Transmission pricing audit
2011/2012 Transmission Prices
Transpower has provided a directors' compliance statement and an independent assurance report to demonstrate that the transmission prices for 2011/2012 are consistent with the TPM.
Transpwer letter 18 November 2010
PWC audit provided 7 December 2010
2010/2011 Transmission Prices
On 26 November 2009, Transpower provided a directors' compliance statement and an independent assurance report, demonstrating that Transpower's transmission prices for 2010/2011 are consistent with the Transmission Pricing Methodology (refer to part 9.2.2 of section IV of the Rules).
Transpower letter 19 November 2009
On 17 December 2009, the Commission wrote to Transpower noting the compliance statement/independent assurance report and confirming its decision not to undertake an audit of Transpower's transmission prices at this time (refer to part 9.3.1 of section IV of the Rules).
Letter to Transpower 17 December 2009
Transpower has again provided a spreadsheet demonstrating the Commission approved amounts applied in the 2010/2011 pricing year.
2009/2010 Transmission Prices
On 29 October 2008 the Commission wrote to Transpower in anticipation of Transpower’s publication of its transmission prices and to outline the Commission’s expectations of Transpower under rule 9.2 of the Electricity Governance Rules 2003.
Letter to Transpower 29 October 2008
Transpower responded (20 November 2008) providing a director’s compliance statement and audit report.
Transpower letter 20 November 2008
The compliance statement did not in all respects comply with the Commission’s request, as it did not state that Transpower’s directors were satisfied;
“….that the revenue requirement has been calculated correctly, and specifically, that the Commission-approved amounts have been correctly assigned to the appropriate fixed assets included in the regulatory asset base.”
In response to the Commission’s request to include the above in the directors’ statement, Transpower subsequently provided an independent assurance report.
The Commission is satisfied that the information provided by Transpower in the independent assurance report covers the outstanding request hightlighted above.
2007/2008 Transmission prices
The Commission has considered whether it should exercise its discretion to appoint an auditor to confirm if Transpower’s transmission prices have been calculated in accordance with the TPM. On balance, it has decided that it is not justified at this point in time as:
- Transpower has the primary responsibility for ensuring consistency and demonstrating this fact to the Commission.
- There are options available to purchasers if they are concerned about inconsistency.
- The Commission considers that a comprehensive audit is not achievable within the current timeframes.
- Transpower has already indicated to the Commission how it proposes to demonstrate consistency with the TPM.
The Commission has written to Transpower informing it of the reasons for the Commission not undertaking an audit at this stage and seeking Transpower’s provision of a directors’ certificate to confirm that the calculated prices are consistent with the TPM.
The Commission notes, however, it is entitled to commence an audit at any time and will therefore be interested in purchasers’ responses to Transpower’s published prices.
Transpower has responded to the Commission's letter noting that while it will endeavour to publish transmission prices by late October 2007 / early November 2007; it is more likely that it will publish prices in either late November 2007 or early December 2007. Transpower intends to provide Directors' certification confirming that the transmission prices are consistent with the TPM, and the internal audit processes for ensuring consistency and calculation, are robust and in accordance with best practice.
Letter from Transpower dated 4 September 2007
The Commission responded to Transpower confirming the approach.
Letter from Commission dated 6 November 2007
Transpower has now provided a directors' statement and a copy of the internal audit report.