Powerco makes CPP application to the Commerce Commission

Monday, June 12, 2017

Powerco today made a formal application to the Commerce Commission for a customised price-quality path (CPP). This follows Powerco's release of its preliminary proposal for public consultation in January.

Powerco’s CPP application sets out a significant programme of renewal investment that will replace assets at the end of their safe and reliable operating life. The plan will see the company invest close to $1.32 billion in its electricity network during the next five years – an increase of about 55% compared with the previous five years. Powerco electricity networks supply Coromandel, Eastern and Southern Waikato, Western Bay of Plenty, Taranaki, Whanganui, Manawatu, Tararua and Wairarapa.

Powerco Chair John Loughlin said the need to lift the level of investment to replace and renew ageing network assets with more modern and resilient plant and equipment had been signalled in Powerco’s recent asset management plans.

“The work programme set out in our CPP is a long-term plan that will ensure we can maintain service levels across the network and enhance capacity in those regions that are exhibiting strong population growth and economic growth,” Mr Loughlin said.

Since January, and ahead of its application to the Commerce Commission for a CPP, the company has been consulting extensively with its customers, seeking feedback from all its stakeholders on the five year investment proposal.

Powerco Chief Executive Nigel Barbour said the scale of consultation was significant and included:

• Meetings and forums attended by representatives from electricity retailers, major customers, councils and stakeholder groups such as Consumer New Zealand, Major Electricity Users’ Group, Greenpeace, Electricity Retailers of New Zealand and Federated Farmers.
• Print advertising and inserts in newspapers and rural publications in Powerco’s areas, which had a circulation of 240,000.
• Social media advertising (Facebook and Twitter), which had a total reach of 92,000 users in Powerco’s distribution areas, with the video viewed more than 60,000 times.
• Publication of consultation documents targeting different audiences, supported by an online survey and video on a dedicated website, which was viewed more than 4,000 times.
• Formal PwC and Colmar Brunton surveys of more than 1500 residential and business customers to establish overall service preferences in relation to the price paid.

As a result of the consultation process and feedback received from independent technical experts, who were tasked with reviewing Powerco’s preliminary proposal, the company has modified its original proposal. It now proposes to invest around $1.32 billion during the next five years (down from $1.4 billion), but believes it can deliver a similar level of benefit to its customers as set out in the original proposal.
“We believe our CPP proposal strikes the right balance between keeping bills affordable and investing appropriately in our assets for the benefit of today’s customers and future generations. Through the consultation, we received some constructive and largely positive feedback. Powerco’s commitment to providing a safe, secure and resilient network and investing in its regional communities were strongly supported in the responses we received,” Mr Barbour said.

“Ultimately, the Commerce Commission will consider if our proposal is in the best interests of our customers as part of the process of evaluating our proposal.”

The Commerce Commission is expected to review Powerco’s proposal and seek feedback from interested parties before making a determination early next year.

People wanting more information about Powerco’s investment plan including the specific application that has been submitted should visit Powerco’s submission will also be available on the Commerce Commission’s website

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