Electricity Industry Reform Act: Commerce Commission grants exemption to Marko Bogoievski

The Commerce Commission has granted Marko Bogoievski an exemption under the Electricity Industry Reform Act 1998 (EIR Act) in relation to his potential appointment to the board of Auckland International Airport Limited (AIAL), an electricity lines business, subject to certain conditions.

Currently Marko Bogoievski is the Chief Executive of HRL Morrison & Co Group Limited (HRL Morrison) and Infratil Limited and a director of a number of other companies.

Mr Bogoievski has been approved by the board of AIAL (subject to the Commission granting an exemption) as the Alternate Director for Lloyd Morrison, who is currently on medical leave of absence. Mr Bogoievski is presently the Alternative Director for Mr Morrison on the board of TrustPower Limited, a generator and seller of electricity.

Mr Bogoievski applied for an exemption because his appointment to the board of AIAL would result in him breaching the connected customers selling cap rule. This is because he would be involved in AIAL’s line business and also in TrustPower, which sells to customers connected to AIAL’s local network, without TrustPower having any qualifying generation on AIAL’s local network with which to offset its electricity retail sales.

Commission Chair Dr Mark Berry said, provided the conditions are met, 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 is available on the Commission’s website www.comcom.govt.nz under Public Registers/Electricity Industry Reform Act – Exemptions
Background

 

The electricity industry has four main parts: electricity generation, electricity transmission, electricity distribution (lines businesses), and electricity supply. Only generation, distribution (lines) and supply are covered by the EIR Act.

The EIR Act provides for the Commission to make exemptions in terms of section 81 of the EIR Act. In considering applications for exemptions, the Commission will have specific regard to the particular purpose of Parts 1 to 3 and 5 of the EIR Act as defined in section 2(2) of the EIR Act. The Commission is likely to 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 and electricity generation and sales that may create incentives or opportunities:
(i) to inhibit competition in the electricity industry; or
(ii) to cross-subsidise generation or retail activities from electricity lines activities; and
(b) where applicable, would not result in relationships between a business that has involvement in electricity line and a business that has involvement in certain electricity generation connected to that line, where those relationships may not be carried out otherwise in separate companies or be at arm’s length.
In determining exemption applications, the Commission will also have regard to the overall purpose of the EIR Act as set out in section 2(1) of the Act. That is, 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
§ that the benefits of efficient electricity pricing flow through to all classes of consumers; and
§ new investment in generation from renewable energy sources by –
§ effectively separating electricity lines from generation and retail where those activities are co-located; and
§ promoting effective competition in electricity generation and retail; and
§ limiting barriers to new investment in generation from renewable energy sources.

 

Commission media releases can be viewed at web site www.comcom.govt.nz