The Lines Company welcomes Electricity Authority Report

31 May 2017

The Lines Company (TLC) welcomes the Electricity Authority’s (EA) Market Performance Review of TLC’s pricing and load control practices.

The report, released earlier this week, found TLC’s use of load control was consistent with the current incentives on TLC to reduce transmission charges by reducing peak network load. Many of its conclusions reinforced those of a recent independent review of TLC pricing, including the influence of a complex pricing methodology on customers when making decisions about their energy usage.

“This is valuable feedback from the EA and very timely, since those are the areas we are already working to address through the proposed changes in pricing structure we are currently investigating,” says Lines Company Chief Executive, Sean Horgan.

“This new report provides good insight into the issues of our current pricing method, while recognising the challenges we face running a network like ours. It further validates our decision earlier this year to embark on a service-based pricing review,” says Mr Horgan.

“We will use the EA report information, with that from Roger Sutton, PWC and our own community consultation, to develop a simple, transparent and equitable pricing methodology that is easily understood by all. While there is considerable work yet to be done we are committed to making sure any changes are well
understood and communicated throughout the whole process.”

As distributors beyond TLC look towards more cost effective pricing structures, in its report the Electricity Authority urges all distributors to resource new approaches appropriately and to remain open to feedback from consumers and retailers throughout the process.

TLC recently completed a second round of consultation involving seven communities and over 130 participants. Once developed, the revised pricing structure will be modelled and trialled before a final round of consultation with the community.

Additional information:

• In September 2016 the TLC Board engaged energy industry experts Roger Sutton, former Chief Executive of Orion (Christchurch’s lines company) and Lynne Taylor, leader of PWC’s Energy Markets Sector Group, to carry out an independent review of its service-based pricing approach.
• The terms of reference for that review can be found here
• The reviewers’ final report was received by TLC’s Board in March 2017. The report, its findings and accompanying Board overview statement are available at here.
• The Electricity Authority’s “Review of pricing and load control by the Lines Company” may be viewed here.
• Over recent months TLC has completed two rounds of consultation gathering feedback from communities to inform development of a revised pricing structure for its customers.
• The Lines Company owns and operates a 4,500 kilometres long electricity distribution network supplying 24,000 customers in the King Country and central North Island.