Earthquake Resilience Plan needs $31 million; Submission on Dec 20
Wellington, December 6, 2017
The Commerce Commission has invited public submissions on Wellington Electricity’s plan to spend $31 million on earthquake strengthening its lines network.
Wellington Electricity, which distributes electricity to approximately 166,000 homes and businesses in the Wellington region, formally applied to the Commission on December 5, 2017 for a customised price quality path.
Wellington Electricity’s proposal and our process paper can be accessed here.
Monthly increase $1.90
If approved, Wellington Electricity estimates that the average consumer’s monthly bill would increase by up to $1.90, with the additional revenue used to fund earthquake-strengthening substations and purchasing equipment for use in emergencies.
The application follows a Government Policy Statement, which outlines the expectation that the Commission considers options to allow Wellington Electricity to recover resilience expenditure that was not anticipated when its price limits were set in 2015.
Commission Chair Dr Mark Berry said that the Commission accepts the need to urgently address this issue, to ensure Wellington’s lifeline utilities are prepared for a significant earthquake given the increased risk following the Kaikoura earthquake.
“We have considered submissions received on our paper discussing our suggested process for assessing Wellington’s proposal. Submissions were generally supportive of using the flexibility in our regulatory regime to fast-track the application, while some raised concerns about the precedent this would set,” he said.
“I want to signal very clearly that we see this as a one-off under these exceptional circumstances. We are not treating this application as a precedent as to how proposals will be dealt with in the future,” he added.
Dr Berry said that the Commission welcomes the views of consumers and other stakeholders on the proposal of Wellington Electricity.
“With the proposed new prices set to apply from April 1, 2018, we recognise that there is a condensed timeframe for public submissions. However, there will also be another opportunity for public feedback on our draft decision, which we expect to release in early February 2018,” he said.
Submissions are due by December 20, 2017 and can be emailed to regulation.branch with ‘Wellington Electricity CPP Proposal’ in the subject line.
The Commission expects to make its draft decision by February 1, 2018, and its final decision by March 29, 2018, subject to consideration of submissions on its draft decision.
Background to the Plan
Customised price-quality pathsAs a monopoly supplier under Part 4 of the Commerce Act, the Commission regulates the maximum prices that Wellington Electricity can charge and minimum quality standards that it must meet through a default price-quality path (DPP).
However, in applying for a customised price-quality path, the Commission must take into account Wellington Electricity’s individual circumstances to determine a new set of prices and quality standards.
More information about customised price-quality regulation can be found on the Commerce Commission website.
Government Policy Statements (GPS)A GPS is not a direction by Government. However, under Section 26 of the Commerce Act, the Commission must have regard to it, subject to its overall requirement to promote the long-term benefit of consumers under Section 52A of the Commerce Act.