NEW ZEALAND GAZETTE, No. 97 — 21 SEPTEMBER 2017

3. Among other things, lifeline utilities are expected to respond to any material change in hazard information
   (such as changes in the hazard environment or new information regarding risks and vulnerability). They must
   review their business continuity plans and undertake appropriate actions to reduce the risks they face in
   light of any change in hazard information.

4. Some lifeline utility services are subject to price-quality regulation under Part 4 of the Commerce Act 1986
   (“Commerce Act”), which conditions how they respond to new hazard information. A regulated lifeline utility
   may identify prudent resilience measures, in response to new hazard information, involving material costs
   that were not anticipated when a price-quality path determination was made under section 52P of the
   Commerce Act. Before undertaking such measures, a lifeline utility may consider applying for a new or
   amended section 52P determination providing for it to recover the unanticipated resilience costs by raising
   prices for relevant services.

5. After the Hurunui and Kaikōura earthquakes on 14 November 2016, GNS Science issued updated information
   about the probability and severity of aftershocks in the areas surrounding the faults that ruptured. The
   probability of a large earthquake or tsunami in Wellington increased as a result of the Hurunui and Kaikōura
   earthquakes and is expected to reduce from that elevated level over time.

6. Wellington is New Zealand’s second largest metropolitan area and houses most of central government. The
   Wellington region faces seismic risks due to the combination of active faults, steep terrain, potential
   liquefaction zones, and vulnerable transport routes and other infrastructure. A large proportion of nationally
   significant functions, including the functioning of central government, could be severely disrupted following
   a major seismic event. The resilience of Wellington’s lifeline utility services is a critical part of the region’s
   broader disaster resilience and contribution to the national economy.

7. Electricity services, in particular, are essential to the normal functioning of businesses and households.
   During disaster response and recovery phases electricity is especially important for telecommunications,
   pumping of water and fuel, and numerous other critical needs. It is therefore a priority to restore electricity
   services to critical sites, and ultimately to the entire affected region, as quickly as possible following an
   emergency event.

Government Policy Statement

1. It is Government policy that lifeline utilities that are regulated under Part 4 of the Commerce Act should be
   able to recover reasonable costs arising from their duties under the CDEM Act, including costs arising from
   actions taken in response to new hazard information, to the extent allowed by law. The ability to recover
   prudent resilience costs promotes the purpose of the CDEM Act and the purpose of Part 4 of the Commerce
   Act.

2. It is Government economic policy that the national significance of Wellington’s disaster resilience is given due
   consideration by lifeline utilities and by the Commerce Commission when performing its functions under Part
   4 of the Commerce Act. In particular, the Government expects the Commerce Commission to consider options
   that are consistent with the purpose of Part 4 of the Commerce Act, which will, in respect of regulated
   suppliers of electricity services in the Wellington region:

a. allow those suppliers to recover prudent, efficient and timely resilience related expenditure that was not
anticipated when existing determinations were made by the Commerce Commission under section 52P of
the Commerce Act, where doing so is necessary to enable the supplier to improve the disaster resilience
of its services;

b. provide certainty to those suppliers in relation to how any additional prudent, efficient and timely
resilience-related expenditure may be recovered, where relevant amendments to a determination made
under section 52P of the Commerce Act or a new determination may not be made in advance of that
expenditure being incurred; and

c. allow the Commerce Commission to consider amending requirements that might normally apply to those
suppliers relating to information, verification, or consultation on proposed expenditure.

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