The Commerce Commission is consulting on a proposed framework for determining acceptable electricity and gas price increases.A new low cost form of regulation - price-quality paths – was introduced by the Commission last year.Electricity and gas sup
The Commerce Commission is consulting on a proposed framework for determining acceptable electricity and gas price increases.
A new low cost form of regulation - price-quality paths – was introduced by the Commission last year.
Electricity and gas suppliers have two options: accept a default price-quality path (DPP) with starting prices set by the Commission, or make a case for customised standards.
Starting prices are allowed to creep up by a certain amount to account for inflation and new starting prices are set at the start of each regulatory period.
The Commission today released a proposal for determining these starting price adjustments.
Brent Alderton, the Commission’s regulation general manager, said that the proposal is“purely illustrative” and does not reflect the size of any actual starting price adjustments.
“We recognise that the regulated businesses may hold differing views on the appropriate process for starting price adjustments and will consider these views once we have received feedback on the proposal,” he said.
“Suppliers who consider that the final starting price adjustments are unsuitable for their particular circumstances may propose a customised price path.”
The Commerce will release draft decisions on the process next year after considering submissions. Final decisions on starting prices will take effect in 2012.
A DPP for non-exempt electricity distribution companies took effect from April this year, and an initial DPP for gas pipeline services will begin in 2012.
Electricity distribution companies owned by consumers are exempt.
