The Commerce Commission will have a close eye on ensuring that the growing investment in electricity lines maximises benefits to Kiwi consumers – as the sector goes into a period of investment that is likely to total in the tens of billions over the next decade.
In a consultation paper published today, the Commission is seeking views on the key issues it will consider in setting revenue limits and quality standards from 2025 through to the end of the decade for the majority of local lines companies, covering over 80% of all residential and business customers in Aotearoa New Zealand.
Commissioner Vhari McWha, says the general need for substantial investment by lines companies is clear.
“Networks will need to grow and adapt to meet new demands from the increasing electrification of transport and industrial process heat as well as connecting new local generation.
“At the same time, they will need to prepare for an expected increase in extreme weather events and keep up with regular upgrades of ageing assets.”
Ms McWha says the potential costs to consumers are significant and this means “it is more important than ever that we ensure the plans and investment decisions of lines companies are in the long-term interests of consumers.
“Decisions made by lines companies in the coming period will have an enduring impact on future electricity bills, so it is critical that proposed investment is prudent, efficient, and to the long-term benefit of consumers. This includes making best use of existing capacity and fully exploring options such as demand side management and batteries.”.
This need for increased investment comes at a time when there are other upward pressures on electricity bills, including higher interest rates and inflation.
Ms McWha says the Commission is conscious of potential price shocks for consumers and can smooth when lines companies recover revenues over time to help soften the impact. However, she cautioned that, “consumers will ultimately need to pay for the services they receive and we are alive to concerns that pushing revenue out into the future could affect lines companies’ ability to pay for necessary investment.”
The Commission is seeking stakeholder feedback on the issues identified in its paper published today. The Commission will publish a draft decision for further consultation in May 2024, and will make a final decision in November 2024. A copy of the consultation paper can be found on the Commission’s website. Submissions close on Friday, 15 December 2023.