Powerco breaches Commerce Commission guidelines

1.00pm

Electricity and gas distributor Powerco has breached price and reliability guidelines set by the Commerce Commission.

The company said it has 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 breach of the reliability criterion was because of extreme storms in February.

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

The company said it had breached the initial price path threshold by less than one per cent of the maximum allowable "notional line revenue" for the period.

The company said transmission charges and local authority rates were lower than forecast in October 2002 when prices for the 2003/04 year were required to be set.

According to Powerco, the commission has acknowledged these costs are "largely beyond distribution businesses' control, and are not always stable or predictable".

Powerco's line charges did not rise during the 2003/04 year and the company's electricity line revenues fell about $3.2 million during the period.

The company said about 10 other electricity lines companies had also breached the initial price path threshold.

Powerco's shares last traded at $2.15 on Friday, having fetched between $1.61 and $2.24 over the past 12 months.

- NZPA