CNU
17/08/2015 08:43
GENERAL
PRICE SENSITIVE
REL: 0843 HRS Chorus Limited (NS)
GENERAL: CNU: Commerce Commission should use credible New Zealand data
STOCK EXCHANGE ANNOUNCEMENT
17 August 2015
Commerce Commission should use credible New Zealand data
Chorus has today called on the Commerce Commission to more clearly ground its
work on the FPP in credible New Zealand costs when it delivers its final
determination.
Chorus has provided a further submission in the long running FPP process,
which outlines some key areas where the Commission appears to have deviated
significantly from New Zealand reality.
"While we recognise that the Commission has taken on board several points of
accuracy from the last round of submissions, some key parameters in the model
have been adjusted materially downwards, meaning the overall effect was for
the monthly charge to remain broadly the same," said Chorus General Counsel
Vanessa Oakley.
"It is our view that the Commission still needs to do more to take credible
New Zealand costs into account where that information clearly exists. If the
Commission doesn't do this then it is sending a strongly negative signal to
domestic and international investors who would otherwise enable improvement
and innovation in network industries throughout New Zealand."
"In particular, the critical parameter of how much it costs to dig trenches
in New Zealand has been drastically reduced in their hypothetical model.
Chorus is currently building a new fibre network, and has tendered
competitively for this work. As such we have genuine, tested in market, up
to the minute, accurate information. The hypothetical trenching rate used by
the Commission in its model is less than half of the true cost."
Chorus has also outlined that its one off transaction costs, such as the cost
to connect a new customer, are also based off competitively tendered pricing,
which ensures they are based on New Zealand reality.
"The Commission has applied an across the board 30% reduction to transaction
costs, however we again have credible, up to the minute, competitive costings
that could be applied," she said.
Chorus has also argued that there is a strong legal precedent for backdating
the more accurate price indicated by the current FPP draft determinations.
"The Commission's own previously held view on backdating was that it should
be applied, and it argued as such in the Court of Appeal. Putting aside the
basic issue of fairness, and the need to correct pricing that has been
accepted as incorrect, adopting a different position on this matter serves to
highlight just how hard it can be to predict the decisions the Commission is
going to make, which is very likely to discourage investment over the longer
term," she said.
Chorus' submission will be made available on the Commerce Commission's
website.
ENDS
For further information:
Nathan Beaumont
Media and PR Manager
Phone: +64 4 896 4352
Mobile: +64 (21) 243 8412
Email: [email protected]
Brett Jackson
Investor Relations Manager
Phone: +64 4 896 4039
Mobile: +64 (27) 488 7808
Email: [email protected]
End CA:00268496 For:CNU Type:GENERAL Time:2015-08-17 08:43:02
