Confusion over regulation after the clampdown on Auckland power lines company Vector is misplaced, Energy Minister David Parker says.
Dismissing some industry and investor criticism of the move, he said yesterday there was "no inconsistency" between the Commerce Commission's actions and the energy industry's regulatory framework.
Almost $500 million has
been wiped from Vector's market value over the last two weeks since the regulator declared its intention to take control of the lines company's prices and accused it of abusing its monopoly position.
Vector's shares closed down 8c to $2.16 yesterday, well off its float price last year of $2.38.
Investors were spooked not only by the severity of the clampdown, but also its timing. Just two days before the commission declared its intentions, the Government told the regulator it should act to ensure that infrastructure companies had the confidence to invest and were allowed commercially realistic rates of return on their investments.
Under the Commerce Act, the commission was required to "have regard" to the directive - which also reiterated the regulator's role in ensuring that infrastructure companies were held accountable for their investments and consumers were not disadvantaged by investments.
Meanwhile, Vector put on hold or began to review $630 million of planned investment, claiming it was no longer certain it would make an adequate return.
Giving voice to many investors' concerns, NZX chief executive Mark Weldon called on the Government to resolve "apparent contradictions" between the clampdown and the directive.
Parker declined to comment on the specifics of the commission's Vector decision. He said that was a matter to be resolved by the independent regulator and the company.
However, he said the coincidence of the Government directive and the commission's move did not look good - this was an observation on timing and not a criticism of the regulator's actions.
"The Government would have preferred it if the commission had taken a couple of weeks between receipt of the [directive] and declaring its intention to take control of Vector," Parker said.
He also said wider concern of the regulatory environment reflected a move "from a light-handed regulatory regime to a more regulated one".
Irrespective of the outcome of the actions against Vector, he supported Commerce Minister Lianne Dalziel's review of the act.
This review may give companies the right to appeal against the commission's price decisions on merit rather than just process.
