NEW ZEALAND GAZETTE, No. 143 — 27 NOVEMBER 2014

amendments is to limit the risk of under- or over-recovery of pass-through and recoverable costs.
The second type amendments also introduce several new recoverable costs that provide a number of incremental improvements.
The new recoverable costs:

i. include new incentive schemes intended to provide incentives for suppliers to maintain or improve their quality of supply, and to improve energy efficiency and demand-side management, including improving incentives to invest in new assets with an energy efficiency and demand-side management purpose;

ii. allow the Commission to provide an adequate response to a reconsideration event (such as a catastrophic event) for electricity distribution businesses and consumers; and

iii. allow the Commission to take into account developments being undertaken by the Electricity Authority that may impact certain recoverable costs.

Copies of the Amendment and reasons paper are available on the Commission’s website at
www.comcom.govt.nz/regulated-industries/input-methodologies-2/amendments-and-clarifications/
and are available for inspection free of charge at the Commission (during ordinary office hours), or for purchase at a reasonable price at the Commission, 44 The Terrace, Wellington.

Dated at Wellington this 27th day of November 2014.

COMMERCE COMMISSION.

Notification of Amendments to Input Methodologies Applicable to Electricity Distribution Businesses and Transpower—Incremental Rolling Incentive Scheme (IRIS)

Pursuant to section 52W of the Commerce Act 1986 (the “Act”), the Commerce Commission (“Commission”) gives the following notice.

The Commission has amended the input methodologies applicable to electricity distribution services and Transpower under Part 4 of the Act.

The input methodologies amended are set out in the following determinations:

• Electricity Distribution Services Input Methodologies Determination 2012, [2012] NZCC 26
• Transpower Input Methodologies Determination [2012] NZCC 17

The input methodologies which are amended are contained in the Incremental Rolling Incentive Scheme Input Methodology Amendments Determination 2014 [2014] NZCC 32 (“Amendment”).

The Amendment comes into effect on the date of this notice.

The Amendment introduces a new form of Incremental Rolling Incentive Scheme (IRIS) to apply to future individual and default price-quality path determinations. The IRIS provides a mechanism by which suppliers that are subject to price-quality regulation can retain the benefits of efficiency gains beyond the end of a regulatory period.

The IRIS applicable to non-exempt electricity distribution businesses:

i. affects incentives for default price-quality paths;

ii. can be described as "symmetric";

iii. provides incentives that are the same in each year of the regulatory period; and

iv. affects incentives to control operating and capital expenditure during a regulatory control period.

The IRIS applicable to Transpower:

i. can be described as "symmetric";

ii. provides incentives that are the same in each year of the regulatory period; and

iii. affects incentives to control operating expenditure during a regulatory control period.

The Commission has amended these input methodologies to improve the incentives for electricity distribution businesses and Transpower to control expenditure and to improve efficiency, and share improvements in efficiency with consumers through prices that are lower than they otherwise would have been.

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