Announcement

GENERAL: TRP: Notification of potential forecast revenue reduction 11:26am 
TRP
22/07/2019 11:26
GENERAL
PRICE SENSITIVE
REL: 1126 HRS Transpower New Zealand Limited

GENERAL: TRP: Notification of potential forecast revenue reduction

Transpower New Zealand today announces a potential impact to the forecasted
revenue reported in its Statement of Corporate Intent (SCI), released on 28
June 2019.

Transpower's announcement follows a draft decision by the Commerce Commission
on Friday 12 July, which affects Transpower's Incremental Rolling Incentive
Scheme (IRIS) Baseline Adjustment Term (IBAT) for its third regulatory
control period covering the revenue years 2020 - 2025 (RCP3).

If finalised, the Commerce Commission's decision would result in lower
revenue for Transpower of approximately $22m per annum or $110m over the
five-year RCP3 period. Transpower does not anticipate any material decline in
its key credit metrics as a consequence of the Commerce Commission's draft
decision. However, the Board will evaluate the impact and advise any changes
to the forecast and targets set out in the SCI once the Commission releases
its final decision in November.

While Transpower stated in its SCI that its credit strength and financial
return metrics would be impacted by the allowable rate of return on
transmission assets set by the Commerce Commission for RCP3, it did not
indicate that its forecast revenue would be impacted by a material change in
the IBAT.

The Commerce Commission will deliver its final determination on Transpower's
RCP3 individual price-quality path in November this year, which will include
its final decision to the IBAT.

For further information, please contact:
Laura Ackland Senior Corporate Communications Advisor on 04 590 6721 or 027
565 3783.
End CA:00337949 For:TRP Type:GENERAL Time:2019-07-22 11:26:07

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