Executive Summary
Section 62 "Continuance of Supply" of the Electricity Act 1992 (the Act) provides that electricity lines companies must maintain line services to connections established as at 1 April 1993. This section expires on 31 March 2013. Unless amended, once this section expires, consumers connected to lines which are not commercially viable (i.e. uneconomic) will face uncertainty about access to electricity at affordable prices. The section is being reviewed now to decide whether section 62 should be amended. The review presents a range of feasible options for consultation in order to ensure that affected consumers continue to have access to electricity after 2013 and that it is delivered efficiently, fairly, reliably and in an environmentally sustainable manner.
This discussion paper identifies a number of options for "continuance of supply" after 2013. Options identified are:
- Continuance of obligation to maintain line function services with no expiry date;
- Continuance of obligation to maintain supply, using lines or alternatives, with no expiry date;
- Continuance of obligation to maintain line function services expires but lines companies provide information on intentions in advance;
- Continuance of obligation to maintain line function services expires but lines companies assist transition from lines supply to alternatives;
- Continuance of obligation to maintain supply, using lines or alternatives, for a limited time beyond 2013;
- Continuance of obligation to maintain supply, using lines or alternatives, with no expiry date but subsidised by all electricity users.
There is no preferred option identified at this stage, and the discussion paper seeks input from stakeholders to identify any other feasible options.
A key assumption is that current policy requiring line charges to rural and urban areas to be pegged will remain. This policy is set out in paragraph 99 of the current Government Policy Statement on Electricity Governance (GPS 99, October 2006):
The Government expects distribution companies keep any changes to rural line charges in line with urban line charges. The Electricity Commission should monitor developments in rural charges.
The paper considers the impacts of each of these options on the following groups of stakeholders: consumers (both rural and urban); lines companies; and ‘the market' for alternative supplies. Broadly speaking, we think that consumers will want certainty of supply at affordable prices; that lines companies will want to be able to generate a commercial return on their assets and to make viable investments; and that ‘the alternative supply market' will be looking for new opportunities to expand.
We seek your feedback on your preferred option and on any other feasible options you think will achieve the objective. We will then analyse the submissions, making our recommendations on continuance of supply and any proposed changes (if necessary) to section 62 of the Act to Ministers by the end of 2007.
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