1. Operating Expenditure

2. Proposed Approach Opex
Commission set opex allowance with an efficiency allowance for the regulatory period based on an ex-ante assessment of Transpower operating expenditure forecasts
No ex-post review and wash-up of opex at the end of the regulatory period
Include an opex incentive mechanism using either:
Within period model – gains retained or losses borne by Transpower within regulatory period only; or
Carry forward model – sustained incremental gains (or losses) achieved in any year carried forward for a period equal to length of the regulatory period
Opex information required and scope of expenditure review set out in Appendix C of Commission’s EVP

3. Discussion