INPUT METHODOLOGIES REVIEW FORUM HELD ON 29-30 JULY 2015 AT TE PAPA, WELLINGTON [8.58 a.m.] KESTON RUXTON: Good morning, my name is Keston Ruxton and I'm the Programme Manager of the Input Methodologies Review here at the Commerce Commission. I'm sure a number of you will have been receiving emails from me for quite a while now on this topic. I will be here today facilitating the sessions throughout the next two days of this forum. To kick off proceedings I would like to ask Dr Mark Berry, Chairman of the Commerce Commission, to say a few words of introduction. DR BERRY: Good morning, I would like to welcome all here today to the Commission's Input Methodologies Review Forum. I'm joined today by Sue Begg, the Deputy Chair, as well as Stephen Gale. The three of us are the Division that will be making the decisions on this Input Methodologies Review. We are here in attendance today and tomorrow to listen to the discussions that will help shape the review. Also joining us for some sessions will be Pat Duignan. So, we're seated at that desk for the duration of the two days. As you'll know, input methodologies are a key part of our Part 4 regime. They involve setting upfront regulatory methodologies, rules, processes, requirements and evaluation criteria for services that are regulated under Part 4, and those services are, of course, Transpower, electricity distribution, gas pipelines and the three main international airports. These rules and processes were last set in 2010 and it's sort of hard to believe that it's that long ago we actually did that first round of exercise. The Commission is required to review these at intervals of no more than seven years, as set out in the 2 legislation. Again, as you'll know, after consultation earlier this year we announced our intention to commence the Input Methodologies Review in June this year with a view to completing this task by December 2016, which is a year ahead of the end date in the legislation. Bear in mind, that's not a mandated date, that's an out date within which the review has to be done. Bringing forward the review allows any changes to be applied before the May 2017 reset of the default price-quality paths for gas pipeline services. We intend to reassess this indicative end date of December 2016 after receiving your submissions on the problem definition paper after this forum. We will issue a process update at that point. We consider that if we were to complete this work by the end of next year, it will give affected sectors greater predictability and certainty in their planning. It also enables us to more effectively plan our own workload and that's one thing that we have noted in submissions, is a request for some flexibility and not to be worked up against the extremely hard timelines that we had to face the first time that we completed this process in 2010. To provide further certainty for stakeholders we have decided to fast track the consideration of the airport land valuation rules and customised price- quality path related amendments. In June we published a paper inviting interested parties to contribute to the problem definition. In that paper we stated our view, that a phase of problem definition is required before we can further develop the process for the remainder of the Input Methodologies Review and to begin to consider potential solutions. We want the issues to drive the process. As such, we see an effective problem definition phase as crucial to 3 informing how we focus the process and timeline for the remainder of this review. Stakeholder engagement is a critical part of this review and we are committed to engaging with a broad range of stakeholders in an open manner to ensure that we understand their perspectives. We are particularly interested in their views on what the future regime should look like and when the incentives in place are working to achieve an appropriate balance between prices, quality services and investment in infrastructure. This forum is the first of a number of opportunities for stakeholders to engage in the Input Methodologies Review process. Ideas discussed here and put forward in your written submissions on the problem definition paper will help identify the issues to be addressed by the Input Methodologies Review. As matters progress, there will be draft decisions and more opportunities for more formal submissions. Also, if they are considered useful there may be more opportunities for workshops or forums such as this one. The Commission considers that where possible stakeholders and experts should share their views in an open and transparent manner so that all interested parties can hear their views and keep up-to-date with developments. So, I do urge you not to be claiming for confidentiality unless it is truly justifiable. We are very keen to have an open and transparent process for the fairness of all parties concerned in this process. The intention is for the forum today and tomorrow to allow open discussion and exchange of information between all parties. Unlike a conference such as the ones that we ran as conventional conferences the last time we did an Input Methodologies project, I and the other Commissioners here are attending as observers and 4 will not be in the role of questioning presenters, we are leaving it to Commission staff to be involved in the forum discussions here. This forum aims to give you an opportunity to test your views on key issues for the review, and to hear possible questions and counter-perspectives. This will allow as many material issues as possible to be identified and shared early in the process; assist in more quickly defining specific problems that changes to the input methodologies could potentially address; it will allow us also to explore these issues before you make your formal written submissions; and, it will also allow the Commission to further develop a process and timeline for review. So, this is a growing process at this stage. For issues that we don't know much about, discussions will be focused on identifying problems that the input methodologies could potentially address. For the issues that we know more about, the discussion will be more focused on potential solutions. Many of our speakers over the next two days will have very different perspectives and we look forward to a free and frank discussion. Although discussions will form part of the record for the review, the Commission does not intend to test comments made during the forum and hopes that parties can use this forum to shape their views on the issues as we go forward. Therefore, if you have formed particular views you wish us to take into account, you should make sure that you include them in your written submissions. I hope that you find the next two days engaging, informative and enjoyable. I look forward to your contributions at the forum and your continuing input into this second Input Methodologies process that we 5 have now started. Thank you and I'll hand back now to the presenters for the first panel. Thank you. KESTON RUXTON: Thank you, Mark, and welcome again to the Input Methodologies Review Forum here at Te Papa. Before we get started I've been given the responsibility of doing the housekeeping. There's a number of things I need to tell you about. First of all, in the case of fire everyone should evacuate the building. Te Papa hosts will come and meet us and help us to leave by the main stairwell. There are also three other exits in this area that we're using. In the case of an earthquake you should drop to the floor and cover your head with your hands, or if you're near a table, get under or near that table and please also listen to the instructions of Te Papa staff who are instructed what to do in these cases. We're asked to remind you that this is a no smoking environment and smoking is only permitted outside the building. There are bathrooms outside this meeting area. If you go down the corridor back towards the stairs, you'll find the bathrooms out there. We've been asked to take no food and beverages outside this area and into the larger museum. Delegates to the forum today should also be aware that if you have parked your car downstairs, if you bring your car-parking ticket upstairs you will get a reduction in the daily charge to $10 and we can endorse that at the front desk. There is a maximum charge for a 24 hour period, of up to $15, but this will cover you until 6 p.m. tonight. Finally, WiFi access is available to everyone and there are some details about the WiFi access included on the back of the programme. There is no password and it 6 is free, you just need to be aware there is a maximum of 2 gig for a 24 hour period. Thank you. So, moving on to today. As Mark discussed before, the purpose of today is a number of fold. Really, it is focused on problem definition and it is an extra event that we've put into this process to enable stakeholders to share and test views between themselves and with the Commission on the likely problem definitions that we will need to tackle as part of our review.