New Zealand Gazette – 2008 – No. 95

Page 2551

✨ Electricity Industry Notices

6 JUNE 2008

NEW ZEALAND GAZETTE, No. 95

2551

The price path breach at the 2003 assessment date was predominantly explained by Electricity Invercargill’s inability to pass on an increase in transmissions costs on 1 April 2002;
as Electricity Invercargill delayed passing on the increase in transmission charges, it, rather than its customers, absorbed these costs. Accordingly, Electricity Invercargill’s 2003 price path breach caused no detriment to customers;
the price path breach during the 2004 assessment period is fully explained by the differences between Electricity Invercargill’s budgeted and actual pass-through costs. During the 2004 assessment period, Electricity Invercargill reduced its prices to account for the differences in the budgeted and actual pass-through costs;
the 2004 Notice required Electricity Invercargill to set its prices so that its initial allowable revenue would not have breached the price path threshold at the second assessment date. This in effect required Electricity Invercargill to set its prices so that the reduction in pass-through costs was passed on to its customers going forward;
by not increasing its average price during the 2004 assessment period, Electricity Invercargill was acting in accordance with the objective of the 2004 price path threshold;
Electricity Invercargill’s reliability performance since the 2004 assessment period quality breach does not indicate a deterioration against its thresholds; and
the Commission has no other section 57E concerns.

The price path threshold breach at the 2004 assessment date is fully explained by the difference in actual and budgeted pass-through costs;
by not increasing its average price during the 2004 assessment period, MainPower was acting in accordance with the objective of the 2004 price path threshold;
the 2004 Notice required MainPower to set its prices so that its initial allowable revenue would not have breached the price path threshold at the second assessment date. This in effect required MainPower to set its prices so that the reduction in pass-through costs was passed on to its customers going forward; and
the Commission has no other section 57E concerns.

The 2003 price path breach was due to Nelson Electricity not passing on an increase in transmission charges on 1 April 2002 which resulted in its allowable notional revenue being lower than it would have been otherwise;

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