Commission exempts AMP's property activities from the Electricity Industry Reform Act
Published30 Sep 1999
The Commerce Commission has exempted AMP Limited, certain subsidiaries of AMP and certain other persons, which are involved with AMP's property investment activities, under section 81 of the Electricity Industry Reform Act (EIR Act). The exemption is from certain sections of the EIR Act for specified property investment and management activities undertaken by AMP.
The decision follows exemptions given to Trans Tasman Properties Limited and Collwall Property Investment Limited, which also involved the application of the EIR Act to property investment and management activities.
Commissioner Dr Kate Brown said that the decision enhances tenants' ability to choose electricity suppliers, and other property companies should look carefully at how the decision may apply to them. The decision allows AMP's tenants to choose to buy electricity from either their landlords or to shop around for better deals from other electricity suppliers.
The Commission granted the exemption subject to conditions that:
- AMP or any other persons do not introduce a charge to any person for the use of, or in connection with, any electricity lines business in relation to the supply of electricity to tenants of AMP's properties;
- AMP or any other persons do not prevent access to any embedded electrical wiring systems owned or operated in relation to AMP's property investment activities, by any competing electricity supply business wanting to supply electricity to any of AMP's tenants;
- AMP or any other persons do not at any time enforce any of the existing lease clauses which allow the option of supplying electricity to any of AMP's tenants, so that AMP's tenants are free to choose their electricity supplier;
- AMP or any of the cross-involved entities provide all tenants of AMP's properties to whom they supply electricity with relevant electricity consumption and billing information, on a timely basis, to enable the tenants to assess competitive options for the supply of their electricity; and
- AMP informs the Commission of the details of any future property investment and/or management activity that is likely to breach the EIR Act and for which AMP and/or any other persons are likely to rely on the exemption.
The EIR Act was passed last year and came into effect on April 1 this year.
One of the EIR Act's requirements is that organisations must separate their electricity lines businesses from their electricity supply businesses that supply at least 2.5 GWh of electricity per annum. The Commission considers that the definitions in the EIR Act include embedded electrical wiring in buildings as an electricity lines business and selling electricity to tenants as an electricity supply business.
Parties can apply to the Commission for exemptions from the EIR Act. In considering an exemption, the Commission must answer three questions:
1. Would the exemption result in inhibiting competition in the electricity industry?
2. Would the exemption allow cross-subsidisation of electricity generation from electricity lines businesses?
3. Would the exemption permit a relationship between electricity lines and supply businesses which is not at arms length?
If the answer to any of these questions is "yes" the Commission must not grant an exemption.
