Commission not opposed to electricity arrangements
20 December 1995
The Commerce Commission's preliminary view is that two arrangements proposed for the period up to the establishment of a competitive wholesale electricity market on October 1 next year are unlikely to have any detrimental anti-competitive effects.
The Commission today released a draft determination on the applications for authorisation of the two arrangements.
One application, from ECNZ, Contact Energy and the Electricity Market Company (EMCO), is for authorisation of proposed interim pricing rules to be in force until September 30.
The other application, from ECNZ and Contact Energy, is for authorisation of an arrangement under which Contact Energy would supply electricity to ECNZ until September 30.
Commission Chairman Dr Alan Bollard said the Commission believes that without the arrangements it is unlikely that Contact Energy would be in a position to compete against ECNZ until the competitive market comes into effect: the arrangements would not be likely to affect competition in the interim period.
Dr Bollard said the interim arrangements are expected to facilitate the establishment of the competitive market. They are expected to allow market participants to practice for such a market and test their systems. This is likely to reduce any risk attached to the introduction of a competitive market.
If its preliminary view is confirmed, the Commission would authorise the application for the pricing rules because they would bring public benefits and they do not lessen competition.
Dr Bollard said that the Commerce Act prohibits pricing arrangements between competitors. However, it allows them to be authorised if it can be shown that public benefits they bring outweigh detriments to competition.
The Act also prohibits other arrangements between competitors if it is shown that they substantially lessen competition. These too can be authorised if public benefits outweigh detriments to competition.
The Commission's preliminary view is that the second arrangement, for electricity supply, would not lessen competition, therefore, it cannot authorise it. Only arrangements which would otherwise be prohibited by the Act can be authorised. In the Commission's view, the supply arrangement is not anti-competitive.
Dr Bollard said the Commission will release a final determination by about January 31, after it has considered submissions and held a conference of interested parties.
The Commissions timetable for continuing its investigation is:
by January 12applicants and interested parties to make submissions on draft determination
January 18-19conference in the Seminar Suite, Wellington Town Hall to give applicants and interested parties the opportunity to provide further comment and for the Commission to ask questions
by about January 31release final decision
Media contact:Communications Officer Vincent Cholewa
Phone work (04) 498 0920, home (04) 479 1432