The Wellington-headquartered commission yesterday afternoon issued its “Proposed Process Paper for Authorisation for the Control of Supply of Natural Gas Distribution Services by Vector Limited and Powerco Limited”.

This follows the July decision by then Energy Minister Trevor Mallard to regulate Vector and Powerco’s gas pipelines services after the commission found Powerco and Vector were charging “excessive prices” and taking “excessive returns”.

Mallard said the commission found Powerco and Vector were earning after-tax returns on capital of 12.7% and 13.5% respectively, while a fair return would have been about 8%.

The commission estimated the average Vector pipeline customer could see a drop of 18.5% in pipeline prices (an average annual drop of NZ$114), while the average Powerco pipeline consumer could receive a 12.2% decrease (a NZ$51 reduction) from price regulation.

Yesterday the commission said it intended issuing its final determination for the authorisation of the supply of gas distribution services by the two companies by next September. It called on interested parties to make submissions of its proposed approach by December 8.

That approach involved seeking asset valuation information, issuing an “Asset Valuation Methodology Dicussion Paper” and a “Form of Control Discussion Paper”, and calling for further submissions before issuing a draft decision paper next July.

The commission intended holding a conference on its draft decision paper the following month and issuing a final determination the month after that.

But the commission also said it might, instead of making a final determination, “obtain or accept a written undertaking in respect of the controlled services”.