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Commission grants exemption to Eastland Network

Media Release

Issued 24 July 2003-04 / 010

Electricity Industry Reform Act: Commission grants exemption to Eastland Network

The Commerce Commission has exempted Eastland from the application of the cross involvement rules of the Electricity Industry Reform Act 1998 (EIR Act).

The EIR Act currently limits the cross-involvement between electricity lines businesses and electricity supply businesses to a maximum of 5 megawatts of generation.

Eastland had applied to the Commission for an exemption in respect of diesel generator sets with a combined capacity of 6.5 megawatts, which Eastland will use for security and outage management, and also for the 4.88 megawatt Waihi Hydro Power Scheme, which Eastland presently has for sale.

The Commission accepted Eastland’s argument that the use of the diesel generator sets in a peaking role would enable Eastland to avoid more costly transmission and distribution asset upgrades, thereby satisfying the broad purpose of the EIR Act, which is to better ensure that the benefits of efficient electricity pricing flow through to consumers.

Commission Acting Chair Paula Rebstock said the Commission has granted the exemption subject to Eastland continuing to use all reasonable endeavours to cease their involvement in the Waihi Hydro Scheme by securing the prompt sale of the Scheme.

“In addition to that condition, Eastland will provide monthly reports to the Commission on its progress to sell the Scheme,” said Ms Rebstock.

Eastland Network is an electricity lines business which owns networks in the Wairoa and Gisborne regions.
A copy of the decision is available on the Commission’s website, http://www.comcom.govt.nz/adjudication/index.cfm


Background
The purpose of the EIR Act is to reform the electricity industry to better ensure that costs and prices in the electricity industry are subject to sustained downward pressure and the benefits of efficient electricity pricing flow through to all classes of consumers, by effectively separating electricity distribution from generation and retail and promoting effective competition in electricity generation and retail markets.

The Commission may grant an exemption in respect of a business or involvement or interest, only where doing so:
a. would not result in certain involvements in electricity lines businesses and electricity supply businesses which may create incentives or opportunities:
i. to inhibit competition in the electricity industry; or
ii. to cross-subsidise generation activities from electricity lines businesses; and
b. would not result in relationships between electricity lines businesses and electricity supply businesses which are not at arms length.

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

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