The Commerce Commission has received an application from Babcock & Brown International Pty Limited, seeking exemption from section 17 of the Electricity Industry Reform Act 1998 in relation to Powerco, Glenbrook Power Station and Te Rere Hau wind farm.

Babcock and Brown International Pty Limited is a global investment and advisory firm specialising in structured finance and the creation, syndication and management of asset and cash flow-based investments.  Through its subsidiaries, Babcock and Brown International Pty Limited has shares in Powerco (an electricity lines business), Glenbrook Power Station and Te Rere Hau wind farm (both electricity supply businesses).

Section 17 of the EIR Act prohibits the cross-involvement of electricity lines and supply businesses.

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;
• to ensure the benefits of efficient electricity pricing flow through to all classes of consumers; and
• 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 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.

For further information on the Commission’s role within the EIR Act, visit the Commission’s website, www.comcom.govt.nz under Industry Regulation/Electricity/Electricity Industry Reform Act.

A public version of the application is available on the Commission’s website, under Public Registers/Electricity Industry Reform Act – Exemptions