3460 NEW ZEALAND GAZETTE, No. 139 29 OCTOBER 2004

Development of draft benchmark agreements June 2005
Publication of transmission pricing guidelines December 2004
Approval of initial grid upgrade plan September 2005¹⁰
Progress report on development of FTRs June 2005

97 The Government requests the Commission to publish a detailed workplan for achieving these timetables, including intermediate steps.

Distribution

Distribution pricing methodologies

98 The Electricity Commission should develop in consultation with interested parties principles or model approaches to distribution pricing and monitor their uptake. The Commission should recommend regulations if required to ensure compliance.

99 The Government expects distribution companies to keep any changes to rural line charges in line with urban line charges. The Commission should monitor developments in rural charges.

Distribution use of system agreements

100 The Electricity Commission should develop in consultation with interested parties model use of system agreements for use by distribution lines. If the Commission thinks it necessary and beneficial, it may also recommend regulations. Arrangements should take into account the interests of consumers, retailers and distributors and should be consistent with:

• arrangements for connecting distributed generation to distribution networks (described later)
• obligations imposed on retailers as a result of arrangements relating to contracts between retailers and consumers
• arrangements covering distribution pricing methodologies
• arrangements for the use of ripple control for load management, and
• any other regulations promulgated under the Electricity Act 1992.

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 businesses¹¹. 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:

¹⁰ Assuming that a public conference is not required.

¹¹ The Commerce Act, as amended in 2004, precludes the Commerce Commission from setting quality standards for Transpower.