█ Suppliers of electricity lines services are subject to regulatory provisions under the Commerce Act 1986.
Commerce Commission Media Release
New report details profitability of electricity lines companies
8 June 2016
The Commerce Commission has today released a new report detailing the profitability of the 16 electricity distributors subject to price-quality regulation in New Zealand between 2012 and 2015. Commission Deputy Chair Sue Begg said the analysis shows the revenue limits were effective at limiting excessive profits, while investment in the electricity distribution network also increased. The Commission’s analysis is based on information that distributors are required to publish under information disclosure regulation. Cont/ page link
[Report] Profitability of electricity distributors following first adjustments to revenue limits
8 June 2016
Under information disclosure regulation, 29 electricity distributors are required to publically disclose information to help people better understand how the sector is performing. The focus of this report is on profitability. Amongst other things, we hope this work will go some way towards answering questions that are frequently asked of the Commission about whether the average level of distribution pricing is appropriate. While the report comments on the profitability of all distributors, our detailed analysis centres on the distributors that are subject to price-quality regulation. Cont/
● Download: EDB profitability infographic for interactive version
(PDF, 2.4 MB)
● Profitability of electricity distributors following first adjustments to revenue limits [page link to 8 documents for download]
“Given lines companies are natural monopolies it’s important that consumers can be confident that the revenue limits we set are working as intended,” Ms Begg said. “This report helps reassure consumers that lines companies’ returns are appropriate and infrastructure investment is continuing to be made.” –Begg, Commerce Commission
### National Business Review Wed, 8 June 2016
Regulatory curbs limit excessive profits from lines companies
By Paul McBeth
The Commerce Commission is hailing the success of revenue limits in curbing excessive profits at electricity lines companies, although Auckland’s Vector and Wellington Electricity were among five distribution firms showing a material deterioration in network reliability. Returns for the 16 companies subject to price-quality regulation ranged from 5.33% for The Lines Company to 8.37% for Network Tasman between 2012 and 2015, with the majority falling within one%age point of the regulator’s expectations and the remainder below those predictions, commission deputy chairwoman Sue Begg said in a statement. Vector, the country’s biggest lines company, generated an internal rate of return of 7.04% in the period and the Commerce Commission estimates profit would have been about $110 million more had the revenue limits not been in place.
As NBR reflects, the Dunedin City Council-owned company, Aurora Energy Ltd comes in for harsh criticism from the Commerce Commission (“the regulator”):
[Today’s profitability report spanning 2012 to 2015] …. “also showed five companies – Aurora Energy, Eastland Network, Electricity Invercargill, Wellington Electricity and Vector – had a material deterioration in network reliability between April 1, 2010, and March 31, 2015, and didn’t meet the ‘two out of three years’ quality standard, which allows for poor performance in one year.
The regulator has issued warnings to Aurora, Eastland and Electricity Invercargill, and may take stronger responses to Aurora and Eastland for future breaches after its engineering advisers raised concerns about those two firms’ asset management.”
Aurora Energy Ltd (471661) has the same Board of Directors and Chief Executive (Grady Cameron) as Delta Utility Services Ltd (453486) which is seriously mired in the debacle for the Noble subdivision at Yaldhurst, Christchurch – a parallel but more expensive nightmare for ratepayers than the Luggate and Jacks Point subdivisions fiasco.
Note: Representatives for the ‘Noble parties’ surfaced at the High Court in Christchurch on Friday 3 June (details to come).
█ For more, enter the terms *aurora*, *delta*, *luggate*, *jacks point*, *auditor-general* or *noble* in the search box at right.
Posted by Elizabeth Kerr
Election Year. This post is offered in the public interest.