Energy network company Vector's shares subsided gently this week after it was clobbered by the regulator and announced a senior management shake-up.
The shares fell from $3.13 a week ago to $3.09 this week but recovered yesterday to close at $3.14. They peaked at $3.34 in August, shortly after its
$2.38 a share ($2.32 to its bondholders) float.
In August, the Commerce Commission told Vector and fellow distributor Powerco to cut prices because it considered they were making excessive profits. Vector was told to make a 9.5 per cent cut.
Last week, Vector drew the commission's ire when it proposed cutting prices to its business customers but raising residential prices 5 per cent.
Commission chairwoman Paula Rebstock threatened to increase the required cut to 10.4 per cent from November if Vector did not apply the price cut across the board.
"The commission considers Vector may be discriminating against its largest and, arguably, its most vulnerable customer base, preventing those customers from receiving the benefit of regulatory control," Rebstock wrote to Vector chief executive Mark Franklin.
On Monday, Franklin capitulated and announced an across-the-board price cut but reiterated his view that residential customers were paying too little.
"In the longer term, Vector still considers that it is important to rebalance our pricing in order to remove the existing distortion which favours our residential customers at the expense of commercial and industrial customers," Franklin said.
In the management shake-up, eight new executives, mostly internal appointments, will report directly to Franklin and the three core businesses, electricity, gas and technology, will each have their own chief executives.
