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- Release Date: 24/10/12 15:34
- Summary: GENERAL: VCT: Draft gas pricing decision based on flawed methodologies
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VCT
24/10/2012 13:34
GENERAL
REL: 1334 HRS Vector Limited
GENERAL: VCT: Draft gas pricing decision based on flawed methodologies
The Commerce Commission's draft gas distribution and transmission price
decision, released today, closely follows its draft decision for electricity.
Both decisions are based on flawed methodologies, such as asset valuation and
WACC, and an incomplete regulatory package, said Vector Chief Executive,
Simon Mackenzie.
"Today's announcement by the Commission sets both price and quality levels
for Vector's gas pipeline businesses. The Commission's draft decision
proposes that we reduce our gas distribution prices by an average of 16
percent and gas transmission prices by an average of 25 percent from 1 July
2013.
"This is frustrating as we reduced prices on our Auckland gas distribution
pipeline by over 20% in real terms from 2005. At the time, the Commission
also determined that Vector's other gas pipeline businesses did not warrant
price regulation. Our gas pipeline prices have been capped at inflation from
2008.
"The Commission is relying on asset valuations which are nearly ten years
old, having rejected more up to date valuations," he said.
"We are concerned at the Commission's approach to capex and opex investment
in gas transmission and distribution.
"We also find it difficult to reconcile the Commission's position against the
Minister of Energy's view of the criticality of the gas infrastructure in New
Zealand and the need to ensure that those assets remain in excellent
condition.
Mr Mackenzie said this reinforces that the company's decision to challenge
the Commerce Commission's input methodologies is the right one.
"The Commission's decision will need to be revised if the merits review court
action, taken by Vector and others, is successful," he said.
ENDS
End CA:00228803 For:VCT Type:GENERAL Time:2012-10-24 13:34:02
