Monopoly pricing issue before court

Last updated 08:03 05/09/2012

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An army of lawyers is assembled in the High Court at Wellington this month to review the way airports and electricity distributors set pricing. They are apparently free to ignore a major Commerce Commission review of the subject.

The Major Electricity Users Group (MEUG) has warned the court's findings could add millions to the costs faced by consumers. However, the hearings alone could dent balance sheets.

With 11 lead counsel and 20 assisting lawyers, it is believed the first day of hearings before Justice Clifford was costing more than $15,000 an hour in legal fees.

While the numbers were expected to dwindle during the course of the trial, this week is only the start.

The first of three separate hearings on input methodologies, the courts' findings will ultimately determine how much regulated monopolies - airports, gas and electricity distributors and national grid operator Transpower - can charge customers.

It was also the start of an expensive relitigation of a matter the Commerce Commission has already spent almost two years on. That process included four rounds of consultation, more than 500 submissions and hundreds of pages of findings.

Previously, aggrieved parties were forced to seek judicial reviews of commission findings, but Parliament gave cross-party support for "merit-based" reviews of the input methodology findings when it was considering the Commerce Amendment Act 2008.

Allen Myers, a Melbourne-based QC representing lines company Vector, told the court on Monday that this meant it was hearing the matters "afresh". While no new evidence could be presented, the court was not bound by the commission's findings if it believed it could do better.

"There is no requirement to demonstrate error, of law or fact, in relation to determination of an IM [input methodology] by the commission. The statute provides for a rehearing, without any conditions," Myers said.

"There is no presumption about the correctness, or the opposite, of the commission's determination."

The Commerce Commission declined to comment on Myers' statement.

MEUG executive director Ralph Matthes said while there "might be a better way" to conduct the process, previous commission findings had created uncertainty for monopolies.

He conceded that consumers were reliant on the Commerce Commission having the legal resources to ensure a good outcome, with little scope for individuals to take part in the latest step.

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- © Fairfax NZ News

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