The Commerce Commission has advised electricity distribution companies in New Zealand to set prices according to prevailing inflation rate. The process to regulate power supply was already ensured, with the changes brought into the Commerce Amendment Act in October 2008.

The commission today released a paper for consultation underlining price-quality paths for the power business under the Commerce Act, which sets a limit to the maximum average price that the line companies can charge. The draft proposal, fourth paper in a row to set default price for distribution companies, will be effective from April 2010. It also lays down norms for the services to be provided by the companies to its clients.

Terming the norms a path-breaking development, Brent Alderton, the acting Director of performance branch of the Commerce Commission said: "The Commission's approach to setting quality standards is intended to improve certainty for businesses by taking into account extreme events, such as severe storms."

The Ministerial Electricity Market Review released last month also advocates greater flexibility for the line suppliers for making power available to local areas at reasonable rates.