The Commerce Commission has granted BHP New Zealand Steel Limited an exemption, subject to conditions, from the Electricity Industry Reform Act (EIR Act).

Commissioner Dr Kate Brown said that the exemption is for BHP's Glenbrook steel mill. BHP owns an electricity lines network, which it uses to supply electricity to two companies whose businesses are situated on the mill site. BHP therefore contravenes the ownership separation provisions of the EIR Act.

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

BHP does not charge BOC and Duke for the use of its network, nor does it charge a margin over its electricity purchase cost. The absence of a network charge minimises BHP's ability to act contrary to the purposes of the EIR Act.

Further, BHP has no incentive to increase the cost of power to BOC as that would increase the cost of the goods BOC supplies to BHP.

The exemption is subject to the following terms and conditions. That:

? if BHP supplies electricity or a lines service to any new customers it notifies the Commission;

? BHP does not generate electricity for other than its own use;

? BHP advise the Commission if it changes its electricity charges to BOC or Duke; and

? BHP does not introduce a lines charge.

The EIR Act was passed last year and requires companies involved in electricity markets 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.

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