ELECTRICITY

Utility attacks NZ regulator's power grab

HASTINGS-based energy network company Unison has hit back at Commerce Commission accusations it i...

Unison chairman Brian Martin said its prices were set to allow for the replacement of ageing infrastructure.

"By any normal commercial measure our earnings are reasonable and not excessive," he said.

The commission last Friday said it was moving to control the electricity distribution services of Unison after it found the company had breached Commerce Act regulatory thresholds, with price rises in April 2002 and March 2004.

It assessed Unison’s return on investment for the year ended March 2006 to be as high as 12.23%, compared to the commission’s required rate of return of 7.35%, and estimated Unison’s rates of return by region were Taupo 17.36%, Rotorua 14.36%, and Hawke’s Bay 8.25%.

But Martin denied those claims, saying Unison had not made excessive distributions to its owner, the Hawke's Bay Consumers Trust, but was reinvesting in maintenance and improvements for its networks.

Unison chief executive Ken Sutherland said Unison aimed to provide similar service levels across all of its networks and has invested significantly in improving service quality in Taupo and Rotorua.

Any commission intervention would dramatically reduce Unison's capacity to continue with its infrastructure work and put at risk the service levels of all its networks.

"It is important at a time when substantial investment is required in New Zealand's infrastructure that regulatory intervention does not act as a disincentive to such investment," Martin added.

Last month, Unison sought a High Court injunction to prevent the commission from publishing its intent to declare control but its application was dismissed.

The commission also flexed its regulatory muscles last month regarding gas services, imposing price control on the gas pipeline businesses of energy network companies Vector and Powerco.

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