Vector's hands tied – ordered to reduce charges

Consumers in 11 regions around the country are likely to see rises of up to 10% in power bills as a result of new price-quality paths.

But Auckland-based provider sVector and Horizon Energy Ltd will be required to cut prices.

The Commerce Commission today released its final decision to reset the default price-quality paths for 16 electricity distributors.

While Horizon Energy will need to cut its prices by 3%, Vector will need to find a 10% reduction. It could mean a $5.30 reduction in consumer’s monthly power bills.

Aurora, Nelson Electricity and Powerco will not have to adjust their prices, while the remaining 11 will be able to increase them by up to 10%.

The price changes take effect from April 1, 2013, and commission deputy chairman Sue Begg says they have tried to smooth the increases over a number of years in regions where there needs to be a larger price increase to support network investment.

The affected distributors are:

• Alpine Energy Ltd
• Aurora Energy Ltd
• Centralines Ltd
• Eastland Networks Ltd
• Electricity Ashburton Ltd
• Electricity Invercargill Ltd
• Horizon Energy Ltd
• The Lines Company Ltd
• Network Tasman Ltd
• Nelson Electricity Ltd
• OtagoNet Joint Venture
• Powerco Ltd
• Top Energy Ltd
• Unison Networks Ltd
• Vector Ltd
• Wellington Electricity Lines Ltd

Christchurch distributor Orion New Zealand has not been included in the new price paths while it works out whether to apply for a customised price-quality path to deal with rebuild issues associated with the earthquakes.

"The price limits on electricity distributors have been changed to better align their revenues with their costs," Ms Begg says.

"We aim to create an appropriate balance between providing incentives for these businesses to invest in their networks, while ensuring that consumers are being charged based on the cost of services provided in each region." 

She says while consumers will eventually get an increase or a decrease in power bills, businesses are free to decide how to spread the prices across their customer base.

Today’s change comes as a result of the Supreme Court’s November 15 decision which went against Auckland-based distributor Vector.

The company had argued the commission should not be allowed to carry out the price reset for electricity distributors without first setting the input methodology.

bcunningham@nbr.co.nz