Electricity Industry Reform Act
Electricity Industry Reform Act: Commission grants exemption to Stephen Reindler
The Commerce Commission has granted Stephen Reindler an exemption under the Electricity Industry Reform Act 1998 (the EIR Act) in relation to his proposed appointment to the board of Meridian Energy Limited (Meridian), an electricity supply business. If Mr Reindler becomes a Director of Meridian, an electricity supply business, it would result in a cross involvement, as Mr Reindler is presently a senior manager of Auckland International Airport Limited (AIAL), an electricity lines business. Mr Reindler had applied for exemption from section 17 of the EIR Act, which prohibits cross-involvement in electricity lines and supply businesses. The Commerce Commission exempts Stephen Reindler from compliance with section 17 of the EIR Act in respect of the cross-involvement with AIAL that would be created through his appointment to the position of director of Meridian. The exemption is subject to the following conditions:
1. whilst Stephen Reindler is cross-involved with Meridian Energy Limited and Auckland International Airport Limited, Stephen Reindler shall not participate in any discussions or decision making by Meridian Energy Limited and/or Auckland International Airport Limited regarding matters that relate to or could affect or favour the supply of electricity by Meridian Energy Limited (or disadvantage any other electricity supply business other than Meridian Energy Limited) on Auckland International Airport Limited's electricity distribution network or the provision of electricity lines services by Auckland International Airport Limited to Meridian Energy Limited, including:
a. the selection of, and any negotiation with, any electricity retailer for the supply, or intended supply, of electricity to Auckland International Airport Limited; and b. the supply, or intended supply, of electricity by Meridian Energy Limited to any new, or existing, consumers on Auckland International Airport Limited's electricity distribution network; and shall not disclose the outcomes of any discussions or decision making by Auckland International Airport Limited to Meridian Energy Limited (and vice versa) on those matters;
2. Stephen Reindler will confirm to the Commission, in writing, that the cross-involvement to which this exemption applies has ceased within one calendar month of the cross-involvement ceasing to exist;
3. this exemption expires when the Commission publishes on its website Stephen Reindler's written confirmation that his cross-involvement has ceased, unless any variation or earlier revocation in terms of section 81(5) occurs before that event; and
4. this exemption is specific to the cross-involvements created through Stephen Reindler's involvement in Meridian Energy Limited. It does not extend to any other interest or existing or future cross-involvement of Stephen Reindler.
Commission Chair Paula Rebstock said that, provided the above conditions are met, the Commission had determined that the granting of the exemption would not create incentives or opportunities to inhibit competition in the electricity industry. A public version of the Commission's decision will be made available on the Commission's website www.comcom.govt.nz under Public Registers/Electricity Industry Reform Act – Exemptions. Background AIAL is an electricity lines business because it owns and operates the electricity distribution network at Auckland International Airport, and conveys electricity across that network to connected consumers.
Meridian is an electricity supply business because it owns and operates electricity generation and retail businesses.
The electricity industry has four main parts: electricity generation, electricity transmission, electricity distribution (lines businesses), and electricity retail. Only generation, distribution (lines), and retail are covered by the EIR Act.
Under the EIR Act, a company may have an ownership interest in both generation and retail businesses, but generally needs permission to own both lines and generation, or lines and retail. It seeks that permission by applying for an exemption under the EIR Act.
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.