✨ Commerce Commission Decision
25 JUNE 2008 NEW ZEALAND GAZETTE, No. 105 2739
Before making a declaration of control, the Commission is required under section 57I(1) of the Act to:
(a) publish its intention to make a declaration and invite interested persons to give their views on the matter; and
(b) give a reasonable opportunity to interested persons to give those views;
and
(c) have regard to those views.
Assessment and identification of Transpower’s threshold breaches
Transpower New Zealand Limited (Transpower) is the state-owned enterprise that operates New Zealand’s high-voltage transmission grid (the grid) which transmits electricity throughout the country. The grid comprises approximately 11,800kms of transmission lines and 170 substations and switchyards and links generators to distribution companies and major industrial users. The grid is, therefore, a significant infrastructure asset for the New Zealand economy. In 2007, Transpower had revenue of $585 million, an after-tax net profit of $126 million and total fixed assets worth approximately $2,376 million.
The Commission has assessed Transpower against the initial thresholds set from 6 June 2003, and has identified Transpower as having breached the price path threshold at the first assessment date (6 September 2003). In addition, the Commission has assessed Transpower against the reset thresholds, and has identified Transpower as breaching the price path threshold at the second (30 June 2004), third (30 June 2005), fourth (30 June 2006) and fifth (30 June 2007) assessment dates. In addition, Transpower breached its quality threshold at the fourth assessment date of 30 June 2006 and the fifth assessment date of 30 June 2007.
Intention to declare control of Transpower
On 22 December 2005, the Commission published in the New Zealand Gazette, No. 210, page 5382, its intention to make a declaration of control under Part 4A of the Commerce Act 1986, in respect of transmission services supplied by Transpower (Commerce Act (Intention to Declare Control: Transpower New Zealand Limited) Notice 2005). A paper explaining the reasons behind the Commission’s decision was released on 16 February 2006.
In March 2006, Transpower’s Board indicated a preference to resolve the post-breach inquiry with an administrative settlement. In response, the Commission indicated that it would be prepared to delay its decision on whether to declare control, only if Transpower offered to suspend its announced 19% price increase which was to become effective on 1 April 2006.
On 27 March 2006, Transpower formally agreed to suspend the 19% price increase, and established a rebating system that backdated increases to the date the increase was initiated (1 April 2006). This did not cancel the increase, but suspended it pending the outcome of the Commission’s investigation. The Commission accepted this interim measure and announced on 31 March 2006 its decision to postpone publishing its final determination pending settlement discussions.
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NZ Gazette 2008, No 103
✨ LLM interpretation of page content
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Decision not to declare control of Transpower New Zealand Limited
(continued from previous page)
🏭 Trade, Customs & IndustryCommerce Act, Decision, Transpower New Zealand Limited, Price Path Threshold, Quality Threshold