The Commerce Commission today received an application from BHP New Zealand Steel Limited for an exemption from the Electricity Industry Reform Act (EIR Act).

Commissioner Dr Kate Brown said that the application is for an exemption for BHP's Glenbrook steel mill. BHP owns an electricity lines network which it uses to supply electricity to two of its suppliers whose businesses are situated on the mill site.

The companies supplied electricity through BHP's network are BOC Gases New Zealand Limited and Duke Energy New Zealand Limited.

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.

To date the Commission has granted exemptions to Alpine Energy Limited and Carter Holt Harvey Limited. It has declined exemptions to Central Electric Limited and Auckland International Airport Limited (AIAL).

It has on hand applications from Trans Power New Zealand Limited, Trans Tasman Properties Limited, Top Energy Limited, from AIAL (this is a revised second application) and BHP.

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 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.

Details of how the Commission applies the EIR Act are available from its Wellington office and its website. They have been published as Practice Note 3 and the October 1998 issue of the newsletter Compliance.

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