New Zealand's largest lines company Vector-UNL, second largest Powerco and the Electricity Networks Association have all come out strongly against the commission's proposed regulatory regime.
ENA chief executive Alan Jenkins told EnergyReview.Net today that the general consensus among the 25 lines companies was one of opposition to proposed regime because of the confused or distorted signals it would deliver to the lines industry, particularly in relation to the government's parallel signals for supply security and sustainable investment.
"The general feeling is that the commission's regime would be unbelievably intrusive, difficult to administer and offers nothing of great good to anyone.
"Our concerns about distorted economic signals are fundamental to this submission. There are immediate power supply problems facing the country that should be being given priority by the lines industry, and this is a further reason why a pause should be considered before the new regime is applied.
"We essentially offered the price freeze so the whole industry can get on with the real work facing us. You won't be too worried about price if you can't even get reliable generation and distribution of electricity."
There were also many examples of lines companies cutting prices only to find retailers had "pocketed" those cuts or even increased their prices to power users, Jenkins added.
The ENA, Vector-UNL and Federated Farmers gave their evidence to the commission yesterday; while Powerco and the Major Electricity Users Group (MEUG) were due present their cases today.
Most of the 54 submissions the Commission has received slate its proposed regime. Many criticise the lack of time given for the companies to put together a proper response to the plans and the introduction of a "profit threshold" - which is designed to restrain the companies from earning any more than their cost of capital.
PricewaterhouseCoopers, which put together a submission on behalf of 18 lines companies, told the commission there was uncertainty about what would happen if a company breached one of the new thresholds and recommended a delay of at least a year before any regulations were implemented.
Vector also argued for a pause to the commission's plans for regulation, saying the profit threshold, which effectively capped returns, would "strip away any incentive to reduce costs, acquire scale, and develop new and improved services".
It said a similar method of self-regulation by Transpower, the government-owned enterprise that owns and manages the national grid, has been a failure.
The commission should "engage the industry on the development of a robust methodology for setting price and quality thresholds that obviate the need for a profit threshold", Vector added.
Last week Powerco boss Steve Boulton said the commission's proposals were essentially unlawful, as they amounted to universal price control. The combination of price, profit and quality thresholds in the proposed regulatory system design did not provide for proper sharing of benefits between shareholders and consumers, and lines companies would have no incentive to fund new customer connections.
Companies would be stretched to meet unrealistic targets, which seemed to have been implemented with little or no reference to realistic sector performance. Boulton described the regulatory proposal as a hybrid scheme, the likes of which he had not seen anywhere else in the world.
The commission says the five-day conference, hosted by commission chairman John Belgrave, is a further opportunity for interested parties to present their views on what thresholds and mechanisms the commission should use to determine whether individual electricity lines businesses be investigated and, if necessary, controlled.
