Potential price shocks in the transition to a low-carbon economy

The Commerce Commission will closely monitor how much consumers will have to pay to cover the cost of upgrades to the energy distribution network.

The regulator said revenue thresholds would need to increase to meet rising demand for electricity in the transition to a low-carbon economy.

Investment in network capacity will total tens of billions over the next decade.

More EVs on our roads and greater demand for industrial heat will factor into planning as it transitions away from fossil fuels.

Commissioner Vhari McWha said the regulator would monitor large-scale investment by tax businesses needed to improve services.

It made consumers aware of potential price shocks.

„What we’re preparing to do is reset those revenue caps starting in 2025,” McWha said.

“Decisions taken by line companies in the coming period will have a lasting impact on future electricity bills, so it is critical that the proposed investment is prudent, efficient and for the long-term benefit of consumers.

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

„At the same time, they must prepare for the expected increase in extreme weather events and continue routine upgrades of aging assets.”

The commissioner said the general need for substantial investment by the 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 and the connection of new local generation.

„At the same time, they must prepare for the expected increase in extreme weather events and continue routine upgrades of aging assets.”

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Consumers and lines companies are expected to participate in the consultation process, which closes on December 15.

The current Default Price-Performance Path (DPP) will expire on March 31, 2025, and to apply from April 1, 2025, the Commission will have to reset the price-performance pathway by November 30, 2024.

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