More work needed to give domestic gas consumers choice
Published22 Mar 2000
Commerce Commission Chair John Belgrave said today that, since deregulation, competition has developed in the gas wholesale market and in retailing of gas to industrial and commercial users, but is developing more slowly in retailing to residential users.
Mr Belgrave was speaking at the New Zealand Petroleum Conference in Christchurch.
"The Commission is pleased to see some initial competition for residential customers is now beginning to occur, particularly with the entry of Fresh Start in some regions of the North Island," Mr Belgrave said.
" While the Commission anticipates that most domestic consumers can look forward to more competitive markets, it is not satisfied that this situation will necessarily flow through to all areas in the immediate future. The Commission considers that competitive issues associated with domestic retailing on each network must still be considered on a network by network basis."
A recent issue with direct impact on residential gas customers was Natural Gas Corporation's (NGC) application for clearance to acquire 78.5 percent of TransAlta New Zealand Limited. This created competition concerns in the Hutt Valley and Porirua area, where NGC's parent company, The Australian Gas Light Company (AGL), owned the gas network and TransAlta was the gas retailer.
The Commission gave the clearance subject to AGL divesting its gas distribution system in the Hutt Valley and Porirua, or TransAlta divesting its residential gas business or at least half of its residential gas customers. The divestment will ensure that a company independent of NGC will be actively involved in the area
Other issues include the acquisition by Fletcher Challenge Energy (FCE) and Electricity Corporation of New Zealand (ECNZ) of interests in the Kupe gas field, and the possibility of FCE selling its interest in the Maui pipeline.
The Commission considered that the FCE and ECNZ transactions would result in the acquiring or strengthening of dominance in the production of gas. The Commission has started court action against the acquisition and the case is working its way through the court process.
The Commission has taken informal steps to warn against NGC acquiring an interest in the Maui pipeline: " the Commission advised NGC of its view that the acquisition of the Maui pipeline would be likely to strengthen NGC's dominance in gas transmission."
Mr Belgrave's paper to the conference outlined the Commerce Act and gave an overview of the Commission's place in New Zealand competition law. It discussed areas where the Act is relevant to petroleum exploration companies operating in New Zealand. The Commission's main area of contact with the petroleum sector to date has been with the gas industry.
Hard copies of Mr Belgrave's paper are available from reception at the Commission's Wellington office, level 7, Landcorp House, 101 Lambton quay. Electronic copies can be obtained by
