11th hour deal spares Transpower from Commission control

State-owned energy network company Transpower today offered up an 11th-hour deal, delaying plans by the Commerce Commission to seize control of its networks.

Transpower said it would abandon a planned 19 per cent price rise, ekeing out more time to negotiate with the competition watchdog over pricing.

The 19 per cent price rise would go ahead as planned on April 1, but customers would be credited the same amount, effectively cancelling the increase.

Commission chair Paula Rebstock said today's move was a sign of good faith from Transpower.

"This development shows that the regulatory regime for electricity is flexible enough to allow workable solutions to be developed without necessarily moving to control," Ms Rebstock said.

The commission had been poised to decide whether to take over the power company today, following last month's ruling by the watchdog that Transpower breached payment thresholds by $50 million.

The commission said today's move was an interim measure, delaying the decision and giving the pair more time to reach an administrative settlement.

A settlement -- covering Transpower's revenue requirements and the level of future price rises -- would be "less intrusive and less costly" than imposing control.

"The commission believes there is a way forward that will allow Transpower to make necessary investments in the national grid, while ensuring that its activities do not breach the Commerce Act," Ms Rebstock said.

Today's move marked a turning point in the negotiations, which until now have been acrimonious, with the commission accusing Transpower of making "excessive" profits, and Transpower warning the watchdog's actions could topple efforts to upgrade the national grid.

Transpower chief executive Ralph Craven said both sides had come closer to an agreement in the past week.

"We are hopeful that an appropriate way forward can be worked out in a matter of weeks."

Dr Craven said the commission had indicated willingness to make changes, within the regulatory framework, to cater specifically to the transmission business.

Transpower was expected to provide the commission with a settlement offer in May. If that passed the commission's scrutiny, it would be opened to consultation from interested parties, including consumers, before a final ruling was made.

If an agreement was not be reached, the commission would proceed with its decision on whether to declare control of Transpower.

- NZPA