Power distribution costs outstrip revenue

JASON KRUPP
Last updated 13:09 30/01/2013

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Electricity distribution revenues have outpaced inflation over the past four years, but the higher takings were still outstripped by rising operating and capital investment costs.

That's according a Commerce Commission report into the performance of 29 electricity distribution companies between 2008 and 2011, which analysed revenue, demand, service reliability and expenditure on the network.

The figures show total revenue rose 5 per cent above inflation over the four-year period as firms saw increased demand for their services, and passed on the higher operating and capital expenditure costs.

Total operating expenditure rose 6 per cent over and above inflation from 2008 to 2011, while capital expenditure rose 8 per cent on the same basis.

Commerce Commission's general manager of regulation John Hamill, said the aim of the report was to give customers an insight into the distribution costs, which accounted for about a quarter of a typical household power bill.

"We hope that reports like this will provide useful information for the distributors and their stakeholders to keep improving business performance," he said.

Hamill said the overall reliability of the network was stable during the period, although some firms experienced higher volatility that the sector average.

Electricity distribution firms, which function as the link between the end-customers and the national grid, operate as regional monopolies, putting them under competition watchdog's oversight.

The report did not include the recent price reset for the 16 distributors subject to price-quality regulation.

Auckland distributor Vector is challenging the methodology the Commerce Commission used to reset prices.

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- BusinessDay.co.nz

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