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Conference on intent to declare control of Unison

Media Release


Issued 14 November 2005/060


Commerce Commission to hold conference on intention to declare control of Unison

The Commerce Commission will hold a conference to hear submissions on its intention to declare control over the electricity distribution services supplied by Unison Networks Limited.

The Commission published its intention to make a declaration of control on 9 September 2005. This follows an inquiry into Unison’s electricity distribution services after the company breached regulatory thresholds set under Part 4A of the Commerce Act.

This is the first time the Commission has published an intention to declare control of an electricity distribution business since it was given powers to do so in August 2001.

Unison supplies consumers in the Hawke’s Bay, Taupo and Rotorua regions. The company is 100% owned by the Hawke’s Bay Power Consumers’ Trust, which acts on behalf of the consumers connected to Unison’s network in Hawke’s Bay.

The conference provides an opportunity for interested parties to briefly present the key points of their submissions orally and for the Commission to ask questions based on those submissions.
The Commission intends holding the conference in three stages:

- The first stage will be one and a half days (17-18 November 2005) set aside for submitters from outside the Hawke’s Bay, Rotorua and Taupo regions. The venue for these sessions of the conference will be the Commission’s Wellington Conference Room, at Ground Floor, 44-52 The Terrace, Wellington.

- The second stage, also to be held in the Commission’s Wellington Conference Room, will be an additional two days (5-6 December 2005) set aside for Unison, its experts and the Hawke’s Bay Power Consumers’ Trust, which acts on behalf of Unison’s consumer owners in the Hawke’s Bay.

- The final stage will involve three sessions at locations in each of Rotorua, Taupo and Napier respectively. These regional sessions will be held on 14-15 December, with dates and venues to be confirmed shortly on the Commission’s website.


The Commission received a number of submissions from interested parties. All submissions and the intention to declare control paper issued by the Commission can be found by accessing the following link on the Commission’s website.

Background

The Commission has set thresholds for distribution business performance under Part 4A of the Commerce Act. The thresholds are a screening mechanism for the Commission to identify distribution businesses whose performance may warrant further examination, and if necessary, control of their prices, revenues, or service quality standards.

Unison breached the Commission’s price path threshold as a result of price increases in April 2002 and March 2004. After an initial review, which established that Unison intended to make further significant price increases in future, the Commission initiated a ‘post-breach inquiry’ into Unison’s recent and planned performance.

Part 4A of the Commerce Act 1986, which commenced on 8 August 2001, establishes a targeted control regime for large electricity lines businesses (distribution businesses and Transpower). The Commission is required, among other things, to set thresholds and assess the performance of lines businesses against those thresholds. Following extensive industry consultation, the Commission set two thresholds—a price path threshold and a quality threshold.

The purpose of the targeted control regime, as set out in section 57E of the Commerce Act, is to promote the efficient operation of markets directly related to electricity distribution and transmission services through targeted control for the long-term benefit of consumers by ensuring that suppliers—

(a) are limited in their ability to extract excessive profits; and
(b) face strong incentives to improve efficiency and provide services at a quality that reflects consumer demands; and
(c) share the benefits of efficiency gains with consumers, including through lower prices.

ENDS

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