VCT
30/10/2014 08:49
GENERAL
REL: 0849 HRS Vector Limited
GENERAL: VCT: Commerce Commission releases decision on WACC percentile
The Commerce Commission has released its decision on the proposed amendment
to the WACC percentile.
This change will reduce the allowable return on our assets when all previous
investment decisions have been based on the returns we would expect from a
75th percentile. A WACC setting at the 75th percentile was a position
long-defended by the Commission.
The decision reduces the investment returns from the network, and when added
to other approaches by the Commission, places further pressure on our ability
to invest in network growth.
Current technology advances greatly increase risk and uncertainty in network
investments, which should be increasing the allowable return on assets or
WACC percentile, not reducing it.
The correct balance between lower prices for consumers and a suitable return
on new investment in the network is critical to Auckland's growth and
success.
The Commission has exercised considerable discretion in deciding on the 67th
percentile in light of two of its independent expert advisors recommending
the status quo or higher percentiles.
The decision can be found
www.comcom.govt.nz/regulated-industries/input-methodologies-2/further-work-on
-wacc
Vector will consider the Commerce Commission's decision and engage in
consultation with the Commission on the price reset, due on 28 November,
2014.
ENDS
End CA:00256981 For:VCT Type:GENERAL Time:2014-10-30 08:49:48
