Major Gas Users’ Group Inc v Commerce Commission

COURT OR TRIBUNAL

High Court of New Zealand

DATE FILED (OR FIRST HEARING DATE)

01/10/2022

LITIGATION TYPE

Corporate Accountability

SUBJECT MATTER

Other

REVIEW TYPE

Judicial review

SUMMARY

Lexis Linxplus case summary:

Major Gas Users' Group Inc (MGUG) appealed two decisions of the Commerce Commission made under pt4 of the Commerce Act 1986 (the Act): one that amended the input methodologies for gas transmission and distribution services; and one that determined the default price-quality path for gas transmission and distribution services - both decisions were made in response to government signalling on the phase-out of natural gas because of climate change - the effect of the input methodologies decision was to enable the Commission to adjust the asset lives of gas pipeline assets - the effect of the default price-quality path decision was to utilise that adjustment to bring forward depreciation of gas pipeline assets

The appeal from the input methodologies decision operates under s52Z of the Act so can only succeed if the Court is satisfied that there is an amended or substituted input methodology that is materially better in meeting the purpose of pt4, set out in s52A, or the purpose of input methodologies, set out in s52R of the Act - the appeal from the default price-quality path decision operates under s91(1B) of the Act so can only succeed if the appellant can show the Commission made an error of law - appeal from the input methodologies decision dismissed.

The Court found MGUG's proposals would not be materially better at meeting the purposes set out in s52A or s52R of the Act - the decision itself was not inconsistent with the purposes set out in s 52A or s52R of the Act as MGUG submitted; it promotes the long-term benefit of the relevant consumers by facilitating the ongoing provision of gas transmission and distribution services at prices which reflect the long-run costs of supplying them, particularly in the face of the risk of asset stranding that climate change, and government responses to it, pose - in particular, stranding risk is not otherwise provided for in the input methodologies, the decision was not premature and it does not incentivize excessive investment.

Appeal of the default price-quality path decision dismissed; there was no error of law involved.

CASE DOCUMENTS

Major Gas Users’ Group Inc v Commerce Commission [2024] NZHC 959