Reducing barriers for new connections: WACC estimate for connection charge reconciliation
Consultation
From 1 April 2026, distributors will need to provide a standardised breakdown of connection charges to the Authority and connection applicants on request.
This breakdown (reconciliation) must include incremental costs, incremental revenue and network costs, and be updated annually and adjusted for inflation.
We initially proposed distributors use the mid-point estimate of the weighted average cost of capital as part of this requirement.
However, following feedback on the Code drafting, one submitter recommended the 65th percentile would be more appropriate to use as an estimate, as it aligns with the Commerce Commission’s use of the weighted average cost of capital (WACC) when setting regulatory allowances.
We consider this proposed change would improve consistency between the two regulatory regimes and help keep total system costs as low as possible.
This consultation sought views on the proposed amendment to the WACC percentile. While we consider submissions, and prior to any further Code change, distributors should adopt the estimate consistent with the Code that applies from 1 April 2026. Details on this proposal are in chapter 8 of the consultation paper below.
We received six submissions, including one after the deadline, and no cross-submissions.
Submissions
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Contact Energy2 pages
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ENA3 pages
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MEUG1 page
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Orion2 pages
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Unison Networks and Centralines4 pages
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Wellington Electricity4 pages