Commerce Commission’s draft decision to allow Orion NZ to spend $1.3 billion on a five-year electricity network upgrade falls $200 million short of Orion’s target but would keep power bill hikes lower than proposed

The Commerce Commission has issued a draft decision that would allow Orion New Zealand, one of the South Island’s largest electricity lines distribution networks, to invest $1.3 billion over five years to maintain and upgrade Canterbury’s electricity grid.

Although it is $210 million, or 11%, short of the $1.51 billion investment package Orion NZ wants to invest between 2027 and 2032, household power bills for Orion customers are still projected to have risen $21 per month by the end of the five-year investment.

Orion NZ is the primary electricity distribution network in central Canterbury, providing power to Christchurch, Banks Peninsula and Arthur’s Pass. Christchurch City Council owns an 89.3% shareholding in the network, with Selwyn District Council holding the remaining stake.

Orion announced last year that it wanted to fund a $1.73 billion upgrade of its electricity network. After community consultation, Orion cut that proposed investment figure to $1.51 billion, comprising $932 million in capital expenditure and $578 million in operating expenditure.

It then submitted a customised price-quality path (CPP) application to the Commerce Commission in June for the five-year period of April 2027 to March 2032.

Standard price-quality limits are set through a default price-quality path (DPP), but a CPP gives electricity distributors a more tailored option for specific investment, growth, or reliability needs.

The Commerce Commission regulates the total amount of revenue that electricity lines businesses can earn from their consumers and the quality of service they must deliver under the Commerce Act. This is done by setting revenue limits and quality standards for local lines companies across NZ through DPPs and CPPs.

Commissioner Nathan Strong said the Commission had considered whether Orion’s proposed five-year investment was necessary, efficient “and in the long-term interest of Canterbury consumers.”

He said the investment was particularly important in Canterbury because it would support significant population growth in areas like Selwyn, and also protect against emergencies, including earthquakes and severe weather events.

“While affordability of electricity is important, it’s also crucial we support lines companies to invest to ensure our electricity networks are safe, reliable and future-proofed so power gets to where it needs to be and communities can thrive,” Strong said.

The Commission’s draft decision report said trimming Orion’s $1.51 billion investment proposal down to $1.3 billion reflected the Commission’s view that Orion had made the case for most, but not all, of its planned expenditure. 

The $1.3 billion investment plan would increase the monthly electricity bill for an average Orion customer’s household by around $21 by 2032, instead of around a $33 monthly increase under Orion’s proposal.

The Commission’s draft decision has estimated this would increase the monthly bill of a typical household by just under $10 per month in the first year of Orion's five-year investment rollout, followed by an average monthly increase of roughly $3 over the remaining four years.

However, the Commission noted that the impact on retail electricity bills can be difficult to predict because it’s up to retailers to decide how to package and pass on costs to customers.

“Orion would also be required to report publicly on its progress so people can see what work has been delivered and whether the investment is making a difference,” the Commission said.

Submissions on the Commission’s draft decision for Orion’s CPP are due by December 8 and cross-submissions are due by December 23.

The Commission will make its final decision in March 2027.