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Commission exempts Infratil, Alliant and Utility

Commission exempts Infratil, Alliant and Utility Investments from the Electricity Industry Reform Act

The Commerce Commission today exempted Infrastructure & Utilities NZ Ltd (Infratil), Alliant International New Zealand Ltd and Utility Investments Ltd from the application of part of the Electricity Industry Reform Act until 30 June 2000.

The three companies had applied to the Commission for exemption to allow them more time to dispose of their involvements in Powerco and CentralPower. Such sales were made necessary by the companies' ownership of a large part of electricity generator and retailer, TrustPower.

Continued ownership would mean that the three companies had a cross-involvement with an electricity lines and an electricity supply business. That is prohibited by the Electricity Industry Reform Act.

Commission Member Dr Kate Brown said that the Commission granted the exemption on the grounds that an exemption would not in any way that was more than minimal:

* provide the companies with incentives or opportunities to inhibit competition in the electricity industry; * provide the companies with with incentives or opportunities to cross-subsidise TrustPower's electricity generators from the electricity lines businesses of Powerco and CentralPower; and * allow a relationship between Powerco and CentralPower's electricity lines businesses and TrustPower's electricity supply businesses which would not be at arms length.

The Commission considered that permitting the three companies to retain involvements in both electricity line and supply businesses for a maximum of one year would not defeat the purposes of the Electricity Industry Reform Act.

In considering an exemption, the Commission must answer three questions:

1. Would the exemption inhibit competition?

2. Would the exemption allow cross-subsidisation between electricity generation and lines businesses?

3. Would the exemption create a relationship between electricity lines and supply businesses, which was not at arms length?

Copies of: * Decision Number 360, Infratil and Decision 361, Alliant and Utility Investments; * Practice Note 3: Electricity Industry Reform Act 1998, Commission's Role, Processes and Procedures (also published in the October issue of the Commission's newsletter Compliance); and * Business Acquisitions Guidelines are available from reception at the Commission's Wellington office, Level 7, Landcorp House, 101 Lambton Quay.

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