Electricity Lines Businesses

23 December 2004

Electricity Lines Businesses: Commission initiates review of information disclosure regime

The Commerce Commission is tomorrow issuing a discussion paper to seek feedback from interested parties on the objectives, principles and implementation of its information disclosure regime for electricity lines businesses. This work is part of the Commission’s development of a regulatory regime for lines businesses, as required by Part 4A of the Commerce Act.

“The information disclosure regime shares the same overall purpose as the targeted control regime under Part 4A of the Act—to promote the efficient operation of markets directly related to electricity distribution and transmission services,” said Commission Chair Paula Rebstock.

“The information disclosure regime is intended to achieve that purpose by ensuring that lines businesses make reliable and timely information about their operation and behaviour publicly available. The Commission is required to summarise and analyse the disclosed information to promote greater understanding of the relative performance of lines businesses over time.”

The Commission’s current information disclosure requirements largely replicate and replace the previous information disclosure regime provided under the Electricity (Information Disclosure) Regulations 1999, administered by the Ministry of Economic Development.

The Commission considered such an approach to be an appropriate interim measure because the scope of information disclosure provided for under Part 4A is similar to that under the previous disclosure regulations. However, the Part 4A information disclosure regime has a different statutory authority and purpose, and is complemented by the targeted control regime.

Consequently, the Commission considers it appropriate to undertake a full review of its current information disclosure requirements, beginning from first principles.

Tomorrow, the Commission is also releasing a companion paper outlining its draft decisions on key aspects of allowing lines businesses to choose the method for valuing their system fixed assets. The Commission considers asset valuation to be an important element in the disclosure of lines business performance information, because asset values impact the level of disclosed returns as well as certain productivity measures.

Submissions from interested parties on the discussion paper on the review of the information disclosure regime, and on the paper on implementing valuation choice, are invited by Wednesday, 23 February 2004. Both documents can be found on the Commission’s website, www.comcom.govt.nz.

Background Part 4A of the Commerce Act 1986, which commenced on 8 August 2001, establishes a regulatory regime for large electricity lines businesses (distribution businesses and Transpower). Under Part 4A, the Commission must, among other things, develop an information disclosure regime requiring lines businesses to disclose information concerning their business. The Commission is required to publish a summary and analysis of the information disclosed. The Commission issued its initial information disclosure requirements on 31 March 2004.

These requirements largely replicated the now-revoked Electricity (Information Disclosure) Requirements 1999, administered by the Ministry of Economic Development pursuant to the Electricity Act 1992. A brief description of those requirements was posted in the Gazette on the same day.

The purpose of the information disclosure regime, as set out in section 57T of the Commerce Act, is to promote the efficient operation of markets directly related to electricity distribution and transmission services by ensuring that lines businesses make publicly available reliable and timely information about the operation and behaviour of those businesses, so that a wide range of people are informed about such factors as profits, costs, asset values, price (including terms and conditions of supply), quality, security, and reliability of supply of those businesses.

ENDS

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