20 Jul 2011

Commission to adjust lines company prices

6:51 am on 20 July 2011

The Commerce Commission says Vector and Powerco are among a group of electricity lines companies making excessive profits and it's proposing to cut prices to bring them into line.

The Commission has put out a draft document to reset prices for 16 lines businesses from 2012 to 2015, using a new regime that calculates prices by aligning revenues with costs.

The head of the commission's regulation branch, John Hammill, says some will have to cut average prices by up to 10%, while others will be able to lift prices by up to 20% to ensure they're investing enough in their networks.

Vector and Powerco will have to cut average prices by 9% in 2012/13, Wellington Electricity by 4% and Horizon Energy by 10%.

Top Energy could lift prices by up to 20% and Alpine Energy by 15%.

Due to the Canterbury earthquakes, the draft decision does not apply to Orion.

Dr Hammill says distribution costs make up about a third of the final electricity bill to users and lines companies are also free to adjust prices across their network.

Disgruntled lines companies also have the option to apply for a customised approach.

A final decision will be made in October, following submissions, and new prices will apply from April 2012.

The Commerce Commission says electricity lines firms Vector and Powerco will have to cut prices by 9% in the future, after calculating they'll make excessive profits.