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.2) 2022 [2022] NZCC 15 and Gas Transmission Services Input Methodologies Amendment Determination (No.2) 2022 [2022] NZCC 16 (“amendment determinations”).

The amendment determinations amend the gas IMs in the following respects:

1. they align the information disclosure and price-quality treatment of capitalised “right of use” assets with the new accounting standard New Zealand International Financial Reporting Standards by providing for–
• a GAAP-based life to be assigned to depreciate right of use assets by Gas Distribution Businesses (“GDBs”) and the Gas Transmission Business (“GTB”); and
• for GDBs, the adoption of opening GAAP deferred tax balances for right of use assets and other assets that do not have a corresponding regulatory tax asset value when calculating tax allowances for purposes of information disclosure, default price-quality paths (“DPPs”), and customised price paths;
2. they introduce a mechanism to allow the Commission to adjust asset lives when calculating depreciation for a DPP if doing so would better reflect economic asset lives and better promote the purpose of Part 4 of the Act;
3. they introduce a capacity event reopener to allow the Commission to reconsider the price path in a DPP by approving an additional capital expenditure (“capex”) allowance if the GDB or GTB can demonstrate it needs additional capacity on its network that was not foreseen at the time the DPP was reset, or where it was foreseen, was not provided for due to uncertainty of need; and
4. they introduce a risk event reopener to allow the Commission to reconsider the price path in a DPP by approving an additional capex allowance, or an additional operating expenditure (“opex”) allowance where opex is more cost-effective than capex, if the GDB or GTB establishes that:
• part of its network has deteriorated or will deteriorate to the extent that failing to invest during the DPP period, beyond the allowance already provided, would:
• materially adversely affect its ability to meet its quality standards; or
• compromise the safety of any person or the integrity of assets.

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 30th day of May 2022.

These documents are also available for inspection during the hours of 8.30am to 5.00pm, Monday to Friday, by appointment, at the Commerce Commission, Level 9, 44 The Terrace, Wellington.

COMMERCE COMMISSION.