New Zealand Law Society - Commission avoids gas metering inquiry

Commission avoids gas metering inquiry

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The Commerce Commission says it has decided against initiating an inquiry into whether gas metering services should be regulated "at this time".

During the assessment and clearance of Vector's application to acquire Contact Energy's natural gas metering business in 2013, the Commission identified a lack of competition in the North Island gas metering services market. Vector and Powerco currently control about 96% of the market.

It says it has now completed a preliminary assessment of whether to conduct an inquiry under Part 4 of the Commerce Act to determine whether it should recommend regulation of these services.

Deputy chair Sue Begg says while the Commission remains concerned about the level of competition in the market for the supply of gas metering services, the likelihood of the benefits of regulation materially outweighing the costs is not sufficient to justify an inquiry at this time.

"Our initial findings suggest the benefits of regulation would be modest for consumers – possibly saving between 63 cents to one dollar on a monthly bill. Our indicative analysis does not yield sufficiently high benefits when balancing against the cost of an inquiry and any subsequent regulation," she says.

"However, our remaining concerns about the scope Vector and Powerco have to raise their prices mean that we will continue to pay attention to the pricing of gas metering services in future, as we do with pricing in any infrastructure sector where competition concerns have been identified."

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