Watchdog cuts grid operator’s revenue

THE revenue of state-owned national grid company Transpower will be sliced by about $25 million in the coming pricing year, after over-charging last year.

Even with a reduction in the amount Transpower can charge, its revenue for the coming year will still be $60m more than the previous year, reflecting investments in the national grid.

Monopoly watchdog the Commerce Commission announced it had cut Transpower’s maximum allowable revenue – from April 1, 2014, to March 31, 2015 – by $25.1m, to $934.6m.

Transpower ‘‘over-recovered’’ from customers in the 2012-13 year, the commission said.

That was because Transpower’s asset base was smaller than forecast and new grid projects were brought into operation later than expected.

‘‘The annual adjustment ensures Transpower’s maximum allowable revenue provides for an appropriate economic return over the regulatory period, from 2011 to 2015, and that Transpower does not over or under charge its customers,’’ commission deputy chairwoman Sue Begg said.

Although less than forecast, Transpower’s maximum allowable revenue of $934.6m for the 2014-15 pricing year was still well up from $874.3m for the present pricing year.

The increase was primarily the result of a large increase in Transpower’s asset base due to investment in the national grid.

In the past financial year, Transpower’s transmission revenue jumped to $861m, from $725m in the previous year.

As Transpower brings on big new grid projects it can charge more, though the return on assets is regulated by the commission. As assets grow, so do prices.

With several huge projects in the past few years, Transpower’s prices have risen about 10 per cent a year, adding about 1 per cent a year to home and business power bills.