First Gas, a gas distribution network in New Zealand, asked Oxera to give evidence on regulatory finance issues to the New Zealand Commerce Commission (NZCC). In particular, First Gas asked Oxera to provide expert evidence in relation to the NZCC’s assessment of systematic risk for gas pipeline businesses in New Zealand, relative to electricity networks.
 
Craig Lonie and Sahar Shamsi gave expert evidence to a panel of Commissioners in New Zealand. The evidence was submitted as a report to the NZCC and was followed by expert testimony as part of a regulatory ‘hot-tub’ process. The hot-tub process involves concurrent provision of expert testimony in a court or regulatory proceeding, by appointed experts, on behalf of different stakeholders. In the regulatory hot tub, Oxera’s view of asset risk for the gas distribution networks in New Zealand was debated with other stakeholders including electricity networks and user groups.

The NZCC agreed with several of the points raised by Craig and Sahar. In its subsequent decision, it revised its asset beta for First Gas, allowing an increase of nearly 20% in the asset beta for gas pipeline businesses in New Zealand.