Commission says electricity arrangement does not require authorisation
Published23 Dec 2002
The Commerce Commission has declined to authorise an arrangement following an application by The Marketplace Company Limited, the market administrator of the New Zealand Electricity Market (NZEM). The arrangement would require, after a delay of 14 days, the disclosure of bids to purchase electricity and offers to sell electricity through the NZEM. Bids and offers are currently disclosed after a delay of four weeks.
The Commission considers that the disclosure of bids and offers in NZEM after a delay of 14 days will not lessen competition in the wholesale electricity market.
As a result, the Commission considers the proposed arrangement does not require authorisation under the Commerce Act and therefore the Commission does not have jurisdiction to authorise it.
A copy of the Commission's final determination is available on www.comcom.govt.nz (select Adjudication).
The application stemmed from the findings of the post 2001 Winter Ministerial Review into the operation of the wholesale electricity market. As a result of the review, the Government amended its policy to require disclosure of bids and offers after 14 days. However, participants in NZEM raised concerns that such disclosure may be anti-competitive because it would allow them to gain more knowledge of each other's pricing strategies. These concerns resulted in the application for authorisation.
The Commerce Act prohibits competitors agreeing to work together in a way that reduces competition between them. However, the Act does allow for the Commission to authorise potentially anti-competitive business practices if the public benefit is greater than the lessening of competition. In this case, because the Commission considered the disclosure of bids and offers after a delay or 14 days did not lessen competition, there was no need for the Commission to balance public benefits against loss of competition.
