The Commerce Commission today received the first application for an exemption from the Electricity Industry Reform Act (EIR Act).

Commissioner Dr Kate Brown said that the application is from Alpine Energy Limited and its principal shareholder, the Timaru District Council, for exemption for the Opuha Dam and Power Station.

The EIR Act was passed earlier this year and gives companies involved in electricity markets until April 1 next 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.

Alpine Energy and the Council own local lines businesses. Alpine Energy also owns 50 percent of Opuha Dam Limited and the Council owns a further 15 percent of Opuha Dam directly. Without an exemption, the EIR Act requires them to divest their interests in either the lines businesses or the dam.

Dr Brown said that the Commission has not yet estimated the date by which it expects to make its decision.

In a paper prepared for the New Zealand Electricity conference on Tuesday she had said: "I must emphasise that in the absence of experience in processing applications for exemptions, the Commission expects the process to proceed slowly and deliberately for the first few at least."

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 lines and supply businesses, which was 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.

The Commission has produced free publications that would be of considerable use to companies to whom the Act applies. These include in particular:

  • Practice Note 3: Electricity Industry Reform Act 1998, Commission's Role, Processes and Procedures (also published in the October issue of the Commission's newsletter Compliance);
  • Business Acquisitions Guidelines.

These publications and copies of Dr Brown's speech are available from the Commission's website, www.comcom.govt.nz, and in hard copy from its Wellington office.

Hard copies of Alpine Energy's and the Council's application are available from reception at the Commission's Wellington office, level 7 Landcorp House, 101 Lambton Quay.

Media contact: Commerce Act Manager Geoff Thorn

Phone work (04) 498 0958

Communications Officer Vincent Cholewa

Phone work (04) 498 0920

Commission media releases can be viewed on its web site www.comcom.govt.nz