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Maui Pipeline Open Access draft determination

Media Release - Commerce Commission issues Maui Pipeline Open Access draft determination

The Commerce Commission has today issued a draft determination in relation to an application under section 58 of the Commerce Act by two Todd companies in relation to access to the Maui pipeline.

The application by Todd Petroleum Mining/Todd Taranaki (Todd) relates to certain provisions of the Maui Pipeline Operating Code (MPOC) and open access to the Maui pipeline. Pipeline users who wish to gain access to the pipeline must enter into contracts with its owner, Maui Developments, which contain provisions that are based on the MPOC.

Commission Chair Paula Rebstock said that Todd's application was concerned with the provisions in the MPOC that:

* preserve the existing long-standing rights of the parties to the sale, purchase and delivery of Maui gas; and

* permit the implementation of a specialised operational gas balancing system for New Zealand's gas transmission pipelines. The balancing system is necessary to reconcile quantities and values of gas injected into a pipeline system by producers with that extracted by consumers.

Ms Rebstock noted that the Commission is responsible for deciding whether to authorise Todd's application. The Commission must first determine whether competition would be lessened by the relevant provisions. If so, the Commission then compares any benefits to the public from the provisions with the detriment arising. If the benefits exceed the detriments, the Commission will grant authorisation.

The Commission considered that if the provisions in the MPOC were not implemented by the industry, it was likely that the Government, as noted in its policy statement on the gas industry, would regulate the implementation of identical provisions to those in the MPOC.

Ms Rebstock said that in the Commission's view, there would be no difference between the MPOC and regulation. As a result, the Commission's preliminary view is that there would be no lessening of competition if the relevant provisions were implemented.

Ms Rebstock said that open access to the Maui Pipeline has been occurring since October 2005 and no proceedings under the Commerce Act have been brought by any party in relation to the issues raised by Todd's application. The Commission has not received any complaints under the Commerce Act about the operation of the open access regime.

The Commission now invites interested parties to make written submissions on the draft determination. The closing date for acceptance of written submissions is 4.00 pm Monday 28 April 2008. Submissions received will be posted on the Commission's website. Interested parties are asked to indicate any confidentiality requirements at the time of their submission.

Interested parties may also notify the Commission within ten working days of 14 April 2008 whether they wish the Commission to hold a conference in relation to this draft determination. If no such request is received the Commission does not intend to hold a conference.

A copy of the Draft Determination is available on the Commission's website under PublicRegisters/restrictivetradepractices

Maui Pipeline Operating Code (MPOC) is a set of rules that regulates open access to the Maui pipeline by producers and shippers of gas.


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