Consultations

Distribution pricing reform is an increasing area of focus for the Authority. We want to see faster progress with distribution pricing reform to realise consumer benefits and to facilitate an efficient transition to a low emissions economy.

Distribution pricing is important as it affects how consumers use electricity, how distributors and others manage load, when distributors invest in new (or replacement) poles and wires or network alternatives, and the timing, level and location of investments in new technology, such as distributed energy resources.

To better support distribution networks for faster pricing reform we have updated the Distribution Pricing Practice Note to provide more guidance on what good distribution pricing looks like, and to give clarity on the Authority’s expectations on pricing and urgency.

We encourage feedback on the draft updated Practice Note. The consultation period closes at 5pm on Wednesday 3 November and submissions should be sent to distribution.pricing@ea.govt.nz.

Efficient distribution pricing is an essential component of the Authority’s broader distribution sector reform. This distribution pricing workstream was signalled in the recent discussion document, Updating the Regulatory Settings for Distribution Networks.

No-one wants to pay more than they should for power, but that’s what will happen if distribution pricing doesn’t change soon.

We are reviewing the principles for distribution pricing to clarify our expectation that the price anyone pays reflects the costs of the electricity distribution service they are getting.

Distribution networks take electricity from the transmission grid to the connection point for a property. Distribution accounts for about 27% of the cost of an average power bill.

New technologies like electric vehicles and solar panels could have all kinds of unintended impacts if the current distribution pricing structures remain in place. One example is: if someone gets solar panels they can reduce the share they pay of the distribution network costs, meaning other consumers on that network will pay a higher share.

At a 2016 electricity industry conference, there was near-unanimous agreement that distribution pricing needs to change. Some good progress has been made by distributors, but price reform is not happening quickly enough and needs to advance with more urgency.

The Authority has now published a consultation paper to seek views on its proposal for amending the Distribution Pricing Principles and introducing a monitoring regime.

Our paper:

• proposes changes to the Distribution Pricing Principles to clarify our expectations for distribution prices 
• proposes a star rating of distributors’ price structures, to encourage and support reform
• works through three examples of pricing structures that would get a higher rating.

The period for making submissions on these proposals closes on 19 February 2019. The paper explains how and when to make a submission.

We have released a consultation paper, and a supporting companion paper, on the implications of evolving technologies for the pricing of distribution services. Evolving technologies may include electric vehicles, battery storage units, smart appliances, consumer apps and distributed generators (including solar panels). These exciting technologies are starting to give consumers more choice and will further enhance competitive pressure in the electricity sector.

We believe distribution pricing structures will need to change in order to maximise the long-term benefits of evolving technologies for consumers. The consultation paper seeks submissions on these issues from interested parties. Wherever possible, we will also arrange one-on-one meetings with parties who request them.

The Electricity Authority has released a consultation paper to obtain feedback on its proposed decision-making and economic framework for the Distribution Pricing Methodology (DPM) Review.

The Authority will place submissions to the consultation paper on its website on Monday 25 June 2012, and will give parties until 5:00 pm Monday, 9 July 2012 to make cross-submissions.

Cross-submissions

Cross-submissions should be received by 5:00pm on 9 July 2012. The details of Authority's preferred formats, the process for receiving cross-submissions is the same as that set out below for submissions. As for submissions, your cross-submission is likely to be made available on the Authority's website.

Pricing principles and information disclosure guidelines (guidelines) for distributors to apply when formulating their pricing methodologies were published in March 2010. The pricing principles and guidelines and associated reviews of distributors' performance, are designed to facilitate distributors' achievement of improved pricing approaches. The objective of the pricing principles and guidelines is to improve competition and efficiency outcomes for the long-term benefit of consumers without recourse to prescriptive regulation which dictates how distributors should price their services.

After a review of pricing methodologies of a representative sample of distributors, the Authority invites submissions on:

1. the criteria in Appendix A of the consultation paper below which provide further guidance on the application of the guidelines published last year; and
2. the initial criteria for assessing alignment with the pricing principles.

An additional purpose is to bring to the attention of distributors and other interested parties the results of the initial review of their alignment with the guidelines undertaken by Concept Consulting Group Limited on behalf of the Authority.

Concept Report has been republished on 9 September 2011 to correct the information in Appendix D. The table in the appendix was revised to include Company I.