RECENT INDUSTRY CHANGES'

1
RECENT INDUSTRY CHANGES.

• The Industry dynamics have changed substantially
  over the last 2 3 years. It is doubtful if this
  has been recognised by many in the operational
  Companies.
• The two major changes are the importance of
  individual property rights affecting access, and
  regulation.

2
RECENT INDUSTRY CHANGES.

• PROPERTY RIGHTS.
• Inept performances by Transpower have made it
  likely that all access to land for future high
  voltage transmission lines will require
  compensation at significantly higher levels.
• There is a risk that this will flow on to
  Distribution unless close relationships are
  retained with local land owners.
• Recent events in the Waitaki and Waikato will
  make it harder to get access for projects
  especially Transmission at voltages above 33Kv..

3
RECENT INDUSTRY CHANGES

• Regulation and REGULATORS.
• Regulators represent National Interest and have a
  strong emphasis on Security of Supply and
  Economics.
• It is clear that thresholds for Distribution
  Companies should not be breached or adverse
  results will flow.This will be particularly
  difficult in the performance area.
• The Regulators position with the country has been
  enhanced by the recent actions of Industry
  Companies as they have slowly realised the
  changes above.
• With the low rates of return being set there will
  be difficulty with Investment which will lead to
  security of supply issues at the distribution
  level.

4
RECENT INDUSTRY CHANGES.

• Even though the Electricity Commission have
  adoubted a good benchmark for Northern supply it
  is not the most efficient as it does not consider
  generation options.
• If the Govt were to allow Distribution Companies
  into retailing more efficient options would be
  arrived at for all supply.
• Transpower has not done there homework and has
  been exposed.The same will happen in the South
  Island.
• Mistakes by the industry have increased the
  credibility of both Regulators to our detriment.