Deadline looms for lines companies' new values

By CHRIS DANIELS

Two power lines companies that fell foul of a Commerce Commission audit have a week to deliver acceptable valuations to the regulatory watchdog.

The commission this month approved the valuations of all but two of New Zealand's 29 monopoly electricity lines companies.

Reports from Eastland Network in Gisborne and Westport's Buller Electricity were rejected and both were given until May 3 to resubmit their valuations.

Proper valuations of lines company assets are important to the Government as a way of countering criticism that the monopolies "gold plate"assets to justify excessive charges.

Results published this month showed five companies reduced their asset values by more than 3 per cent as a result of the audit.

Three others, including the state-owned national grid operator Transpower, increased valuations.

The other 20 companies had only minor changes to their valuations as a result of the audit.

Total asset value of all the lines companies, excluding Transpower, dropped by around $45 million, $22 million of that coming from the 13 per cent cut in the value of Southland's carrier, The Power Company.

The chief executive of Eastland Network, Ken Mitchell, yesterday said the company had since "clarified" the two outstanding issues that had arisen.

These had been resolved, and the updated valuation now complied with the commission's requirements. It would be sent back by the May 3 deadline.

Mitchell said the valuation problems related to things such as growth assumptions that Eastland Network had not included.

Buller Electricity has the lowest value of all 29 lines companies, worth an estimated $13,219,000.

The length of its network, at 593 kilometres, is the smallest after Nelson Electricity.

Buller also has the smallest number of connections to its network - 4258 compared with 1,037,001 on the biggest, UnitedNetworks.

Mike McSherry, chief executive of Buller Electricity, said the company was working through the valuation.

The issues that needed to be resolved were "fairly minor matters" and a new valuation would soon be submitted.

Buller Electricity and Eastland Network are owned by locally elected consumer trusts.

Peter Alsop, manager, network performance at the commission, said the two companies had been told what the problems were with their valuations.

"Since then, the companies have come back to us, indicating a willingness to try and get their reports up to the required standard."

The commission had told them what was wrong with their reports, so it was now up to them to submit acceptable audits.