Commission grants exemption to Eastland Network
Media Release
Issued 24 July 2003-04 / 010
Electricity Industry Reform Act: Commission grants exemption to Eastland Network
The Commerce Commission has exempted Eastland from the application of the cross involvement rules of the Electricity Industry Reform Act 1998 (EIR Act).
The EIR Act currently limits the cross-involvement between electricity lines businesses and electricity supply businesses to a maximum of 5 megawatts of generation.
Eastland had applied to the Commission for an exemption in respect of diesel generator sets with a combined capacity of 6.5 megawatts, which Eastland will use for security and outage management, and also for the 4.88 megawatt Waihi Hydro Power Scheme, which Eastland presently has for sale.
The Commission accepted Eastland’s argument that the use of the diesel generator sets in a peaking role would enable Eastland to avoid more costly transmission and distribution asset upgrades, thereby satisfying the broad purpose of the EIR Act, which is to better ensure that the benefits of efficient electricity pricing flow through to consumers.
Commission Acting Chair Paula Rebstock said the Commission has granted the exemption subject to Eastland continuing to use all reasonable endeavours to cease their involvement in the Waihi Hydro Scheme by securing the prompt sale of the Scheme.
“In addition to that condition, Eastland will provide monthly reports to the Commission on its progress to sell the Scheme,” said Ms Rebstock.
Eastland Network is an
electricity lines business which owns networks in the Wairoa
and Gisborne regions.
A copy of the decision is
available on the Commission’s website,
http://www.comcom.govt.nz/adjudication/index.cfm
Background
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.
Commission media releases can be
viewed on its web site
www.comcom.govt.nz