Commission exempts Colonial's property activities from the Electricity Industry Reform Act
Published28 Oct 1999
The Commerce Commission has given an exemption under section 81 of the Electricity Industry Reform Act (the EIR Act) to Colonial First State Property (NZ) Limited (CFSPL) and certain other New Zealand subsidiaries of the Colonial Group and persons which are involved with Colonial's property investment activities in New Zealand. The exemption is from the application of certain sections of the EIR Act for specified property investment and management activities which relate to the Colonial Group in New Zealand.
The Commission's decision follows exemptions given to Trans Tasman Properties Limited, Collwall Property Investment Limited and AMP 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 tenants of properties which are the subject of the exemption 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 the following terms and conditions:
- That CFSPL or any other person does not introduce a charge, directly or indirectly, 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 the relevant properties under the exemption;
- That CFSPL or any other person does not prevent access, on reasonable terms and on a timely basis, to any embedded electrical wiring systems owned or operated in relation to the relevant property investment activities under the exemption, by any competing electricity supply business wanting to supply electricity to any tenants of the relevant properties under the exemption;
- That CFSPL or any other person does not at any time enforce any existing lease clauses which allow the option of supplying electricity to any tenants of the relevant properties under the exemption, so that tenants are free to choose their electricity supplier;
- That CFSPL or other persons provide all tenants of the relevant properties under the exemption 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
- That the Commission is informed of the details of any future property investment and/or management activity that is likely to breach the EIR Act and for which CFSPL 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.
