Transpower revenue restricted

The Commerce Commission has put a lid on Transpower's revenue allowance for the next five years.

Transpower, which owns and operates the country's national grid, is now limited to a revenue stream of $4.05billion for the period, $685million less than it billed during the 2015-20 period.

Transpower had forecast required revenue of $4.42billion for the period.

Commission deputy chairwoman Sue Begg said the reduction in allowable revenues had reflected the expected average cost of capital (WACC) from 7.19% in the current period to 4.57% for the next five years, mainly due to reduced interest rates.

A Transpower statement said the reduction would result in lower transmission prices to customers, "which we would expect to flow through to lower electricity prices to consumers, if passed on by distribution companies and retailers".

However, whether or not the cost savings would be translated into electricity cost savings for consumers was uncertain yesterday, as both retailers and distributors weighed the implications.

Aurora Energy said yesterday said it was too early to comment on pricing, as it was "still assessing the impact of the Commerce Commission's decision".

Ms Begg said while the commission did not allow Transpower the full amount of its proposed capital and operating expenditure, the adjustments to the overall expenditure were "relatively modest".

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