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Proposed regulations promote multi-sector utilities regulator

Tuesday 31 January 2023 | Written by Matthew Littlewood | Published in Local, National, Technology


Proposed regulations promote  multi-sector utilities regulator
Te Aponga Uira workers repair multi-coloured outdoor lights in lead up to the festive season in December last year. The state-owned enterprise is both a regulator of tariffs, (including feed-in tariffs) and provider of power. 22122810

People could have a better idea about what they’re getting charged for in their power bill under proposed new regulations.

The Government has released its Utilities Regulation (Electricity, Water, and Sewerage Services) Bill 2023 for public consultation.

The Bill proposes modifying the Competition and Regulatory Authority (CRA) – currently solely a telecommunications regulator – into a multi-sector utilities regulator, by extending its responsibilities to the electricity and water and sewerage utility sectors.

Local electrical firm Andersons’ chief executive Steve Anderson said much of the Bill had “been in the pipeline for some time”.

“We’ve got some fairly old systems and regulations that don’t make a lot of sense, like the Electrical Inspectorate being part of Infrastructure Cook Islands (ICI),” Anderson said.

“In a large part, I think the industry supports the move to put these utilities under a single regulator.”

Anderson said one of the main issues is that Rarotonga’s Te Aponga Uira was both a regulator of tariffs, (including feed-in tariffs) and provider of power.

“It doesn’t fit well to have it as a regulator when it’s also a monopoly. This is why an independent body is needed to assess the charges it sets,” he said.

The policy document, released alongside the Draft Bill, says under the proposal, the CRA will have the ability to conduct price reviews of electricity and also oversee licensing of utilities service providers, such as electricians.

“The primary objective of this Utilities Policy is to ensure that electricity and water and sewerage public utility services are provided efficiently, safely and reliably for the long-term benefit of end users,” the document says.

Anderson said the fact the CRA would allow submissions from stakeholders for its price reviews should also lead to more transparency in its setting of prices.

“Currently there is no mechanism for the public to have any input on the make-up of the electricity tariff,” Anderson said.

“It is hoped that a Regulator would be able to accept submissions from the public on the tariffs that the Utility charges, and what it pays to solar generators.

“In addition, public confidence would be improved if an independent regulator had full visibility of the Utility’s costs and margins that make up the various tariffs, to determine if they are appropriate.”

According to the policy document, the “current regulatory settings in the Cook Islands suffer from a number of limitations”.

The document says the limitations include:

  • lack of independent regulatory oversight of service standards, pricing and consumer protection,
  • lack of an independently administered licencing and technical qualifications regime,
  • lack of formal consumer protection regulation, and
  • limited transparency in relation to cross-subsidies embodied in current pricing arrangements.

“Regulation helps to solve the problems that tend to occur when a supplier is in a position of market power, as happens when a supplier is the only one in the market (economists call this a ‘monopoly’),” the document says.

“Economic regulation of utility services with monopoly characteristics is warranted to prevent excessive prices and inefficiencies.”

Submissions on the Draft Bill close on February 20.