In its first Electricity Industry Reform Act (EIR Act) decision involving a non-traditional power company, the Commerce Commission today declined to exempt Auckland International Airport Limited (AIAL) from the EIR Act.

Commission Member Dr Kate Brown said that the Commission declined the exemption on two grounds. That granting the exemption would:

  • provide AIAL with incentives or opportunities to inhibit competition in the national retail electricity market; and
  • allow a relationship between AIAL's electricity lines and supply businesses that would not be at arms length.

The Commission was not convinced that the purposes of the Act would be better served if AIAL was permitted to retain involvement in both electricity line and supply businesses.

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.

The Commission is currently considering applications for exemptions from two other

non-traditional power companies Carter Holt Harvey Limited, and Trans Tasman Properties Limited.

Dr Brown said that the Commission has not yet estimated the date by which it expects to make those two decisions.

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.

Copies of:

  • Decision Number 338, Auckland International Airport;
  • 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); and
  • Business Acquisitions Guidelines

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