New Zealand Acts

COMMERCE ACT 1986 - SECT 53P

53P Resetting starting prices, rates of change, and quality standards

1 Before the end of the first and every subsequent regulatory period, the Commission must amend the section 52P determination by setting out the starting prices (as referred to in section 53O(a) ), rates of change (as referred to in section 53O(b)), and quality standards (as referred to in section 53O(c)) that apply for the following regulatory period.

2 In resetting starting prices, rates of change, and quality standards, the Commission must consult with interested parties.

3 The starting prices must be either—

a) the prices that applied at the end of the preceding regulatory period; or

b) prices, determined by the Commission, that are based on the current and projected profitability of each supplier.

4 Starting prices set in accordance with subsection (3)(b) must not seek to recover any excessive profits made during any earlier period.

5 Subject to subsection (8), the Commission must set only 1 rate of change per type of regulated goods or services (for example, if the rate of change (x) is 1% in a CPI− x path, 1% must be the rate for all goods or services of that type).

6 The rate of change must be based on the long-run average productivity improvement rate achieved by either or both of suppliers in New Zealand, and suppliers in other comparable countries, of the relevant goods or services, using whatever measures of productivity the Commission considers appropriate.

7 When setting the rate of change, the Commission may take into account the effects of inflation on the inputs of suppliers of the relevant goods or services.

8 The Commission may set alternative rates of change for a particular supplier—

a) as an alternative, in whole or in part, to the starting prices set under subsection (3)(b) if, in the Commission's opinion, this is necessary or desirable to minimise any undue financial hardship to the supplier or to minimise price shock to consumers; or

b) as an incentive (under section 53M(2) ) for the supplier to improve its quality of supply.

9 Any alternative rates of change set under subsection (8) may include step changes.

10 The Commission may not, for the purposes of this section, use comparative benchmarking on efficiency in order to set starting prices, rates of change, quality standards, or incentives to improve quality of supply.

11 If starting prices, rates of change, and quality standards have not been set by way of an amendment to the relevant section 52P determination by the end of the regulatory period to which it applies, the starting prices, rates of change, and quality standards that apply at the end of the regulatory period continue to apply until the reset starting prices, rates of change, and quality standards are set.

History: Section 53P: inserted, on 14 October 2008, by section 4 of the Commerce Amendment Act 2008 (2008 No 70).