The Commerce Commission's preliminary view is that, on information currently available, it would authorise the pricing mechanisms in the rules for the proposed New Zealand Electricity Market (NZEM).
The administrator of NZEM, the Electricity Market Company (EMCO) has applied for authorisation of some of the rules - the pricing mechanisms, prudential provisions and metering standards - for NZEM.
The Commerce Act prohibits pricing arrangements among competitors and also prohibits other arrangements that substantially lessen competition. However, it allows otherwise prohibited arrangements to be authorised if the Commission is satisfied that public benefits outweigh detriments to competition.
Commission Chairman Dr Alan Bollard said that at this stage the Commission was of the view that, although the pricing mechanisms were deemed to substantially lessen competition, they brought benefits to the public which outweighed any detriments from the loss of competition.
Dr Bollard said that if the proposed pricing mechanisms are put into effect, there could be various efficiency gains for the economy.
The Commission also gave initial consideration to the rules concerning metering standards and prudential provisions.
NZEM is seeking to adopt the metering standards established by a separate industry agreement. At this time, the Commission believes that the Commerce Act does not permit it to authorise this part of the application as this agreement is already in effect.
The Commission's view of the prudential provisions is that as they do not lessen competition in a market, it is unable to authorise them. Only arrangements which would otherwise be prohibited by the Act can be authorised.
The Commission today released a draft determination on the applications and has called for submissions to be made by August 9. It will hold a conference of interested parties starting on August 19 at the Majestic Centre in Wellington.
Dr Bollard said the Commission will release a final decision by about September 13, after it has considered matters raised in the submissions and at the conference.
