Vector acknowledges the release of the Commerce Commission’s draft reasons paper on the Input Methodologies for electricity lines companies published earlier today.

Vector Chief Executive Simon Mackenzie said the company, as a long term investor in critical network infrastructure with significant annual expenditure, has always recognised the legitimacy of regulatory oversight.

“Vector has consistently stated that regulation must strike the right balance between protecting the consumer whilst ensuring businesses earn commercially appropriate returns.

“A fundamental component of a regulatory regime is the need for certainty; this was recognised in the 2008 legislative reforms to the Commerce Act.”

Mr Mackenzie said that although Vector had not yet completed a full analysis of the Commission’s paper, initial impressions are the decisions vary from those previously articulated, which does not accord with a consistent and certain regulatory environment.

“We believe the Commission hasn’t taken sufficient account of the global financial crisis and ongoing market volatility. While the Commission has referenced the need for long-term certainty, there is little recognition of the need to attract off shore capital to New Zealand for investment in growth and security of supply.”

Mr Mackenzie said that any move to a regime based on the input decisions expressed in the draft reasons paper also must reflect investor expectations set by the Commission previously.

“Clearly the release of the draft Input Methodology Reasons paper is only a starting point and we intend to continue to be proactively involved in the process which still has a long way to go,” Mr Mackenzie said.

The Commission’s final decisions on Input Methodologies are expected by the end of the year. The new legislation also allows for a Merits Review process. Following requests for further information, any price changes determined by the Commission as appropriate will take effect on 1 April 2012 for electricity distribution businesses.

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