Energy firms eye commission's call for regulatory control

1.00pm

Energy companies Vector and NGC Holdings today said they were eyeing details of a Commerce Commission call for price controls on natural gas pipelines.

On Friday last week, the commission said Vector, NGC, Powerco and Maui Development should be subject to pipeline price controls.

Chairwoman Paula Rebstock said these companies faced limited competition in the gas pipeline services they provided.

"There are likely to be net benefits to acquirers from the introduction of control," she said last week.

Acquirers are the end users of the services of the gas pipelines, whether direct or indirect and including business and private customers.

Vector chief executive Mark Franklin said he was surprised by the commission's finding.

The company was still "digesting the full details of the report", and intended to prove there was no need for regulatory controls on its gas pipeline business.

Meanwhile, NGC chief executive Phil James said his company was "carefully analysing" the draft finding before commenting.

"The commission's draft report raises broader issues regarding foreign investment in New Zealand," Mr James said in a statement.

Foreign capital was needed in the domestic energy sector to fund upstream exploration and production.

It was also needed for downstream infrastructure development.

Both Mr James and Mr Franklin noted that the commission's finding was only at its draft stage.

There would be opportunities to make submissions, including at a conference hearing in July.

NGC and Vector were willing to work with the commission, which was expected to issue a final report for the Government by November.

The commission has been assessing competition in the gas distribution industry since April last year.

At 10.15am today, NGC shares were up seven cents at $2.52, while Powerco shares were up three cents at $2.14.

Meanwhile, electricity and gas distributor Powerco was today found to have breached price reliability guidelines set down by the commission.

Powerco breached the initial price path threshold and the reliability criterion of the quality threshold, under the new regulatory regime for electricity lines companies.

At the end of each financial year lines companies must advise the commission if they have complied or breached the thresholds.

The company said the less than 1 per cent breach of the reliability criterion was because of extreme storms in February.

If the commission is satisfied with Powerco's explanation, no further investigation would be carried out.

- NZPA