KEY POINTS:
Commerce Minister Lianne Dalziel hopes changes to the competition law covering monopolies like electricity lines companies and the bigger airports will pass before the election.
The Commerce Amendment Bill she introduced to Parliament yesterday inserts into the purpose statement of the Commerce Act language about the importance of incentives to invest and innovate, and of sharing the benefits of efficiency gains with consumers through lower prices. It requires the Commerce Commission to spell out by the middle of 2010 the regulatory rules the monopoly companies will be held to account under.
Called "input methodologies", the rules will cover matters such as the appropriate cost of capital for the companies to recover and how their assets should be valued.
Those generic decisions will be subject to appeal to the High Court on their merits and not just on points of law.
But, as now, merit reviews on individual determinations by the commission will not be allowed. In practice, most litigation about the merits of individual decisions came down to the appropriateness of the methodologies used, Dalziel said.
For lines companies the new regime is intended to be more flexible and forward-looking.
Under the present "thresholds" regime the only way a lines company planning a big investment can engage with the competition authorities is to breach the rules - as all but one has - and then begin the process of persuading the commission that it should not be subject to price control.
Under the new regime the commission will still set a "default" price path, a kind of safe haven for increases in line charges, but if a company with a lot of investment to fund cannot live with that it can seek a customised price path from the commission in advance and get a decision within 12 months.
Auckland, Wellington and Christchurch airports will also be subject to a new and more onerous disclosure regime.
From mid-2010 they will have to report on their price-setting processes, in line with commission rules on valuation and the weighed average cost of capital.
