Exemption granted for Top Energy Ngawha expansion
Thursday 17 May 2007, 6:51PM
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The Commerce Commission has granted Top Energy Limited a limited exemption under the Electricity Industry Reform Act to expand its geothermal generation plant at Ngawha Springs, Northland.
The expansion is to occur by way of Top Energy's wholly owned subsidiary Ngawha Generation Limited.
The EIR Act restricts relationships between electricity lines businesses and electricity supply businesses. A lines business may have an ownership interest in a renewable generation business as long as the two businesses are run as separate companies and kept at arms length, as defined by the Act's arm's length rules. In certain circumstances the Commission can grant exemptions from the EIR Act and the arm's length rules.
Top Energy has been granted a limited exemption to a certain arm's length rule which means that Top Energy managers can be appointed to the board of Ngawha Generation Limited.
The exemption requires the other arm's length rules to be observed, and requires an independent director to be appointed to the Board of Ngawha Generation Limited. The exemption is also conditional on Top Energy not retailing the electricity to customers located on its own network.
Commission Chair Paula Rebstock said that the Commission had determined that the granting of the exemption would not create incentives or opportunities to inhibit competition in the electricity industry.
A public version of the Commission's decision will be shortly available on the Commission's website under Adjudication.
Background
The electricity industry has four main parts: electricity generation, electricity transmission, electricity distribution (lines businesses), and electricity retail. Only generation, distribution (lines), and retail are covered by the EIR Act.
Under the EIR Act, a company may have an ownership interest in both generation and retail businesses, but generally needs permission to own both lines and generation, or lines and retail. It seeks that permission by applying for an exemption under the EIR Act.
The purpose of the EIR Act is to reform the electricity industry to better ensure that costs and prices are subject to sustained downward pressure and the benefits of efficient electricity pricing flow through to all classes of consumers.
The expansion is to occur by way of Top Energy's wholly owned subsidiary Ngawha Generation Limited.
The EIR Act restricts relationships between electricity lines businesses and electricity supply businesses. A lines business may have an ownership interest in a renewable generation business as long as the two businesses are run as separate companies and kept at arms length, as defined by the Act's arm's length rules. In certain circumstances the Commission can grant exemptions from the EIR Act and the arm's length rules.
Top Energy has been granted a limited exemption to a certain arm's length rule which means that Top Energy managers can be appointed to the board of Ngawha Generation Limited.
The exemption requires the other arm's length rules to be observed, and requires an independent director to be appointed to the Board of Ngawha Generation Limited. The exemption is also conditional on Top Energy not retailing the electricity to customers located on its own network.
Commission Chair Paula Rebstock said that the Commission had determined that the granting of the exemption would not create incentives or opportunities to inhibit competition in the electricity industry.
A public version of the Commission's decision will be shortly available on the Commission's website under Adjudication.
Background
The electricity industry has four main parts: electricity generation, electricity transmission, electricity distribution (lines businesses), and electricity retail. Only generation, distribution (lines), and retail are covered by the EIR Act.
Under the EIR Act, a company may have an ownership interest in both generation and retail businesses, but generally needs permission to own both lines and generation, or lines and retail. It seeks that permission by applying for an exemption under the EIR Act.
The purpose of the EIR Act is to reform the electricity industry to better ensure that costs and prices are subject to sustained downward pressure and the benefits of efficient electricity pricing flow through to all classes of consumers.