Fletcher Challenge group interim exemption

Commission grants Fletcher Challenge group interim exemption from Electricity Industry Reform Act

The Commerce Commission today granted 10 companies in the Fletcher Challenge Group an interim exemption from the Electricity Industry Reform Act (EIR Act).

Commissioner Dr Kate Brown said that the interim exemption is until the Commission makes its final decision. There is no specific date for this yet, but it is expected to be within a few weeks.

The EIR Act requires companies involved in electricity lines businesses and electricity supply businesses to separate ownership of the two types of businesses, or be exempted from the Act by the Commission.

The Fletcher Challenge group has wide-ranging electricity interests throughout the country. As the companies are interconnected, it is their total electricity interests that must be looked at under the EIR Act.

Dr Brown said that the Commission considered that the purposes of the EIR Act would not be defeated by a short-term exemption.

The group is involved in electricity supply businesses through: Natural Gas Corporation, the Kapuni Gas Treatment Plant joint venture, Fletcher Challenge Power Limited, Tasman Pulp and Paper Company Limited, Fletcher Challenge Forests Limited, Fletcher Challenge Energy, Fletcher Property Limited, Fletcher Wood Panels Limited, Firth Industries Limited, Winstone Aggregates Limited and Golden Bay Cement Limited.

It is involved in electricity lines businesses through: Fletcher Property Limited, Fletcher Wood Panels Limited, Tasman Pulp and Paper Company Limited, the Kapuni Gas Treatment Plant joint venture, Fletcher Challenge Forests Limited, Firth Industries Limited and Golden Bay Cement Limited.

Background

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 is not at arms length?

"The presumption must be that if the answer to any of these questions is 'yes', the Commission must not grant an exemption from the EIR Act," Dr Brown said.

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