Potential price shocks for consumers as the nation transitions to low carbon economy

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The Commerce Commission will be taking a close look at how much more consumers will be asked to pay to cover the cost of upgrades to the energy distribution network.

The regulator said revenue limits needed to increase to meet rising demand for electricity in the transition to a low carbon economy.

The investment in the capability of the network is likely to total tens of billions over the next decade.

More EVs on our roads and high demand from industrial processed heat as it transitions from fossil fuels will be factored into planning.

Commissioner Vhari McWha said the regulator would keep an eye on any large-scale investment by lines businesses required to upgrade services.

It was conscious of potential price shocks for consumers.

“What we’re preparing to do is to reset those revenue limits from 2025,” said Commissioner Vhari McWha.

“Decisions made by lines companies in the coming period will have an enduring impact on future electricity bills, so it is critical that proposed investment is prudent, efficient, and to the long-term benefit of consumers.

“This includes making best use of existing capacity and fully exploring options such as demand side management and batteries.

“At the same time, they will need to prepare for an expected increase in extreme weather events and keep up with regular upgrades of ageing assets.”

The Commissioner said the general need for substantial investment by lines companies was clear.

“Networks will need to grow and adapt to meet new demands from the increasing electrification of transport and industrial process heat as well as connecting new local generation.

“At the same time, they will need to prepare for an expected increase in extreme weather events and keep up with regular upgrades of ageing assets.”

Consumers and lines companies were expected to take part in the consultation process with feedback closing on 15 December.

The current default price-quality path (DPP) expires on 31 March 2025, and the Commission must reset the price-quality path by 30 November 2024 to apply from 1 April 2025.