Hon David Parker
Minister of Energy
Hon Lianne Dalziel
Minister of Commerce

7 August 2006
Media statement

Government improves the investment regime for transmission and distribution

Energy Minister David Parker and Commerce Minister Lianne Dalziel today announced two government policy statements to encourage investment in infrastructure.

"The first statement amends the Government Policy Statement on Electricity to emphasise the strategic importance the government attaches to timely investment in transmission infrastructure," David Parker said.

It follows record electricity demand on the grid, a significant transmission outage in Auckland and delays in decisions on Transpower’s proposed new line into Auckland.

The amendments are designed to:

- emphasise the importance of adequate transmission, including its ability to cope with extreme events

- better provide for diversity of supply routes, especially for major cities

- ensure that the grid facilitates competition in generation and retail, by minimising transmission constraints

- ensure that transmission planning supports the government’s goal of facilitating renewable energy, and reducing greenhouse gases

- emphasise that, to the extent possible, grid upgrade plans should be comprehensive and considered in the context of long term plans

- allow Transpower to recover the reasonable costs of acquiring land corridors in advance of approval of the detail of upgrade plans.

The proposed amendments to the Government Policy Statement on Electricity (GPS) are made under the Electricity Act. The Electricity Commission is required to give effect to the statement. The Act requires the Minister to consult with the Electricity Commission, which will be done over the next few weeks. After considering any comments by the Commission, a statement will be finalised and gazetted.

The second statement is a statement of government’s economic policy by the Minister of Commerce under s 26 of the Commerce Act. The s26 statement focuses on the importance of regulated businesses, like Transpower and electricity lines businesses, investing in new lines and other infrastructure.

“It is important that consumers are protected from excessive pricing by businesses that face little or no competition, but it is also vital that businesses have the confidence and the incentives to make new investments”, Lianne Dalziel said.

The s26 statement to the Commerce Commission is made under the Commerce Act and will be gazetted shortly. The Commission is required to have regard to the statement. The statement focuses on businesses that are subject to price control under Parts 4, 4A and sections 70-74 of Part 5 of the Commerce Act.

“I have also announced a review of Parts 4 and 5 of the Commerce Act. I expect to make announcements shortly on the scope of the review, but clearly it will include considering whether any amendments to the Act are desirable to reinforce the Government’s policy objectives on investment in infrastructure”, Lianne Dalziel said.

As the Minister indicated in June, the Review will not include a consideration of Part 4A of the Commerce Act, which relates specifically to the control of electricity lines businesses, and which have been delegated to the Minister of Energy.

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The proposed amendments to the Government Policy Statement on electricity and the Section 26 statement are available at:

www.med.govt.nz

ENDS

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