PROJECTS

Review of the Orion Networks Application for a Customized Price-Quality Path, New Zealand

The problem

Following devastating earthquakes in 2010 and 2011, Christchurch’s electricity distribution company Orion was faced with the task of rebuilding the local power grid. It made a regulatory submission for a customized price-quality path (CPP), the first time this has been done in New Zealand. New Zealand’s largest distribution company, Vector, also operates in earthquake prone areas and wanted to ensure that the approach taken with Orion would work for it and other distribution companies.

How we helped

Castalia reviewed Orion’s regulatory proposal. We checked that the approach would be suitable for Vector and other distribution companies if they were to suffer significant earthquake damage in future. We found that it was suitable. We then developed additional arguments in favor of Orion’s proposal, which were submitted to the Commerce Commission.

Impact

The Commerce Commission accepted Orion’s proposal in large part, and in so doing created a regulatory framework to allow Vector and other distribution companies to recover the cost of rebuilding after an earthquake.