Powerco and Wellington Electricity bills reduction expected – ComCom

Electricity bills from two North Island electricity lines companies should reduce from April 1 following a downward adjustment to Powerco and Wellington Electricity’s allowable revenues, possibly providing cheaper EV charging.

The reason for the amendment is to ensure all regulated lines companies have the same weighted average cost of capital (WACC), regardless of whether they are on a default price-quality path (DPP) or a customised price-quality path (CPP), the Commerce Commission (ComCom) says.

“Aligning the cost of capital in the Powerco and Wellington Electricity’s CPPs has the result of decreasing Powerco’s allowable revenue, which they can recover from their consumers, by about $150 million over the next three years and Wellington Electricity’s by about $18 million over the next year,” ComCom deputy chair Sue Begg says.

This is due to a reduction in economy-wide interest rates between March 2018 when their CPPs were set and September 2019, when the WACC was set for the other 15 lines companies covered by the 2020-2025 DPP.

“For Powerco and Wellington Electricity consumers, this amendment is expected to result in lower lines charges in their electricity bills, provided their retailers pass on the savings,” Begg adds.

This is the first time ComCom has reopened CPPs for WACC changes after the provision to do so was introduced as part of the commission’s most recent review of the rules, requirements and processes underpinning the regulatory regime (input methodologies).

“We have listened to submissions on our draft decision which expressed concern that our proposed approach was unnecessarily complex and time-consuming,” Begg says.

“As a result, we have decided to adopt an alternative approach put forward by Powerco and supported by Wellington Electricity which makes it simpler for these businesses to implement the change.”

The change in WACC will be reflected in Powerco’s and Wellington Electricity’s allowable revenue for the remaining period of their current CPPs, and the companies’ subsequent price paths through to 2025.