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The Commerce Commission welcomes a Court of Appeal decision today confirming that the Commission is not required to determine a starting price input methodology for electricity distribution and gas pipeline services. This overturns the previous High Court decision in September 2011.
“We are pleased that the Court has found that we interpreted our statutory obligations correctly, and agreed that, had Parliament intended the Commission to publish a starting price input methodology, it would have specifically said so,” said Commerce Commission Chair Dr Mark Berry.
The Court of Appeal also provided helpful guidance to the parties in relation to the degree of certainty that Part 4 of the Commerce Act could be expected to promote, the boundary between input methodologies and price-quality paths, and the Commission’s ability to reset the current price-quality path for electricity distribution businesses. This guidance will be of considerable value to the Commission in Part 4 decisions it is making over next few months.
As a consequence of the Court of Appeal’s decision, the number of additional input methodologies that the Commission has to determine (following the High Court decision) by the end of September this year will reduce. The Commission will confirm the timeframes for completion of the remaining work to interested parties next week.
“The judicial reviews the Commission has faced in relation to input methodologies have significantly delayed the implementation of the Part 4 regime. Now that we have received the Court of Appeal’s judgment, we look forward to applying all aspects of the new regime to electricity distribution and gas pipeline services as soon as possible,” Dr Berry said.
You can see a copy of the Court of Appeal judgment at http://www.comcom.govt.nz/input-methodologies-2/
Input methodologies involve setting upfront regulatory rules, processes and requirements that apply to the regulatory instruments under Part 4 of the Commerce Act. Input Methodologies were determined by the Commission in December 2010 and can be viewed on the Commission’s website at http://www.comcom.govt.nz/input-methodologies-2/
Part 4 of the Commerce Act regulates suppliers of electricity lines services, gas pipeline services and specified airport services supplied by Auckland, Wellington and Christchurch airports.
Default Price-quality Path (DPP) limits the amount a business can charge for regulated services by setting a maximum price cap or revenue cap, while maintaining certain minimum quality standards. Various electricity distribution companies and gas pipeline businesses are subject to this type of price-quality regulation under Part 4 of the Commerce Act.
The High Court decision arose from an application for judicial review by Vector Limited of the Commission’s decision not to determine an input methodology for starting prices.