21 JANUARY NEW ZEALAND GAZETTE 121

Departmental Notices

Commerce

Commerce Act 1986

Statement to the Commerce Commission of the Economic Policy of the Government: Telecommunications Numbering

To the Commerce Commission

Pursuant to section 26 of the Commerce Act 1986, I hereby transmit to the Commerce Commission a statement of the economic policy of the Government in relation to markets for the provision of telecommunications numbering and number portability.

Overall Objectives for Telecommunications and Telecommunications Numbering

The objective of New Zealand’s regulatory environment for telecommunications is to promote economic efficiency, including efficient pricing and service provision. Competition is seen as the best means of achieving this objective. The Government’s overall policy objectives for telecommunications numbering are to ensure the efficient administration of telecommunications numbering resources and the efficient provision of telecommunications number portability.

Specific Outcomes

To achieve the overall objectives, the Government considers that the following outcomes are necessary:

• Telecommunications Numbering Administration
  Telecommunications numbering resources must be independently administered and allocated. In particular the allocation, use and ongoing planning of telecommunications numbering must be efficient, must be based on relevant principles, and must involve robust processes including binding dispute resolution to resolve any disputes that arise.

• Telecommunications Number Portability
  Telecommunications number portability must be available between telecommunications service providers’ networks where required, because number portability reduces customer switching costs and puts extra pressure on prices where relevant alternative services are available. The form of number portability provision and the associated terms and conditions must be based on principles of economic efficiency.

Preferred Policy

The Government has concluded that the objectives and outcomes for telecommunications numbering will be best achieved by means of a voluntary industry-based numbering arrangement covering number administration and number portability, in preference to the status quo or a regulated numbering co-ordination mechanism.

HON. MAX BRADFORD, Minister for Enterprise and Commerce.

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Statement to the Commerce Commission of the Economic Policy of the Government: Market Power in the Electricity Sector

To the Commerce Commission

Pursuant to section 26 of the Commerce Act 1986, I hereby transmit to the Commerce Commission a statement of the economic policy of the Government in relation to market power in the electricity sector.

Electricity Objectives

The Government’s overall energy policy objective is to ensure the continuing availability of energy services at the lowest cost to the economy as a whole consistent with sustainable development.

Electricity is a key input into the production and use of goods and services in both industry and households. The achievement of the Government’s overall energy policy objective is therefore important to both New Zealand’s international competitiveness and the quality and standard of living of consumers.

Specific goals for achieving this objective are that:

• Electricity prices should signal the full cost of providing each extra unit of electricity; and
• Electricity costs and prices should be subject to strong and sustained downward pressure.

The Government considers that the above objective and goals are best achieved by:

• Strong competition in all sectors of the electricity industry where competition is possible (electricity generation and retailing); and
• Robust regulation which replicates competitive pressure in the natural monopoly sectors of the electricity industry (electricity distribution and transmission).

Government Reforms

To achieve these objectives the Government has recently taken a series of measures including:

• Splitting ECNZ into 3 competing State-owned enterprises;
• Requiring the ownership separation of electricity line and retail businesses;
• Requiring the industry to develop low cost systems to enable consumers to switch suppliers; and
• Enhancing the credibility of the threat of price control on electricity lines businesses.

The Government has also recently announced its intention to sell Contact Energy Limited. Contact Energy owns, inter alia, a portfolio of hydro and thermal generating stations and it has purchased the customer base of a number of electricity supply businesses.

Government Views on Market Power in Electricity Markets

The Government has concluded that the following factors are important in considering market power issues in the electricity sector:

Competition in the Physical Spot Market

The price of electricity in the spot market is set by competition for dispatch between generating stations in the wholesale electricity market.