26 April 2006

Media Statement by Acting Energy Minister Trevor Mallard

Discussion paper proposals aim to increase investment in generation

Acting Energy Minister Trevor Mallard today announced the release of a discussion paper looking at options to encourage electricity lines companies to make increased investment in generation.

Investment in Electricity Generation by Lines Companies, drafted by the Ministry of Economic Development, considers a number of changes to the Electricity Industry Reform Act 1998 (EIRA) – which enforced separation of ownership of electricity lines and supply businesses, with limited exceptions.

"This is not a full-scale review of the current legislation. But it's likely that there are a number of things we can do to get better coordination between electricity lines and generation operations, in this way increasing the efficiency of the overall electricity market, and the opportunity for lines businesses to invest in generation," Trevor Mallard said.

The options canvassed in the discussion paper include allowing lines companies to trade in electricity hedges, relaxing some arms-length separation rules for lines companies involved in generation, and clarifying parts of the Act to help reduce uncertainties about how the legislation is applied in practice.

"These options could potentially help create a better environment for much-needed investment in generation. However, it's also important that we balance any changes against the risk of lessening competition in the electricity market."

This discussion paper follows an earlier round of consultation in March last year, which sought industry views on the specific issue of allowing lines companies to trade in electricity hedges. During consultation on that paper, stakeholders raised a number of other options, and a decision was made to run a further round of consultation, including additional options.

Submissions on the discussion paper are welcomed by 25 May 2006.

The discussion paper can be found on the Ministry of Economic Development website at www.med.govt.nz/electricity/generation-investment/

ENDS

© Scoop Media