Electricity Industry Reform Act: Commission grants exemption to AMP Diversified Property Trust
Published04 Dec 2003
Issued 4 December 2003
The Commerce Commission has exempted AMP Diversified Property Trust (ADP) and its associated entities from the application of the cross-involvement rules of the Electricity Industry Reform Act 1998 (EIR Act).
ADP had applied to the Commission in March 2003 for an exemption in relation to its acquisition from AMP NZ Property Retail Limited of a one half share in the freehold of three shopping centres - the LynnMall Centre, Botany Town Centre and Manukau Supa Centa - and specifically to its supply of electricity to tenants in these centres.
ADP amended its application to the Commission in September 2003 as a consequence of a takeover of ADP by Stockland.
Commission Acting Chair Paula Rebstock said the Commission had granted the exemption to ADP, its cross-involved entities and persons who acquire more than 10 percent of the securities in Stockland subject to a number of conditions which would minimise the opportunity for ADP to inhibit competition in the national electricity retail market. Those conditions are:
(a) That ADP or any other persons do not introduce a charge to any person for the use of, or in connection with, any electricity lines business in relation to the supply of electricity to tenants of ADP's properties.
(b) That ADP or any other persons do not prevent access to any embedded electrical wiring systems owned or operated in relation to ADP's property investment activities, by any competing electricity supply business wanting to supply electricity to any of ADP's tenants.
(c) That ADP or any other persons do not at any time enforce any of the existing lease clauses which allow the option of supplying electricity to any of ADP's tenants, so that ADP's tenants are free to choose their electricity supplier.
(d) That ADP:
• notifies, within three months, those tenants who have lease clauses which allow ADP the option of supplying electricity to them that ADP will not enforce these clauses; and
• notifies any new tenants, after the date of this exemption, who have lease clauses which allow ADP the option of supplying electricity that ADP will not enforce these clauses or alternatively that ADP provides in the lease that tenants can choose their own electricity supplier.
(e) That ADP or any of the cross-involved entities provide all tenants of ADP's properties to whom they supply electricity with relevant electricity consumption and billing information, on a timely basis, to enable the tenants to assess competitive options for the supply of their electricity.
The exemption takes effect from the date of publication of this Notice in the New Zealand Gazette.
A copy of the decision is available on the Commission's website, http://www.comcom.govt.nz/adjudication/s81.cfm
Background
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.
