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Gas Inquiry: Commission recommends control

Issued 21 May 2003

Gas Inquiry: Commission recommends control in draft report

The Commerce Commission today released its draft report relating to its current Gas Pipelines Inquiry. The Commission commenced the Inquiry following a request from the Minister of Energy pursuant to Part IV of the Commerce Act.

Under the Commerce Act, the Commission is required to consider whether: * competition in the supply of gas pipeline services is limited or likely to be lessened; and * control is necessary or desirable in the interests of acquirers or suppliers of gas pipeline services.

Commission Chair Paula Rebstock said if the Commission was reporting to the Minister today, it would advise him to recommend to the Governor-General that an order in Council be made imposing control on two gas transmission businesses and three gas distribution businesses.

"Today's draft report reflects the Commission's current position on whether or not to recommend control in the gas industry. The Commission issues a draft report to assist understanding of the Inquiry and to add transparency to the Commission's decision making process," said Ms Rebstock.

"The process also allows the Commission's preliminary views to be consulted on by all interested parties and allows for further submissions and input. The Commission encourages interested parties to make submissions on the Commission's draft report and to present those submissions at a public conference to be held in July.

"Based on what we currently know, the Commission's preliminary view is that NGC Transmission, Maui Development Limited, NGC Distribution, Powerco Limited and Vector Limited all face limited competition in the gas pipeline services they provide and that there are likely to be net benefits to acquirers from the introduction of control," said Ms Rebstock.

In relation to Wanganui Gas Limited, the Commission's preliminary view is that it is not necessary or desirable, in the interests of acquirers for the gas pipeline services supplied by Wanganui Gas to be controlled. In relation to Nova Gas Limited, the Commission's assessment to date has found that Nova Gas faces workable or effective competition in the market where it provides gas services and has therefore not recommended control in its draft report.

The Commission's established process includes the release of a draft report, which is followed by a public submission process and conference before the Commission makes its final recommendations to the Minister of Energy.

Ms Rebstock explained the Commission's preliminary recommendations were based on its assessment of the potential benefits to acquirers of control and the potential costs to acquirers of control.

"In making its recommendations, the Commission must balance the benefits of control against the costs of imposing control."

A copy of the Commission's Executive Summary is attached. The Commission is required to deliver its final report to the Minister by 1 November 2004. It is for the Minister to decide whether to recommend to the Governor-General to make an order declaring control. <> The Inquiry timetable confirmed today is as follows: Draft Report released by Commission 21 May 2004 Written submissions on draft report due 2 July 2004 Conference on Draft Report 22,23, 26-28 July 2004 Cross submissions following conference due 13 August 2004 Final report provided to Minister of Energy By 1 November 2004


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