Local Body Rating of the Distribution Networks of Utility Companies: An Economic Analysis

Abstract

Our analysis is concerned solely with the levy of rates on the value of the distribution networks of utilities (which may be on poles above ground or underground) and is not applicable to the land and buildings owned by utilities and rated under the standard residential and commercial rating schemes. We consider two key questions: Is it efficient for utilities to be rated on the value of their distributionnetworks? and Does rating on the basis of the value of distribution networks provide utility companies with incentives that are consistent with New Zealand governmentpolicy?