Interrelationship with the Commerce Commission
101. This section sets out the Government's expectations and intentions regarding the interrelationship between the Commerce Commission and the Electricity Commission with regard to the regulation of Transpower and electricity lines businesses by the Commerce Commission under the Commerce Act 1986 and the Electricity Commission under the Electricity Act 1992.
102. The Government expects the Commerce Commission and the Electricity Commission to work together closely to ensure that their respective roles are well co-ordinated, and to minimise any scope for uncertainties regarding jurisdictional issues.
103. Under the Commerce Act 1986 the Commerce Commission is charged with operating targeted control of electricity lines businesses including Transpower for the long term benefit of consumers. Under this regime, the Commission is required to set thresholds for electricity lines businesses, determine whether any businesses have breached those thresholds, and if so, consider whether to impose control on the prices, revenues and quality standards of those businesses.11 Where the Commerce Commission has declared all or any goods or services supplied by an electricity lines business to be under control, that business is unable to supply those goods or services unless an authorisation or undertaking relating to the price, revenue or quality of the services has come into effect.
104. Under the Electricity Act 1992, the Electricity Commission is empowered to make recommendations to the Minister of Energy on regulations and rules on a number of issues relating to:
- power quality standards; reliability standards for the national grid; upgrades, expansions and replacements of Transpower's grid assets; terms and conditions for connection to the grid; and pricing methodologies for the recovery of Transpower's revenue requirements;
- terms and conditions for the connection of generation to distribution lines;
- pricing methodologies for the recovery of the revenue requirements of electricity distributors, and
- terms and conditions for the use of lines (and related services) by competing retailers.
105. It is evident that the exercise of the Electricity Commission's functions, responsibilities and powers affects the work of the Commerce Commission, and vice versa.
106. The Commerce Act 1986 and the Electricity Act 1992 have been amended to:
- require the Commerce Commission to take into account, when exercising its duties and powers under Part 4A of the Commerce Act 1986, any regulations and rules made under the Electricity Act 1992 (including any decisions made by the Electricity Commission under those regulations and rules), and
- require the Electricity Commission to advise the Commerce Commission of any regulation, rule or decision made under the Electricity Act 1992 which is likely to affect the powers and duties of the Commerce Commission under Part 4A of the Commerce Act 1986.
107. The Government requests the two Commissions to develop and publish a Memorandum of Understanding on how they propose to operationalise the coordination of their respective roles.
108. The Commerce Act 1986 has been amended to allow responsibility for Part 4A to be transferred from the Commerce Commission to the Electricity Commission by Order in Council should there appear to be benefits in doing so. This transfer (after due process and consultation) may take place at any time with regard to Transpower, but may not take place before 1 April 2009 for other lines businesses.
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