You are using an older browser version. Please use a supported version for the best MSN experience.

Gas revenue restrictions unveiled

NZ Newswire logoNZ Newswire 9/02/2017 Paul McBeth

The Commerce Commission is proposing to cap regulated sales for gas pipeline firms, including NZX-listed Vector, which it estimates will lower their maximum revenue by 18 per cent a year.

In a draft decision, the regulator sets out the default price-quality path for GasNet, Powerco, Vector and First Gas starting from October 1 and spanning the next five years.

The commission wants to reduce the gas pipeline businesses' maximum revenue by $42 million a year, due largely to a lower cost of capital for the firms. It also proposes limiting future price increases to no more than the rate of inflation for the four years from 2018.

"They have been primarily driven by the fall in the cost of capital and as such would have been anticipated by the affected businesses," deputy commission Sue Begg said in a statement.

The Commerce Commission regulates what gas distribution and transmission firms can charge, and will make a final decision by May 31.

The changes would lower Vector's revenue cap by 23 per cent or $43m over five years, Powerco's by 16 per cent or $45m and GasNet's by 13 per cent or $4.1m.

First Gas, which bought Vector's gas distribution and transmission businesses outside Auckland, would see a 26 per cent reduction in its revenue cap from distribution, which covers smaller consumers, or $20m over five years, and a 16 per cent fall from its transmission for large industrial gas users, or $113m.

The commission estimates its decision will cut consumer gas bills by 8 per cent in 2017/18, although commercial users would be affected differently.

Consumer gas prices have risen 20 per cent higher than the rate of inflation over the past five years.

image beaconimage beaconimage beacon