23 FEBRUARY
NEW ZEALAND GAZETTE
531

• lower fiscal risk to the Crown.

Explanatory Note:
ECNZ can provide additional generating capacity in New Zealand only if non-ECNZ parties have first built at least an equal amount of additional capacity in New Zealand.

Definitions
2. Additional generating capacity is “provided” by ECNZ where—

• the development of the additional capacity is effectively controlled by ECNZ; and/or

• the sale of all or any part of the electricity produced from the additional capacity to any wholesale buyer (other than ECNZ) is effectively controlled by ECNZ.

3. In this Appendix, a “non-ECNZ party” is a person which is fully independent of ECNZ and in which ECNZ has no direct or indirect financial or other interest (but—

• a business arrangement in which ECNZ participates with another person only in regard to an overseas project, or a New Zealand project involving only energy efficiency, co-generation and/or generation from non-traditional renewable sources; or

• the provision by ECNZ to a person of financial, design, or operating and maintenance services—

does not constitute an interest by ECNZ in that person).

Rules

Entitlement System
4. A system of MW credits (“credits”) and MW debits (“debits”) will be established to determine ECNZ’s entitlement to provide additional generating capacity. ECNZ’s entitlement will be the sum of the credits and debits. This entitlement will not create any legal rights. The table in Annex A illustrates the system.

5. Two key features of the system are as follows:

• In broad terms, each MW of additional capacity built by a non-ECNZ party (excluding the proposed Taranaki combined cycle station and any additional capacity using part or all of the gas associated with that proposal) will create a credit, and each additional MW of capacity provided by ECNZ will incur a debit.

• ECNZ may provide additional capacity only if it has a positive entitlement which is equal to or greater than the debits it would incur from the additional capacity.

6. The effective start date for the counting of credits towards and debits against ECNZ’s entitlement will be the date of this Memorandum.

7. For administrative convenience, additional generating capacity under 1 MW will not be taken into account.

Non-ECNZ Building
8. Additional generating capacity built by a non-ECNZ party will (except as set out below) create a credit when the non-ECNZ party enters into binding contracts for the purchase of major plant or major capital works.

ECNZ Building
9. ECNZ’s entitlement will be debited when tenders are called for the purchase of major plant or major capital works for additional generating capacity to be provided by ECNZ. If a tender process is abandoned by ECNZ, the debit will be reversed.

10. ECNZ will not require an entitlement before purchasing land, applying for resource consents, or undertaking evaluation, feasibility studies, or design work.

Joint Ventures
11. Where ECNZ has effective control: If ECNZ has effective control of a joint venture that provides additional generating capacity—

• the full MW capacity of the joint venture project will be debited against ECNZ’s entitlement; and

• the share of the joint venture held by non-ECNZ parties will not be credited towards ECNZ’s entitlement.

12. Where ECNZ does not have effective control: If ECNZ does not have effective control of a joint venture that provides additional generating capacity—

• a proportion of the full MW capacity of the joint venture project, corresponding to ECNZ’s share of the joint venture, will be debited against its entitlement; and

• the share of the joint venture held by non-ECNZ parties will not be credited towards ECNZ’s entitlement.

13. In this Appendix, a “joint venture” includes any business arrangement in which ECNZ participates with any other person in respect of the provision of any additional generating capacity.

Project Abandonment
14. If any additional ECNZ generating capacity is abandoned (including mothballing) after a debit is incurred, the debit will be reversed. ECNZ’s entitlement will be debited on any subsequent recommissioning of the capacity.

15. If any additional non-ECNZ generating capacity is abandoned (including mothballing) after a credit is established, the credit will be reversed. However, if this means that ECNZ no longer has sufficient entitlement to provide additional generating capacity that it is already committed to—

• ECNZ may continue with the provision of that capacity; but

• ECNZ may not provide further additional generating capacity until it has accumulated sufficient credits to offset both the resulting negative entitlement and the debits that will be incurred from the additional capacity.

Transfers of power stations from ECNZ
16. Meremere and Marsden A and B: A transfer of Meremere and/or Marsden B thermal stations will not create credits. A transfer of Marsden A station as a going concern will create 60 MW credits.

17. Small hydro-stations: A transfer as a going concern of any or all of the Cobb, Coleridge, Highbank, Matahina, Mangahao, Kaitawa, Tuai and Piripaua hydro stations will not create credits.

18. Transfer of proposed TCC station: A transfer of the proposed Taranaki combined cycle station (or any transfer of any plant using part or all of ECNZ’s gas which has been associated with this proposed station) will not create credits.

19. Other ECNZ stations: A transfer as a going concern of—

• all or any part of the other existing ECNZ stations that will not be transferred to the new SOE; or

• any additional generating capacity provided after the date of this Memorandum (excluding the proposed Taranaki combined cycle station and any additional capacity using part or all of the gas associated with that proposal) —