How does the Electricity Industry Reform Act apply to building owners ?
Published24 Feb 1999
The Commerce Commission has started investigating how, or if, the Electricity Industry Reform Act (EIR Act) applies to building owners.
Commissioner Dr Kate Brown said that the investigation is of an application from Trans Tasman Properties Limited (TTPL) for exemption from the EIR Act.
TTPL owns a large number of CBD properties in New Zealand. It has applied for an exemption to buy electricity from an electricity retailer and sell it to its tenants.
Dr Brown said that such business relationships appear to be covered by the EIR Act, but the Commission has not yet investigated a similar example and has not formed a definite view of how, or if, the EIR Act applies.
Two other non-traditional power companies have previously applied for exemptions. They are Auckland International Airport Limited, which owns a power network at the airport and sells to tenants there, and Carter Holt Harvey, which generates electricity at its Kinleith timber mill and sells some of it to tenants in a neighbouring industrial park.
Dr Brown said that the Commission has not yet estimated the dates by which it expects to make its decisions.
The EIR Act was passed last year and gives companies involved in electricity markets until April 1 this year to put in place corporate separation of their electricity generation and trading businesses from their lines businesses or to have obtained an exemption from the Commission.
In considering an exemption, the Commission must answer three questions:
1. Would the exemption inhibit competition?
2. Would the exemption allow cross-subsidisation between electricity generation and lines businesses?
3. Would the exemption create a relationship between electricity and supply businesses, which is not at arms length?
"The presumption must be that if the answer to any of these questions is 'yes', the Commission must not grant an exemption from the EIR Act," Dr Brown said.
Public copies of TTPL's application are available from reception at the Commission's Wellington office, level 7, Landcorp House, 101 Lambton Quay
