copies of the amendment determinations, and the supporting reasons papers, are available on the Commission’s website via the 2022 gas default price-quality path project page at: https://comcom.govt.nz/regulated-industries/gas-pipelines/gas-pipelines-price-quality-paths/gas-pipelines-default-price-quality-path/2022-2027-gas-default-price-quality-path.

Dated at Wellington this 25th day of March 2022.

COMMERCE COMMISSION.