"For once they (commission members) have pleasantly surprised us. They have listened to our submissions, and done what is sensible and reasonable," Electricity Networks Association chief executive Alan Jenkins told EnergyReview.Net referring to the week-long conference held by the commission in Wellington earlier this month.

Jenkins said any possible regulatory environment was now infinitely more complex than when the matter was first raised about a year ago. He was glad the commission had decided on a year-long deferral, as the industry's top priority was ensuring as good a national reticulation system as possible to counter any supply constraints imposed through another cold dry winter.

The commission announced on Monday that it had decided to adopt a price path threshold and a quality threshold to apply to all electricity lines businesses (including national grid owner Transpower).

The price path threshold will be of the form 'CPI - X', requiring no increase in average prices since the legislation was enacted (8 August 2001) to 31 March 2004; and from April 2004 (July 2004 for Transpower), and ongoing real price reductions at a rate yet to be determined. The commission will reset the price path threshold to apply from this date, with the intention that it be set for five years.

The commission said the quality threshold would require no material deterioration in system reliability, as well as demonstration of meaningful engagement with end consumers to ensure services were being provided at a quality that reflected consumer demands.

The commission said that after considering submissions from interested parties, it decided a profit threshold, assessed at the end of five years (as was first proposed) might not be the best means to achieve the purpose of the targeted control regime, as it could deter investment and innovation.