Freeze on gas charges to be extended

The price freeze on Powerco and Vector's gas distribution charges will remain in place until a more flexible regulatory regime has been worked out next year, the Commerce Commission says.

The commission made the decision to extend the freeze, imposed last year, as it set out its preferred plans for the longer term.

It wants smaller gas users to benefit from a cap on gas distribution prices for every unit of energy used and larger users to benefit from a cap on the total amount Powerco and Vector can charge.

In both cases, prices will be subject to an initial reduction and an ongoing reduction equal to a number of percentage points below inflation.

The exact figures are still to be decided.

Pass-through of uncontrollable costs, such as regulatory and statutory levies, to consumers will be allowed and the quality of service will be linked to certain financial incentives.

The commission released the discussion document detailing its preferences on Friday. A conference to be held in September will discuss the plan.

Submissions on its proposals are due by August 7.

Vector's shares rose 1c yesterday to $2.55.