Commission shines light on EDB reporting of asset management practices

The Commerce Commission is encouraging electricity distribution businesses (EDBs) to continue to improve their annual Asset Management Plans (AMPs).

In its Reporting of Asset Management Practices paper, published today, the Commission presents a targeted review of five key areas of EDBs’ asset management practices that have particular influence on outcomes for electricity consumers.

Deputy Chair Sue Begg said the Commission’s analysis is designed to encourage EDBs to acknowledge and explain adverse trends in asset performance and to detail the mitigating actions being taken as part of their AMP disclosures.

“Our window into an EDB’s asset management practices is through their asset management plan,” she said. “AMPs are an important source of information to help customers and a wide range of other stakeholders understand and assess EDB performance and asset management processes.”

The Commission uses information contained in AMPs in setting price-quality paths, undertaking investigations of non-compliance with quality standards, performing and publishing summary and analysis of asset management practices, and to inform its other programmes of work.

Ms Begg said the report looks to encourage EDBs to improve their asset management reporting by highlighting examples of asset management reporting and practices that they may want to consider implementing in their own AMPs.

Background

The Commission’s interest in how EDBs manage their assets comes from its statutory responsibility under Part 4 of the Commerce Act 1986. The central purpose of Part 4 is to promote the long-term benefit of consumers in markets where there is little or no competition and little or no likelihood of a substantial increase in competition.

Under Part 4, the Commission sets requirements for EDBs to publicly disclose information relevant to their performance – called ‘information disclosure requirements’. The purpose of information disclosure requirements is to ensure that sufficient information is readily available to interested persons to assess whether the purpose of Part 4 is being met.

A key component of the current information disclosure requirements relates to EDBs’ asset management. Under the current requirements, each year all 29 EDBs must complete and publicly disclose an AMP (or an AMP update), which provides detailed information regarding how the EDB plans to manage its assets.

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