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Commission's First Enforcement Action Under EIRA

Commission's First Enforcement Action Under Electricity Industry Reform Act

In a settlement with the Commerce Commission, Mr John Sax and Mrs Alma Sax have acknowledged that as simultaneous owners and directors of companies that are electricity lines and electricity supply businesses they may have breached the Electricity Industry Reform Act.

Commission Chair John Belgrave said that the Act prohibits individuals (or companies) from owning or operating both electricity lines and supply businesses.

This is the first time that the Commission has taken enforcement action against a possible breach of the Act. Previously, it has made decisions on applications for exemptions from the Act.

Companies associated with Mr and Mrs Sax both conveyed and sold electricity to consumers during 1999 and 2000, mostly in the Southpark industrial estate in Penrose, Auckland. The Act prohibits such behaviour if the amount sold and conveyed is more than 2.5 gigawatt-hours per year (the electricity consumption of a small supermarket). In this case, the amount sold and conveyed was 6.5 gigawatt-hours per year.

In the settlement, Mr and Mrs Sax have given undertakings that: * they acknowledge that it is likely that they have breached the Act * they, and companies associated with them, will not sell electricity in the future whilst they continue to be involved in electricity lines businesses; * they will facilitate access to their electricity lines by electricity retailers wishing to sell electricity to consumers connected to the electricity lines owned by companies associated with them; and * if they do not honour the settlement the Commission can take further action.

Mr Belgrave said that Mr and Mrs Sax cooperated with the Commission during its investigation and in reaching a settlement, and the Commission accepts that the Mr and Mrs Sax did not deliberately set out to breach the Act. It also accepts that upon ascertaining their legal position under the Act, Mr and Mrs Sax moved quickly to divest their interests in their electricity supply business so as to comply with the Act.

Background

Courts can impose penalties of up to $5 million on companies and $500,000 on individuals who breach the Electricity Industry Reform Act. In addition fines of three times any commercial gain arising from a contravention of the Act may be ordered by the Court.

Media contact: Commerce Act Manager Geoff Thorn Phone work (04) 498 0958, cellphone 021 661 104

Senior Advisor Communications Vincent Cholewa Phone work (04) 498 0920, home (04) 477 0039

Commission media releases can be viewed on its web site www.comcom.govt.nz


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