Aucklanders will save more than $60 a year on their power
bills while most other regions could pay more under new
monopoly prices set by the Commerce Commission.
The regulator today released its final decision on price caps
and minimum quality standards for the 16 electricity
Two distributors - Vector in Auckland and Horizon Energy in
the Bay of Plenty - will have to reduce their prices, while
the remaining 14 distributors will be able to increase prices
by up to 10 per cent.
The new price structure from April next year will affect how
much customers pay for power, with distribution costs making
up about a third of a customer's bill.
Vector will have to reduce its prices by 10 per cent, or an
estimated $5.30 a month off the typical residential
customer's bill - a saving of $63.60 a year.
Horizon will have to reduce its prices by 3 per cent, or an
estimated saving of $2.10 a month, or $25.20 a year.
The remaining distributors can increase their prices, if they
choose, by between 1-10 per cent.
The biggest increase could be made by Top Energy in the Far
North, which can put up its prices by 10 per cent - an
estimated increase of $8.90 a month, or $106.80 a year.
The price cap decision comes after the Supreme Court this
month upheld a Court of Appeal ruling that found the Commerce
Commission was not required to determine a starting price
input methodology for electricity distribution and gas
Vector had argued the commission should not be allowed to set
its caps without first setting an input methodology.
Vector chief executive Simon Mackenzie today said the
commission's decision was little different from an earlier
draft requiring it to reduce prices by 10 per cent next year,
with a further price adjustment in 2014.
The company and seven other parties are appealing before a
High Court judge and two independent experts through a merits
"The commission is making its final decision as part of the
regulatory process, however more importantly our focus
remains on the merits appeal process, which is well underway
with a decision expected in the first half of next year," Mr
Commerce Commission deputy chairwoman Sue Begg said the price
caps had been changed to better align distributors' revenues
with their costs.
"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 said.
"In those regions where we have determined that there needs
to be a larger price increase to support network investment,
we have smoothed the increases over a number of years. This
has helped to avoid more significant price increases in
Ms Begg said the price reset would eventually flow through to
consumers, as either a price increase or decrease on their
power bills depending on where they live.
"Businesses are free to decide how to spread the prices
across their customer base, or indeed, in the case of
increases may decide not to take up the full amount of the
The commission has not reset the pricing for Christchurch
distributor Orion, which was still assessing whether to apply
for a customised price-quality path to deal with earthquake