Open letter to distributors published

The Electricity Authority Te Mana Hiko is committed to improving distribution pricing to help deliver better outcomes for consumers and help manage how much traditional investment (such as poles and wires) will be required.

Distribution pricing reform is a key priority as New Zealand transitions to a low-emissions, electrified economy, which will require substantial investment in distribution networks.

There will be key challenges for the sector and distribution pricing reform aims to maximise the consumer benefits from increased electric vehicle adoption, new technology, and the building of distributed generation. We want distribution pricing to encourage consumers to respond efficiently to this dynamic environment.

Our letter outlines the main focus areas for distributors, including:

• allocating revenue transparently
• assigning all ICPs to time-varying distribution tariffs
• setting peak rates based on a measure of long-run marginal cost
• reducing off-peak and controlled rates
• following up on Asset Management Plan reporting on readiness for increased electrification.

We are aware of the cost pressures facing distributors as part of the Commerce Commission’s regulatory reset. The Authority encourages distributors to have regard to consumer impacts when setting pricing each year.

Open letter to distributors

About distribution pricing