Vector expected pricing decision

CATHERINE HARRIS
Last updated 14:35 30/11/2012

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Auckland-based electricity lines firm Vector said it was unsurprised by the Commerce Commission's final decision on its pricing for electricity distribution.

Vector's chief executive Simon Mackenzie said there was little change to a draft released by the commission in August, which requires Vector to cut its distribution prices by an average of 10 per cent next year.

It must make a further price adjustment in 2014.

Distribution charges make up about a third of a power consumer's bill so the price caps on Vector are expected to be welcomed by consumers.

However, Vector has vigorously fought the price caps and said today that it would focus on the "merits appeal process," an appeal against the calculations rather than the commission's right to regulate.

That decision was expected to be made in the first half of next year, Mackenzie said.

Vector is one of 16 power distribution companies reviewed by the Commerce Commission, and one of two ordered to reduce their prices.

Horizon Energy must cut its prices by 3 per cent while the other companies are allowed to increase their distribution prices by up to 10 percent in some cases.

Sue Begg, the commission's deputy chair, said the price changes would bring electricity distributors' revenues more into line 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".

The commission said its move was not just about price but quality, so networks did not underinvest in their service.

Christchurch's distribution business Orion did not have its prices reset because it was weighing up whether to apply for a "customised" price path to help it deal with rebuild issues from the earthquake.

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- BusinessDay.co.nz

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