Commission Chairman, Dr Bollard, stated that the Commission welcomes the news that NGC and gas utilities have renegotiated their 1980 supply contracts, or are on the verge of doing so.
Dr Bollard said, "The Commission gave the industry a limited time to sort out these original contracts, which appear to breach the Commerce Act, and is pleased that this looks like being achieved".
Light-hand regulation of utilities does not mean no regulation. Dr Alan Bollard, Chairman of the Commerce Commission emphasised, speaking to a conference on Utility Markets today. But New Zealand's system does allow some freedom of action for industry players.
He explained that utility regulation by the Commerce Commission has focused on essential facilities and network industries, especially refusals to provide access to networks or demands for unrealistic access prices. These issues run across markets involving electricity, gas, telecommunications, ports, airports, water and in future might be seen in roading.
Dr Bollard said the Commission's approach to enforcement was to initially offer utilities a honeymoon period to sort out competition problems. However, this honeymoon is now over and the Commission is taking a tougher approach.
In relation to telecommunications, Dr Bollard explained that the industry has made big advances. Much of the argument has been between private parties: there are five cases currently underway in the courts which cover issues such as interconnection, bundling, and alleged misuse of dominant positions.
Dr Bollard said, "The Commission's main interest today is in number portability. The Commission is concerned to see a competitive environment emerging and urges the companies involved to work towards this. The Commission will be monitoring developments".
On electricity, Dr Bollard stated that the Commission's position on takeovers is now very clear. In addition, the Commission has had a number of complaints about access to electricity distribution networks but most of these have now been dealt with. In particular, the Commission has pushed several companies into reaching agreement on terms of technical interconnection to their distribution lines.
The Commission is continuing its important case against Southpower in the courts, alleging that that company has made it difficult for new entrants to retail electricity over its lines.
There are currently two electricity metering and deemed profiling trials underway involving co-operation between electricity companies. The Commission is satisfied that these pilot projects do not breach the Commerce Act, but has reserved its position on any further such co-operation.
In the area of water services, Dr Bollard noted that there are some very large commercial assets involved in this industry. The Commerce Commission has already dealt with a number of complaints, particularly where exclusive contracts have been given. The Commission expects that this is an area where companies will need to pay more attention to the Commerce Act.
Copies of Dr Bollard's speech are available from reception at the Commission's Wellington office, level 7, Landcorp House, 101 Lambton Quay.
Media contact: Communications Officer, Vincent Cholewa
