Wellington Electricity settles with regulator over price path breach
Wellington Electricity Lines, the capital city's electricity lines company owned by Hong Kong billionaire Li Ka-shing's Cheung Kong Infrastructure Holdings, has reached an out-of-court settlement with the Commerce Commission over a breach of its price path.
The Wellington-based company will cut the amount it can earn in the 2014/15 year by $148,000 to compensate for exceeding its price path, which restricts the revenue an electricity distributer can earn in a given year, by almost $117,000 in the 12 months ended March 31, 2012, the antitrust regulator said in a statement. The amount reflects the gain to Wellington Electricity, and adjusts for the time value of the money.
The regulator accepted Wellington Electricity's assertion that the breach was because of lower pass-through costs than forecast.
"The commission welcomes the settlement agreement, which is a cost effective way of resolving the breach," commission deputy chair Sue Begg said. "We acknowledge the constructive way in which Wellington Electricity approached the settlement process in order to return the amount it gained from the breach."
Wellington Electricity's lines network delivers electricity to about 160,000 homes and businesses throughout Wellington, Porirua and the Hutt Valley areas.
The company reported a loss of $19 million in calendar 2012, with some $67.6 million in interest costs, half of which was to related parties, according to its latest financial statements. Earnings before interest, tax, depreciation and amortisation were flat at $47.6 million on a 4.8 percent lift in revenue to $165 million.