Vector Limited (VCT)

[kura]

Wow, there goes yesterdays gain !

Comm/Commision stated that announcement after taking full consideration of recent govt announcement, hate to think what would have happened if there wasn't the govt announcement on Monday.

[Bobby_Fischer]

quote:Originally posted by whatsup

WOW, just imagine what the Comm Comm will do to Auck Airport( On the abuse of a monopoly position situation).

Heh, heh. This anno. has not gone unnoticed by holders of AIA. Being a member of the travelling public (and AIR holder), but not an AIA holder, bring it on, I say. Actually thought about buying VCT yesterday. Slow to react can be fortunate sometimes ... I guess Commerce Comm. are reminding everyone who the sheriff is, after apparent signs of weakness from the Govt. yesterday.

[biker]

VCT
09/08/2006
COMCOM

REL: 1441 HRS Vector Limited

COMCOM: VCT: Intention to declare control of Vector Limited published

Intention to declare control of Vector Limited published

The Commerce Commission has published its intention to declare control of the
electricity distribution services supplied by Vector Limited.

The Commission has found that Vector is overcharging industrial and
commercial customers across its networks. Vector is also undercharging some
residential customers, particularly the Auckland residential consumers who
are the beneficiaries of Auckland Energy Consumer Trust, Vector's principal
shareholder. By being undercharged, beneficiaries of the Trust are receiving
an implicit dividend in addition to the normal shareholder dividend.

The Commission considers that the disparity between customer classes is
inefficient and can not be justified. The Commission also found that Vector
is earning excessive revenues overall.

Commerce Commission Chair Paula Rebstock says that the Commission's view is
that:
- Vector is overcharging some customers and undercharging others. The
company is making different rates of return from its 21 different customer
classes and these differences can not be justified. For example, during the
2006/2007 year, Vector will earn a 54.4% rate of return on investment from
one group of Northern business customers, while it earns only a 4.6% rate of
return from Auckland residential customers.
- Vector is earning excess revenues. The Commission's preliminary
estimate is that, during the next two years, Vector will earn between $13
million and $75 million in excess revenue per annum. To bring its returns to
a normal level, the Commission estimates Vector would need to reduce its
charges between 2% and 11% for each of the next two years. (Vector's
distribution charges comprise around 20 to 40% of the customer's power bill.)

Ms Rebstock says that the Commission has given full regard to the Government
Policy Statement issued on Monday.

"The Commission is committed to ensuring that there is effective investment
in New Zealand's basic infrastructure and our regulatory approach takes full
account of appropriate infrastructure investment incentives for lines
businesses," says Ms Rebstock.

"The Commission considers that Vector's actions are not consistent with the
purpose of Part 4A of the Commerce Act, nor with the objectives of the
Government Policy Statement.

"Vector is focussing on the short term interests of particular classes of
customers who are also beneficiaries of its major shareholder, the Auckland
Electricity Consumers Trust. Such customers receive a direct dividend and an
additional implicit dividend by being undercharged themselves.

"The Commission's view at this time is that a declaration of control would be
in the long-term interest of consumers.

"Overcharging and undercharging are both inefficient - that is, they are
harmful to the New Zealand economy," Ms Rebstock says.

"Vector is aware of the imbalances across its customer classes and has had
ample opportunity to improve the situation. Instead, during the time that
Vector has been aware of the imbalances, the situation has deteriorated
further for many groups of consumers.

"Vector is not making sufficient progress in redressing the overcharging of
some customers and reducing its excessive revenues, and as a result the
Commission has moved to this intention to declare control.

"These are very serious issues," says Ms Rebstock. "Vector is only able to
overcharge some customers and undercharge others by abusing its monopoly
power."

Ms Rebstock said that Vector was in discussions with the Commission about an
administrative settlement, which is an alternative to control. She said the
release of the Commission's paper will assist Vector to focus on the long
term interest of all its consumers, and will add transparency to the process
of removing overcharging.




Hopefully Airpor

[kura]

Pity I'm going to take a double hit, once as a shareholder, and again as a consumer in the "undercharged" area (AECT)

As an aside, (as I operate through a company) if my company sold some of its trading shares to me, at below market value, then wouldn't the IRD want to tax my "additional implied dividend" ???

[duncan macgregor]

I am starting to think that my TPW shares are not as safe as i anticipated. What will the crazy bastards meddle with next. AIA,TEL, CEN,TPW. Time for a rethink. Hope you sold heaps KIWI no one has a system that will forecast that. macdunk

[Paddie]

Thankfully I got out of this share recently.

"The Commerce Commission has published its intention to declare control of the electricity distribution services supplied by Vector Limited".

Unbelievable, but not surprising with this government.

Paddie

[Toddy]

Does this mean that the Labour Govt and the ComCom are going to have an all out battle on the direction that regulation is going to take in the NZ market place.

The Govt needs to clarify the situation and urgently.

[PointyHat]

I thought this was a free market economy rather than a dictatorship!
There goes my pension investment hopes.
Why don't the govt just nationalise things if they want control rather than just interfering with the market forces? Rather that than allowing householders and investors to invest, and then (just before the first results come out) they take over control!!!
This has dumbfounded me, I really have lost incentive to take part in a game where the goal posts are moved by the referee. Bit like the Aussie league refs decisions on the Warriors!! A little one sided.
Perhaps the conflict re govt saying "invest in infrastructure" vs "you are charging too much" can be sorted by the VCT management(?)

[redzone]

its a very muddy ...dont like the look of the whole out look for the NZX...government involvement into equity markets dont mix well....
Have stuck to export stocks SOE is looking good.

[Bobby_Fischer]

I hope you guys were equally offended with Govt's treatment of TEL? The principles involved (property rights, etc) are exactly the same.