PNG Power and Independent Consumer & Competition Commission (ICCC) signed a regulatory contract this morning after completing an intensive and comprehensive review into the pricing and regulatory arrangement for PPL since 2011.

The contract sets out a new price path for PPL for regulatory period starting 1 January 2013 and ending 31 December 2017.

“And the contract, basically from PNG Power’s perspective, sets out a regulatory parameter or mechanism on how tariff is to be derived and applied by PNG Power and ICCC has got that mandate to oversee that we operate by that regulatory contract framework,” PPL CEO Mr John Tangit said.

The contract places emphasis on the efficient delivery of services and improved service levels. For the first time, it introduces penalties for non-compliance with minimum service standards and ties prices to the achievement of these service standards.

Under this contract, PPL will adopt competitive and transparent capital and operational procurement processes to ensure that only prudent and efficient expenditure is passed onto customers; a requirement that PPL investigate potential new pricing structures including “time of use pricing” and the introduction of small scale generation such as roof top solar; and processes to ensure that third party funding, including the benefit of concessional loans are excluded from allowable expenditure.

Mr Tangit said PPL would like to have more involvement in terms of capital expenditure to improve reliability in the service we provide and that’s electricity.

ICCC Commissioner and CEO Dr Billy Manoka said ICCC’s determination allows PPL the discretion to differentiate in prices between service areas based upon the different costs of providing services in various areas.

“The desired outcomes of the new contract are about improving efficient service delivery, and improved service standard performance of PPL today and in the future,” Dr Manoka said.