The Commerce Commission has begun assessing Orion’s
customised price-quality path (CPP) proposal to spend more
on Canterbury’s electricity network. The Commission is
seeking feedback on the proposed level of investment, the
benefits it would deliver to consumers and the impact on
electricity bills for the more than 235,000 homes and
businesses connected to Orion’s network.
Details of
the assessment process, key timeframes, and the main issues
under consideration are outlined in the process and issues
paper published today, along with a notice confirming that
Orion’s CPP application meets the relevant regulatory
rules and can now be assessed.
Associate Commissioner
Nathan Strong said that while the CPP process allows an
electricity lines company to seek approval for expenditure
beyond standard regulatory settings, approval is not
guaranteed.
“Our job is to rigorously test whether
Orion’s proposed expenditure is necessary, efficient, able
to be delivered, and in the long-term interest of Canterbury
consumers.”
Orion is seeking approval for
approximately $932 million in capital expenditure and $578
million in operating expenditure, totalling $1.51 billion.
According to its proposal, the spending is needed to address
ageing infrastructure to maintain existing quality levels,
support population growth and rising electricity demand,
improve resilience to earthquakes and severe weather events,
prepare the network for future energy needs and enhance
efficiency and capability.
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To recover these costs,
Orion is proposing increases to electricity prices from
April 2027. The Commission estimates that, if approved in
full, this would see a typical household’s monthly
electricity bill increase by around $7.50 (in 2025-2026
dollars) in the first year of the CPP and around $3.50 on
average (in 2025-2026 dollars) for each of the remaining
four years of the CPP.
“We know that every Canterbury
household and business values a safe, reliable and resilient
electricity network. Since Canterbury consumers ultimately
pay for investments in the network, we need to ensure Orion
demonstrates not only that the spending is needed, but that
it represents good value for money and delivers benefits
that matter to consumers.”
To ensure the proposed
investment is sufficiently justified, the Commission’s
assessment will focus on considering the appropriate levels
of investment, how uncertain investment should be managed,
the adequacy of Orion’s consumer consultation, how price
impacts can be managed for consumers, appropriate levels of
service quality and how best to monitor Orion’s progress
and performance.
The review of Orion’s proposed
expenditure is further supported by an independent
expert’s (verifier’s) assessment, as required under the
CPP process. The verifier’s report helps the Commission
better focus its assessment on areas that matter most for
consumers.
Mr Strong said, “We’re particularly
interested in consumers’ views on the trade-offs as
different people will value different outcomes differently,
and understanding those perspectives is an important part of
our decision-making.”
Feedback on Orion’s proposal
and issues we have identified in the process and issues
paper will help the Commission understand what matters most
to Canterbury consumers. Submissions can be made until 5pm,
26 August 2026. The Commission also plans to hold targeted
engagement with consumer groups for feedback on this
paper.
A draft decision will be released for
stakeholder feedback in November, with a final decision to
be made in March 2027. Consumer price increases would take
effect from 1 April 2027.
Background
The
Commerce Commission regulates New Zealand’s electricity
lines businesses under Part 4 of the Commerce Act. As
electricity lines businesses are monopolies and consumers
have no choice but to connect to their networks, the
Commission regulates the total amount of revenue they can
earn from their consumers and the quality of service they
must deliver. It does this by setting revenues and quality
standards for local lines companies across New Zealand once
every 5 years.
However, if a lines company like Orion
needs to invest substantially more in its network, it can
submit an investment plan (a CPP) to the Commission seeking
approval for increased revenues to recover this
investment.
The Commission has the power to approve,
amend or decline aspects of the CPP proposal after assessing
the supporting evidence for the proposed investment and
considering consumer feedback.
The Commission does not
regulate Orion’s owners, set electricity prices, or get
involved in the day-to-day management of the
company.
Orion submitted its CPP application to the
Commerce Commission on 9 June 2026. Its application covers
the five-year period from 1 April 2027 to 31 March
2032.