ComCom wants Transpower customer engagement plan

The Commerce Commission’s final decision sets the maximum revenue Transpower can earn and the minimum quality standards it must meet under its individual price-quality path (IPP) for 2020-2025.

ComCom deputy chair Sue Begg says it has approved a revenue allowance of $4.05 billion for the next five years, a reduction of 15% or more than $685 million compared to its current five-year period.

The key reduction in allowable revenues results from the significant reduction in the weighted average cost of capital (WACC) from 7.19% in the current period to 4.57% for the 2020-2025 period. This is mainly due to the economy-wide reduction in interest rates, she says.

“We did not allow Transpower the full amount of its proposed capital expenditure and operating expenditure but our adjustments to the overall expenditure proposed are relatively modest.

“We consider that this IPP will promote the long-term benefit of consumers, particularly if local lines companies and electricity retailers pass on to consumers the price reductions they receive from Transpower,” Begg says.

That may also help reduce power costs for EV charging.

“We are also asking Transpower to continue to up its game in terms of customer and stakeholder engagement,” Begg says.

“We have asked it to provide a customer engagement plan and to report on the effectiveness of its consultation over capital expenditure. We think these new requirements will benefit Transpower’s customers.”

Transpower potentially faces challenging grid investments from 2025 as it has forecast a need to replace a significant number of its overhead wires.

That investment may result in higher costs for Transpower’s customers and end consumers in years to come.

For this reason, Begg says the Commission has set additional reporting requirements to show how well Transpower is preparing for that uplift in asset replacement.