Company director applies for EIRA exemption

Company director applies for EIRA exemption

The Commerce Commission has received an application from Mr Samford Lee Maier (Junior) for a permanent exemption under section 81 of the Electricity Industry Reform Act 1998.

Mr Maier’s application relates to:
a. his ‘involvement’ as a director of with Mighty River Power, an electricity supply business; and
b. his directorship of an advisory company to the principal shareholder of Powerco, an electricity lines business, in the event that such directorship is an ‘involvement’ in Powerco under the EIR Act.

Potentially, any such ‘involvement’ in both a lines company and a supply business would contravene section 17 of the EIR Act.

The purpose of the EIR Act is to reform the electricity industry to better ensure that costs and prices in the electricity industry are subject to sustained downward pressure and the benefits of efficient electricity pricing flow through to all classes of consumers, by effectively separating electricity distribution from generation and retail and promoting effective competition in electricity generation and retail markets.

The Commission may grant an exemption in respect of a business or involvement or interest, only where doing so:
a. would not result in certain involvements in electricity lines businesses and electricity supply businesses which may create incentives or opportunities:
i. to inhibit competition in the electricity industry; or
ii. to cross-subsidise generation activities from electricity lines businesses; and
b. would not result in relationships between electricity lines businesses and electricity supply businesses which are not at arms length.

For further information on the Commission’s role within the EIR Act, visit the Commission’s website, http://www.comcom.govt.nz/acts/eiract/.

A public version of the application is available on request from the Commerce Commission. Please contact Catherine Best, (04) 924 3654.

Background
Mr Maier was appointed a director of Mighty River Power, with effect from 19 April 2002. Mighty River Power is an electricity generator and retailer. Its core electricity generation assets include a chain of nine hydro stations on the Waikato River, which provides an average of approximately 13% of New Zealand’s electricity needs. Mighty River Power falls within the definition of an electricity supply businesses under the EIR Act.

Mr Maier has been a director of New Plymouth Equity Advisers Limited (NPEAL) since
1 December 2000. NPEAL is a wholly-owned subsidiary of, and advisory company to, the New Plymouth District Council (NPDC). NPDC holds a 47.7% shareholding in electricity lines business Powerco. Powerco falls within the definition of an electricity lines business under the EIR Act.

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