LAWFUEL – The New Zealand Legal Jobs & Newswire – The Commerce Commission has granted The Lines Company Limited (TLC) a limited exemption under the Electricity Industry Reform Act 1998 (the EIR Act) in relation to its proposed involvement in the development of a hydro-generation plant, located on the Waikohu Stream near Gisborne.
The hydro-generation plant will be developed by TLC’s wholly owned subsidiary Matawai Hydro Limited (MHL).
The limited exemption to TLC is granted in respect of section 17 of the EIR Act in relation to the appointment of managers to the board of MHL. The exemption is conditional on TLC not appointing more than two out of three directors to the Board of MHL, and on TLC and MHL complying with rules 1 to 6 and 11 to 15 of the Arms Length Rules of the EIR Act.
The exemption is also conditional on the generation assets not being connected to TLC’s electricity lines networks, and on TLC not selling the resulting electricity to customers located on its own network.
Commission Chair Paula Rebstock said that the Commission had determined that the granting of the exemption would not create incentives or opportunities to inhibit competition in the electricity industry as TLC will not be connecting the generation assets to its own network or selling the electricity to its own lines consumers.
A public version of the Commission’s decision is available on the Commission’s website www.comcom.govt.nz under Public Registers/Electricity Industry Reform Act – Exemptions – http://www.comcom.govt.nz/PublicRegisters/eira.aspx
Background
The Lines Company Limited is involved in electricity distribution in the King Country region, delivering 300GWh of electricity per annum to approximately 20,000 customers. TLC is 90% owned by the Waitomo Energy Services Customer Trust and 10% owned by the King Country Electric Power Trust.
The electricity industry has four main parts: electricity generation, electricity transmission, electricity distribution (lines businesses), and electricity retail. Only generation, distribution (lines), and retail are covered by the EIR Act.
Under the EIR Act, a company may have an ownership interest in both generation and retail businesses, but generally needs permission to own both lines and generation, or lines and retail. It seeks that permission by applying for an exemption under the EIR Act.
The purpose of the EIR Act is to reform the electricity industry to better ensure that costs and prices in the electricity industry are subject to sustained downward pressure and the benefits of efficient electricity pricing flow through to all classes of consumers, by effectively separating electricity distribution from generation and retail and promoting effective competition in electricity generation and retail markets.
The Commission may grant an exemption in respect of a business or involvement or interest, only where doing so:
a) would not result in certain involvements in electricity lines businesses and electricity supply businesses which may create incentives or opportunities:
I. to inhibit competition in the electricity industry; or
II. to cross-subsidise generation activities from electricity lines businesses; and
b) would not result in relationships between electricity lines businesses and electricity supply businesses which are not at arms length.
Media contact: Allanah Kalafatelis, Communications Manager
Phone work (04) 924 3708, mobile 021 225 4417
