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The Commerce Commission today issued its final decision to approve $1.7 billion of planned Chorus expenditure for 2025 through 2028 but disallow $172.6 million that would have forced prices up.
Telecommunications commissioner Tristan Gilbertson said said Chorus had provided evidence to satisfy the regulator that expenditure of $1.7 billion was prudent and efficient, an increase over an earlier commission draft decision, but $172.6 million of its proposed expenditure still failed that test.
Gilbertson said the commission was focused on ensuring Chorus continued to invest efficiently ahead of demand for the long-term benefit of Kiwi consumers.
“We want to see ongoing investment in world-class infrastructure but are conscious that any expenditure we approve ultimately flows through to the prices Kiwi consumers pay for fibre services,” he said.
“This is the regime acting as it should to encourage ongoing investment, including in critical resilience initiatives, but guarding against unjustified expenditure that would be paid for by Kiwi consumers.”
Chorus chief corporate and regulatory officer Julian Kersey welcomed “improvements” to the draft decision that would benefit fibre customers.
“As requested by the commission, we provided more information to support our proposal and this has resulted in an uplift of both capital and operating allowances against the commission’s draft decision,” Kersey said.
The importance of resilient infrastructure in the face of increasingly frequent and severe weather events was a key consideration during the consultation process, Gilbertson said.
Today’s decision was the first of two the commission needed to make to set a new price-quality path – including maximum revenue and minimum quality standards – for Chorus.
A final decision on revenue and quality standards is expected later in the year with consultation now under way.
Chorus initially proposed expenditure of $1.9 billion for regulatory period but the commission reduced this to $1.6 billion in its draft decision in April on the basis that Chorus had failed to meet the “prudent and efficient” test in respect of the excluded expenditure.
Chorus has subsequently provided further evidence that led the regulator to approve expenditure increasing to $1.7 billion.