26 Nov 2010

Transpower cap announced by commission

12:08 pm on 26 November 2010

The Commerce Commission says Transpower's revenue will be capped at $644 million in the June 2011 year.

This is the first revenue cap set under individual price-quality regulation under Part 4 of the Commerce Act.

Transpower will be allowed to recover up to this amount through its transmission prices.

In addition to the revenue cap, Transpower can recover a further $39 million in recoverable costs through its pricing, bringing the total amount to $683 million.

The total amount represents an overall increase in allowable revenue of 9.5% compared with the previous year, largely reflecting the investment return on higher capital expenditure.

However, the increase is less than Transpower forecast in March, due to primarily due to delays of some expenditure projects and a lower weighted average cost of capital being applied by the commission.