The preliminary view of the Commerce Commission is that significant public benefits would need to be shown before it could authorise Enerco New Zealand Ltd buying 49% of Capital Power.

The Commission today released a draft determination saying the acquisition would be likely to strengthen Enerco's dominance in the Wellington natural gas markets, and Capital Power's dominance in the Wellington electricity markets.

Commission Chairman Alan Bollard said that while the Commission has considered natural gas and electricity as different markets, each energy form does, to an extent, constrain the other.

In an industry where there are few constraints on gas and electricity suppliers, this acquisition would remove any possible inter-fuel competition that did exist.

Dr Bollard said the draft is the Commission's initial views on the matter only. Enerco has yet to provide details of public benefits which may arise from the acquisition. However, the Commission has noted that significant benefits to the public would need to be shown before the acquisition could be authorised.

The Commission intends to hold a conference on the proposed acquisition on November 22 and 23, and is seeking further submissions from interested parties.

The competition issues on which the Commission is seeking further information include:

  • the extent to which natural gas and electricity compete with each other;
  • the extent to which the prices of gas and electricity constrain each other;
  • the extent of public benefits and detriments to competition which could result from the acquisition.

Interested parties wishing to make submission on the acquisition must make them to the Commission no later than October 31.

Media contact:David Taylor, Chief Investigator

phone work (04) 471 0180

After hours contact:Vince Cholewa, Communications Officerphone home (04) 479 1432