Commission exempts Broadcast Communications Ltd and TVNZ Ltd from the Electricity Industry Reform Act
Published30 Sep 1999
The Commerce Commission today exempted BCL and its parent TVNZ from the application of the cross-ownership rules of the Electricity Industry Reform Act. The two companies had applied to the Commission for exemption to allow them to continue to own and operate electricity distribution networks, electricity generators and to supply other companies with electricity. Such activities are associated with the services BCL supplies to telecommunications companies and radio and television broadcasters and with TVNZ's property leasing operations. Commission investigations showed that continued ownership would mean that BCL and TVNZ had cross-involvements with electricity lines and electricity supply businesses that are prohibited by the Electricity Industry Reform Act.
Commission Member Cathie Harrison said that the Commission granted the exemption on the grounds that an exemption would not in any way that was more than minimal:
- provide BCL or TVNZ with incentives or opportunities to inhibit competition in the electricity industry;
- provide the companies with incentives or opportunities to cross-subsidise their electricity generators from their electricity lines businesses; or
- allow a relationship between BCL and TVNZ's electricity lines businesses and their electricity supply businesses which would not be at arms length.
The Commission considered that permitting BCL and TVNZ to retain involvements in both electricity line and supply businesses would not defeat the purposes of the Electricity Industry Reform Act. The two companies do not charge to distribute electricity, nor do they add a margin to their own purchase costs in respect of the electricity they supply to other companies or have any rational method of cross-subsidising their generation activities from their lines businesses.
Copies of:
- Decision Number 374, Broadcast Communications Ltd and Television New Zealand Ltd;
- 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.
