The Commerce Commission has received an application from Carter Holt Harvey Limited (CHH) for exemption from the Electricity Industry Reform Act (EIR Act).
Commissioner Dr Kate Brown said that the application is for an exemption for the Kinleith timber mill. CHH generates electricity at the mill. The electricity not used by the mill is sold through a network also owned by CHH to tenants at the neighbouring Kinleith industrial park.
Dr Brown said that the EIR Act covers arrangements like those at Kinleith, as well as traditional power companies. This is the second application from an organisation other than a traditional power company.
The first was from Auckland International Airport Limited. Auckland Airport owns the network on the airport site and sells electricity to customers on that site.
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.
Dr Brown said that the Commission has not yet estimated the dates by which it expects to make its decisions.
In considering an exemption, the Commission must answer three questions:
Would the exemption inhibit competition?
Would the exemption allow cross-subsidisation between electricity generation and lines businesses?
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.
The Commission has produced free publications that would be of considerable use to companies to whom the EIR 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 1998 issue of the Commission's newsletter Compliance); and
Business Acquisitions Guidelines.
Media contact: Communications Officer Vincent Cholewa
Phone work (04) 498 0920
Commission media releases can be viewed on its web site www.comcom.govt.nz
