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Electricity Industry Reform Act

7 October 2004

Electricity Industry Reform Act: Commission clears Westfield

The Commerce Commission has granted the Westfield Group an exemption under the Electricity Industry Reform Act 1998 (the EIR Act) in relation to ownership separation provisions, subject to a number of conditions.

The Westfield Group sought an exemption from s 17 of the EIR Act, which prohibits cross involvements in electricity lines and supply businesses, in relation to the shopping centres the Westfield Group owns and operates in New Zealand.

Commission Chair Paula Rebstock said following an extensive investigation, the Commission has granted the exemption, which requires greater specificity in the conditions that the Westfield Group must comply with, to ensure that the Westfield Group does not benefit from its cross-involvement in electricity lines and electricity supply businesses in a manner that would be inconsistent with the EIR Act.

In order to retain its cross-involvement, the Westfield Group must allow other retailers access to the internal embedded wiring systems within its shopping centres, and is not able to charge tenants for the use of these systems. The Westfield Group is also not able to recover any revenue, margin or other amount in respect of line function or other services provided by external network operators other than an apportionment of their actual cost.

“Finally, the Westfield Group must provide full billing information to its tenants to enable tenants to assess competitive options available to them for retail supply and to identify any recovery of energy or line charges by the Westfield Group,” said Ms Rebstock.

The exemption will take effect one month from the date at which the exemption is published in the New Zealand Gazette, in order to allow the Westfield Group time to ensure compliance with these conditions.

A public version of the Commission’s decision will be shortly available on the Commission’s website under Adjudication.

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.

ENDS

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