Commission exempts Tranz Rail from the Electricity Industry Reform Act
Published14 Apr 2000
The Commerce Commission today exempted Tranz Rail Holdings Ltd and its subsidiaries from the application of the cross-ownership rules of the Electricity Industry Reform Act.
Commissioner Dr Kate Brown said that Tranz Rail had applied to the Commission for exemption to allow it to continue to own and operate electricity distribution networks, electricity generators and supply other companies with electricity. Such activities are associated with amongst other things:
lines Tranz Rail owns to supply its electric locomotives
lines on Tranz Rail's inter-island ferries and in its workshops, rail yards and buildings
electricity Tranz Rail generates on the North Island main trunk locomotives
electricity Tranz Rail supplies to the national grid from the North Island main trunk railway, and
electricity it supplies to the tenants of its properties.
Commission investigations showed that continued ownership would mean that Tranz Rail had cross-involvements with electricity lines and electricity supply businesses that are prohibited by the Act.
Commission Member Kate Brown said that the Commission granted the exemption on the grounds that an exemption would not in any way that was more than minimal:
provide Tranz Rail with incentives or opportunities to inhibit competition in the electricity industry,
provide Tranz Rail with incentives or opportunities to cross-subsidise its electricity generators from its electricity lines businesses, or
allow a relationship between Tranz Rail's electricity lines businesses and electricity supply businesses that would not be at arms length.
The Commission considered that permitting Tranz Rail to retain involvements in both electricity line and supply businesses would not defeat the purposes of the Electricity Industry Reform Act. The company does not charge to distribute electricity, nor does it add a margin to its own purchase costs in respect of the electricity it supplies to its tenants or has any method of cross-subsidising its generation activities from its lines businesses.
Copies of:
Decision Number 385, Tranz Rail Holdings Ltd and its Subsidiaries; and
Practice Note 3: Electricity Industry Reform Act 1998, Commission's Role, Processes and Procedures,
are available from reception at the Commission's Wellington office, Level 7, Landcorp House, 101 Lambton Quay.