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The Commerce Commission has accepted a commitment of lower price rises by Transpower after threatening last year to place the national grid operator under regulatory control.
The watchdog stepped in in 2005 after Transpower, whose charges make up about a tenth of an average power bill, announced price increases adding up to more than 50 per cent between April 2006 and April 2009. Yesterday the commission gave final approval to a series of price increases adding up to just over half that.
Transpower offered the reduced increases in August, after three earlier offers were rejected by the commission. Since then, discussions have focused on how to set future price increases so consumers are not overcharged.
Commission chairwoman Paula Rebstock said the final agreement allowed Transpower to keep adding to power bills if it complied with new, tougher rules designed to keep charges down. By stepping in, the commission had saved customers $240 million over three years, she said.
A spokesperson for Transpower said the settlement had pushed price rises into the future by stopping the grid operator recovering the cost of new investments until they were in service, rather than charging consumers during construction. She said the settlement would not stop Transpower from making appropriate investments to develop and maintain the national grid.
Ms Rebstock said the Electricity Commission would need to approve new investments in the grid before Transpower could pass on the cost.
"There's no doubt it's in the national interest for them to [invest in the national grid] but it's also in the interests of New Zealanders for them to do so properly, and in a way that makes sure any increases can be justified," she said.
The operator backtracked on its original price plans after the commission threatened to take control of its transmission services under the Commerce Act.
Yesterday's decision means the 19.1 per cent price increase Transpower wanted to charge for 2006-07 will be reduced to 10.2 per cent. The 13 per cent price increases proposed for 2007-08 and 2008-09 will be reduced to 8.1 per cent and 6.3 per cent respectively.
