NZ Commerce Commission concerned about limited competition in North Island gas metering services


Dr Mark Berry,
Chair, NZ Commerce
Wellington, New Zealand — (METERING.COM) — May 2, 2013 – New Zealand’s Commerce Commission has expressed concern about the limited competition in the delivery of gas metering services on New Zealand’s North Island and will consider an inquiry into possible regulation.

Following an inquiry into the level of competition and market power of the sector, and whether the benefits of regulation would exceed the costs, the Commission may then be able to make a recommendation on regulation and the best way to regulate this service.

This comment was contained in the Commission’s clearance for infrastructure group Vector to acquire Contact Energy’s natural gas metering business, resulting in the merger of the two largest suppliers of gas metering services on the North Island’s reticulated natural gas distribution network.

The Commission found that there is limited competition between Vector and Contact and other market participants for the supply of gas metering services, and that the acquisition would likely result in no substantial difference in competition.

“The parties argued that prices are conditioned by the prospect of the wholesale replacement of meters, rather than by existing competitors competing to install the relatively small number of new meters that are installed each year,” said Commission chairman Dr Mark Berry. “We agreed with this and in our view, this would still be the case whether Contact retained its gas metering business, or sold it to a third party.”

The sale price was NZ$63 million (US$54 million), but the number of meters involved appears to be not publicly available.

Contact Energy retains access and ownership of the data the meters provide.