- IEA, Energy Policies of IEA Countries: New Zealand 1997 Review, Paris, OECD, 1997 (‘IEA Review’) p 29.
- The present electricity fuel mix is: hydro 77 per cent, geothermal 6 per cent, gas 13 per cent, coal 2 per cent, others 2 per cent, for an annual generation of 35.2TWh. The uses to which gas is put are: petrochemicals 49 per cent, electricity generation 29 per cent, reticulation 22 per cent (1995 figures), IEA Review, pp 49, 60.
- White Paper on the Development of the Maui Gas Field, 1973, AJHR D5A.
- A Kellow, Transforming Power: the Politics of Electricity Planning, Cambridge, Cambridge Univ Press, 1996, p 65; J G Culy, E G Read and B D Wright, The Evolution of New Zealand's Electricity Supply Structure, Wellington, NZIER Working Paper 94/33, 1995; reprinted in R J Gilbert and E P Kahn (eds), International Comparisons of Electricity Regulation, Cambridge, Cambridge Univ Press, 1996, pp. 312–365; and Culy, Electricity Restructuring: Towards a Competitive Wholesale Market, Wellington, NZ Institute of Economic Research Discussion Paper 37, 1992.
- Kellow, ibid, p 77–79.
- Annan v National Water & Soil Conservation Authority (No 2) (1982) 8 NZTPA 369 (PT), following Gilmore v NWSCA (1982) 8 NZTPA 298 (HC). The forecasts were also challenged in CREEDNZ Inc v Governor-General [1981] 1 NZLR 172 (CA) as to the associated Aramoana aluminium smelter proposal.
- F M Brookfield, ‘High Court, High Dam, High Policy: the Clutha River and the Constitution’ [1983] Recent Law 62.
- Kellow, supra note 4, p 75. The Party's chief condition for supporting the government was funds for a study of how to keep open a freezing works in its leader's electorate.
- Kellow, ibid, p 195; and Culy, 1992, supra note 4, pp 11, 12 and 28.
- Kellow, ibid, p 82.
- Ibid, p 3.
- Duncan, I, and A Bollard, Corporatisation and Privatisation: Lessons from New Zealand (OUP, Auckland, 1992), p 5. Generally see Boston et al (eds) Reshaping the State: NZ's Bureaucratic Revolution (OUP, Auckland, 1991); Kelsey, Rolling Back the State: Privatisation of Power in Aotearoa/New Zealand (Bridget Williams Books, Wellington, 1993); Sharp, A, (ed) A Leap in the Dark: The Changing Role of the State in New Zealand since 1984 (OUP, Auckland, 1994).
- Duncan and Bollard, ibid, p 10.
- State-Owned Enterprises Act 1986 ss 5(3), 14–16.
- ss 6 and 17
- s 7.
- This power is not often used.
- ss 13(3) and 17.
- Electricity Amendment Act 1987 s 3.
- Duncan and Bollard, supra note 12, p 36.
- Energy Policy Framework, 30 June 1992, quoted in Wholesale Electricity Market Development Group, New Zealand's Wholesale Electricity Market: Draft Proposals for Evaluation, March 1994, p 17 and App B; reiterated in Memorandum of Understanding Entered into on 8 June 1995 by the Government of NZ and ECNZ (unpublished, ‘MOU of 8 June 1995’); also reiterated in Statement to the Commerce Commission of the Economic Policy of the Government: Development of a Competitive Wholesale Electricity Market, 12 December 1995.
- MOU of 8 June 1995.
- Statement to the Commerce Commission, 12 December 1995, supra note 21.
- Structure, Regulation and Ownership of the Electricity Industry, Report of the Electricity Task Force, September 1989; and Duncan and Bollard, supra note 12, p 84.
- Electricity Distribution Reform Unit (Elworthy), Report on the Future Ownership of Electricity Supply Authorities, March 1991; Terry, S, Making a Market for Energy Efficiency. Wellington, NZ Planning Council, 1991; Wholesale Electricity Market Study, ‘Towards a Competitive Wholesale Electricity Market’, Report to NZ Govt, 1992 (‘WEMS’); ‘Promoting the Market for Energy Efficiency: Report of the Officials Committee on Energy Policy’, May 1993; Wholesale Electricity Market Development Group, New Zealand's Wholesale Electricity Market: Draft Proposals for Evaluation, March 1994 (‘WEMDG Draft’); Wholesale Electricity Market Development Group, New Zealand Wholesale Electricity Market: Final Report, August 1994 (‘WEMDG’). Culy 1992 supra note 4 p 30 lists 13 different studies 1989–1991.
- In a challenge of a share allocation plan, Cooke P said of share allocation ‘Thus, rather than attempting to formulate guidelines, Parliament gave up that task, opting instead for a system of local initiative and input, subject to ultimate Ministerial approval.’ Thames Valley Electric Power Bd v NZFP Pulp & Paper Ltd [1994] 2 NZLR641. In allowing communities to decide on ownership for themselves, the Act shows that the underlying policy concern was that the organisational structures were wrong, not that the ownership was wrong. Even public ownership of a sort was permissible, so long as it was at arm's length, in a form of corporatisation.
- Sections 40–41. Section 42 states that ss 36–41 cease to apply to an energy company where a controlling interest in it is held by a person other than a local authority or an ‘approved person’, usually a community energy trust. The Act therefore has little or no application to a privately-controlled energy company.
- Electricity Act 1992 ss 68–73. The licences previously issued under s 20 of the Electricity Act 1968 in order to supply electricity to the public were continued under s 69, but s 73 caused ss 68–73 to expire on 31 March 1994. In the Gas Act 1992 there were no such transitional provisions, and the franchise and obligation to supply disappeared with the repeal of the Gas Act 1982. There is a procedure (s 4 Electricity Act 1992, s 5 Gas Act 1992) for a company supplying line service functions and wishing to avail itself of the powers in either Act (eg to lay lines under roads) to be declared an electricity or gas operator. The Minister's discretion to refuse is limited.
- Electricity Act 1992 ss 63–67: price restraint could be imposed by regulation on supply to domestic premises, but s 67 caused ss 63–67 to expire on 31 March 1997. No regulations were made. For gas, there was price control under s 53 of the Commerce Act 1986 until 31 March 1993. In fact, gas was the last commodity so controlled.
- However, electricity line function services provided to a customer under the old regime cannot be disconnected without cause before 2013: Electricity Act s 62. Line function services do not include the sale of the electricity itself.
- Electricity (Information Disclosure) Regulations 1994 (Reg 1994/143), Reg 22, made under Electricity Act s 170; Gas (Information Disclosure) Regulations 1997 (Reg 1997/127), Reg 25, made under Gas Act s 55.
- David Russell, Chief Executive of Consumer Institute, NZ Herald 22 April 1997. Also Consumer Institute, ‘Power to the People’ Consumer 357, March 1997.
- NZ Herald 17 May 97.
- ECNZ News, Issue 6, July 1997.
- Ministry of Consumer Affairs, ‘An Analysis of Contracts, Metering and Disputes Procedures for Domestic Electricity Customers’, January 1997. The company responses should interest contract lawyers; they earnestly explained that contracts had very little to do with ongoing customer relationships. NZ Herald, 17 January 1997.
- IEA Review, p 65. But see Power NZ Ltd v Mercury Energy Ltd [1996] 1 NZLR 686, infra note 102.
- M E Bergara and P T Spiller, ‘The Introduction of Direct Access in New Zealand's Electricity Market’ (1997) 6:2 Utilities Policy, 97–105, p 104.
- C Pleatsikas and B Turner, ‘Electric Competition in New Zealand: Putting Last Things First’ Public Utilities Fortnightly, 15 June 1996, p 26.
- NZ Herald, 22 December 1997.
- In the United States in the 1970s utility companies launching grand plans for new generation capacity caused much heartache for their customers: R F Hirsch, Technology and Transformation in the American Electric Utility Industry (Cambridge University Press, 1989) pp 126–7.
- IEA Review, p 73. There was minor tightening of the requirements by the Electricity (Information Disclosure) Regulations 1994, Amendment No 1, (Reg 1996/ 48). The gas industry attacks electricity companies for imposing high levels of fixed charges, to the detriment of customer choice, and to entrench one form of end use of energy. R J Bentley, ‘Growth Prospects for the Natural Gas Industry’ in 1996 NZ Petroleum Conference Proceedings (Wellington, Ministry of Commerce, 1996) vol 2 p 60 at 61.
- Press Statements, Max Bradford, 18 August 1997, 30 August 1997.
- Press Statement, Max Bradford, 2 October 97.
- The SOE Amendment Act 1992 s 2 permitted further state trading enterprises to be brought under the SOE Act by an Order in Council that added to the Act's Schedules.
- Trans Power NZ Ltd, Statement of Corporate Intent, year ending 30 June 1995.
- IEA Review, p 64.
- When National Party Ministers took this up in early 1997, it caused one of the first tests of the solidarity of the new coalition government between National and NZ First. NZ First had campaigned against privatisation of state owned assets, and it got the Prime Minister to pull the proposal off the cabinet agenda, but not before allegations and denials that a secret addendum to the coalition agreement of 17 December 1996 existed and dealt with the matter.
- IEA Review, p 74.
- Trans Power New Zealand Ltd, Statement of Corporate Intent, 4 September 1997.
- Considered in Structure, Regulation and Ownership of the Electricity Industry, 1989, supra note 25.
- ECNZ, Report to the Minister for State-Owned Enterprises on Generation Break-Up in the New Zealand Electricity Industry, 1990.
- WEMS, 1992; Culy, 1995, supra note 4, p 65.
- WEMDG Draft p 22.
- WEMDG Draft.
- WEMDG, p 117.
- Ibid p 121.
- Some of the difficulties got brief mention in WEMDG Draft ‘Companion Vol X, Leasing Proposal’. Leasing would have been a misfit in the unregulated environment where companies are expected to fight their competitors every step of the way in the Commerce Commission and the courts. Policymakers spoke approvingly of just such a multi-front war in telecommunications. The leases would quickly have become legal battlegrounds. The 15-year term was wrong for long-term investments like hydro or geothermal generation plant, and would have inhibited capital expenditure by either owner or operator. ECNZ would probably not have embarked upon plant upgrades eg $200 million at Manapouri had it been under lease. The parties would also have been at odds on water rights renewals and geothermal field depletion rates.
- NZ Herald, 22 March 1995.
- NZ Herald, 6 September 1995.
- MOU of 8 June 1995.
- Not that small; their total capacity is 324 MW, possibly worth $500 m to $1 billion.
- The possibility of a split was formally raised in the Budget of June 1997. By August it was described as ‘likely’: Press Release, Hon M Bradford, Minister of Energy, 30 August 1997.
- NZ First, the party more opposed to privatisation, agreed that the ECNZ's efforts to sell the eight small hydro stations should proceed.
- Barriers had been encountered: Duncan and Bollard supra note 12, p 95.
- On 8 June 95 it issued Government Policy Statements entitled ‘Electricity Pricing’, ‘Management of ‘Dry-Year’ Risk’, ‘Pool Development and Governance’, and ‘Regulation of the Electricity Lines Business’.
- B J Ring and E G Read, ‘A Dispatch Based Pricing Model for the New Zealand Electricity Market’, in M Einhorn and R Siddiqi (eds), Electricity Transmission Pricing and Technology, Boston, Kluwer, 1996, chap 8, p 183.
- ECNZ's obligation to offer a high level of firm supply on long-term contracts is fulfilled through long-term hedge contracts. Contact Energy offers similar contracts.
- MSC Report, Newsletter of the Market Surveillance Ctee of the NZ Electricity Market, 2, 29 January 1997; Issue 5,6 June 1997.
- Emco Media Release, 4 July 1997.
- Bentley, supra note 41; Gillespie, ‘Gas Industry Deregulation: A New Zealand and International Comparison’, unpublished paper at 1996 NZ Petroleum Conference, Wellington. See supra note 1 for the figures.
- IEA Review pp 48 and 50 summarises the main contracts. A Commerce Act difficulty with long-term contracts, which are essential to develop new gas fields, is that if they prevent the seller from bidding for other customers, thereby substantially lessening competition, they may be unenforceable under section 27. The industry seeks an amendment Bentley, supra note 41.
- IEA Review p 56.
- D Kidd, ‘Opening of the 1996 NZ Petroleum Conference’, 1996 NZ Petroleum Conference Proceedings (Wellington, Ministry of Commerce, 1996) Vol 2 p 1 at 4; Gillespie, supra note 70; and Bentley, supra note 41. NGC operates the Maui pipeline for the Maui partners.
- Logan, G, ‘An Exploration Perspective of Gas Markets’ 1996 NZ Petroleum Conference Proceedings (Wellington, Ministry of Commerce, 1996) Vol 1 p 279; IEA Review p 52.
- Ibid, p 280.
- The Crown is bound, s 4; local authorities are bound, s 84. An exception in s 4(2) for national security has been narrowly construed: Ngataringa Bay 2000 Ine v Minister of Defence (1992) 2 NZRMA 308 (HC).
- The previous provision, s 23 Water and Soil Conservation Act 1967, provided a separate procedure for Crown water right applications. It was actually repealed by the Water and Soil Conservation Amendment Act 1988 s 20, in anticipation of the RMA regime.
- NZ Cooperative Dairy Co v Commerce Commission (1991) 3 NZBLC 99–219 (HC): a s 26 statement is evidentiary in character, and it is up to the Commission to determine the weight to be given to it.
- ss 54–57; and see Ministry of Energy (Abolition) Act 1989 s 13.
- Culy et al supra note 4, p 34.
- Culy et al, ibid.
- Culy et al, ibid p 43. Their measures differ from ECNZ's in the choice of deflator used.
- Culy et al, ibid p. 38–39.
- Culy, supra note 4, Fig. 3.2; M Lear, ‘Energy Supply and Demand Trends in New Zealand’ in 1996 NZ Petroleum Conference Proceedings (Wellington, Ministry of Commerce, 1996) Vol 1 p 272 at 277. Certainly the NZED's forecasting of demand went awry in the 1970s and 1980s, but then so did that of hundreds of investor-owned utilities in the United States: Hirsch, supra note 40.
- Supra note 23.
- IEA Review p 103. The Shared Goals were adopted in 1993. IEA membership is similar to OECD membership.
- C Flavin and N Lenssen, ‘Reshaping the Power Industry’ in World Resources Institute, State of the World, Washington, WRI, 1994, p 61.
- State-Owned Enterprises Act 1986, s 9. The main case was NZ Maori Council v A-G [1987] 1 NZLR641 (CA). One subsequent case dealt specifically with hydro assets: Te Rununganui o te Ika Whenua Inc v Attorney General [1994] 2 NZLR 20 (CA).
- [1994] 2 NZLR 385 (PC). See Chen, ‘Judicial Review of State-Owned Enterprises at the Crossroads’ (1994)24 VUWLR 51.
- Previously it had been described as subjective and secondary to the principal purpose of making a profit, Wellington Regional Council v Post Office Bank Ltd (HC, Wgtn, CP 720/87, 33 December 1987, Greig J).
- NZ Maori Council v AllGen [1994] 1 NZLR 513 (PC). But the issue was the options open to the SOE, not whether it was obliged to pursue one of them. See Taggart, ‘Corporatisation, Contracting and the Courts’ [1994] Public Law 351–58 and J Farrar and B McCabe, ‘Corporatisation, Corporate Governance and the Deregulation of the Public Sector Economy’ (1995) 6 Public Law Rev 24.
- M Taggart, ‘Corporatisation, Privatisation and Public Law’ (1991) 2 Pub LR 77.
- Culy et al, supra note 4, pp 34–36; Parliamentary Commissioner for the Environment, Sustainable Energy Management in New Zealand: Improvements Required in Government Policy, 1992, p 23.
- MOU of 8 June 1995 p 11: ′2.1 Key tasks for implementation:… In parallel with the above, pool rules will need to be developed by the industry within the Government's public policy objectives.’ Also Appendix 8.
- In this I treat the Crown as the owner; the shareholding ministers of each corporation hold as agents of the Crown and not in their own right. It will be a strange spectacle if one minister should conceive his or her agency to extend to encouraging one SOE to compete by inflicting major damage on the other SOE.
- Sharp, A (ed), A Leap in the Dark: The Changing Role of the State in New Zealand Since 1984, Auckland, Univ Press, 1994, in Introduction by Sharp, p 4.
- Bollard, A E ‘The Role of Antitrust in a Small Open Economy: The Commerce Act of New Zealand’ in Round, D K (ed), The Australian Trade Practices Act 1974: Proscriptions and Prescriptions for a More Competitive Economy, 1995, p 213.
- Bollard, A, and M Pickford, ‘New Zealand's ‘Light-Handed’ Approach to Utility Regulation’ (1995) 2 Agenda 411.
- [1995] 1 NZLR 385 (PC)
- Clear Communications Ltd v Telecom Corp NZ Ltd (1993) 5 TCLR 413 at 436.
- [1995] 1 NZLR 385 at 403; modified as required for sense as shown by Van Roy, ‘The Privy Council and Telecom v Clear. Narrowing the Application of s 36 of the Commerce Act 1986’ [1995] NZLJ 54; and Port Nelson Ltd v Commerce Comsn [1996] 3 NZLR 554 at 577 (CA).
- [1996] 1 NZLR 686. Another, Electricity Corp v Geotherm Energy Ltd [1992] 2 NZLR 641 (CA) concerned rivalry in the acquisition of geothermal resources.
- Ibid p 708. The judgment falls silent on distribution after p 710, but endorses the Commission's decision that distribution is prima facie a natural monopoly, but that the ability of power companies to market power outside the old franchise areas would not be altered by the acquisition: p 700 line 45, p 702 line 55.
- Ibid, pp 715 and 716. The figures in GWh per annum for mid-1995 are set out on p 691: Domestic users, supplied by power companies on own lines: 10,000 Commercial and industrial users: supplied direct by ECNZ: 7,500 supplied by power cos on own lines: 10,880supplied by wheeling retailers: 1,620 Total consumption: 30,000
- (1997) 7TCLR 463 (HC).
- Bollard, 1995 in Round, supra note 97.
- Patterson, ‘The Rise and Fall of a Dominant Position in New Zealand Competition Law: From Economic Concept to Latin Derivation’ (1993) 15 NZULR 265; Bollard and Pickford, supra note 98.
- Van Roy, supra note 101; Pengilley, ‘The Privy Council Speaks on Essential Facilities Access in New Zealand: What are the Australasian Lessons?’ (1995) 3 Competition and Consumer Law J 26. Port Nelson Ltd v Commerce Comsn [1996] 3 NZLR 554 at least indicates an awareness in the Court of Appeal that dominance ought not to be any harder to prove.
- Pengilley, ibid at 42. Legal costs were said to be $8m each.
- Bollard, 1995 in Round, supra note 97.
- Van Roy, supra note 101 p 60.
- Bollard, 1995 in Round, supra note 97.
- Bollard, 1995 in Round, supra note 97.
- (1996) 17NZULR 160.
- Eg s 3A, requiring efficiency to be taken into account in determining benefits to the public; and s 3(8) and 3(9) as to potential competitors.
- Statement to Commerce Commission, 12 December 1995, supra note 21; Press Release, Max Bradford, 24 September 1997.
- Ministry of Commerce and the Treasury, ‘Regulation of Access to VerticallyIntegrated Natural Monopolies; A Discussion Paper’ August 1995. Also see Bollard and Pickford, supra note 98.
- IEA Review p 73, supra note 42.
- Earlier the Minister had inclined to tighten information disclosure but then to make a full corporate separation as an alternative. NZ Herald, 17 May 1997, 30 May 1997, Press Release, M Bradford, 30 August 1997.
- NZ Herald 16 March 1996, 2 October 1996.
- NZ Herald 27 June 1996.
- Press Release, M Bradford, 30 August 1997.
- M Taggart, ‘Corporatisation, Privatisation and Public Law’ (1991) 2 Public Law Rev 77. Allars, ‘Private Law but Public Power: Removing Administrative Law Review from Government Business Enterprises’ (1995) 6 Public Law Rev 44 argues that the administrative law values of openness, rationality, fairness and participation should apply to the use of public power even when it is used in the private sphere, in a corporatised SOE or privatised company. Also see M Taggart (ed), The Province of Administrative Law, Oxford, Hart, 1996.
- R v Chief Rabbi ex p Wachmann [1993] 2 All ER 249 (QB); R v Disciplinary Committee of the Jockey Club ex p Aga Khan [1993] 2 All ER 853 (CA), modifying principles in R v Panel on Take-overs and Mergers, ex p. Datafin plc [1987] 1 QB 815 (CA). See J Black, ‘Constitutionalising SelfRegulation’ (1996) 59 Mod L Rev 24. New Zealand law may be more liberal; see Waitakere City Council v Waitemata Electricity Shareholders Soc [1996] 2 NZLR 735 at 747.
- The government sought to play a muted role in the establishment of the NZEM, professing to stay outside WEMDG and the NZEM itself. But it set WEMDG in motion, having vetoed the industry's previous effort WEMS, it sent ‘observers’, it required ECNZ to carry on with it through its amended SCIs and the MOU of 8 June 1995, it sought development of the market and laid down its requirements in Government Policy Statements of 8 June 1995 (supra note 66); it expressed a policy for the development of a robust market mechanism in its Commerce Commission Statement of 12 December 1995, and relied upon the creation of the market under the heading of ‘Legislative and Regulatory Reform in the Energy Sector’ in its report Climate Change: The New Zealand Response II, New Zealand's Second National Communication under the Framework Convention on Climate Change, Ministry for the Environment, June 1997, p 50.
- M Taggart, ‘Public Utilities and Public Law’ in P Joseph (ed) Essays on the Constitution, (Brookers Wellington, 1995), p 214; P P Craig, ‘Constitutions, Property and Regulation’ [1991] Public Law 538.
- Allnutt v Inglis (1810) 12 East 527, 104 ER 206.
- Minister of Justice for Canada v City of Levis [1919] AC 505 (PC). Generally see Taggart, 1995, supra note 126.
- Eg in Australia Bennett & Fisher v Electricity Trust of South Australia (1961–62) 106 CLR 492 (HC) rejected law of public utilities.
- Mercury Energy Ltd v Electricity Corp NZ Ltd [1994] 2 NZLR 385 (PC); sub nom. Auckland Electric Power Bd v Electricity Corp NZ Ltd [1994] 1 NZLR 551 (CA). ECNZ of course no longer has a monopoly.
- Airways Corp N Z Ltd v Geyserland Airways Ltd [1996] 1 NZLR 116.
- [1997] 1 NZLR 492 (CA).
- A Ogus, Regulation: Legal Form and Economic Theory, Oxford, Univ Press, 1994; Black, supra note 124.
- I Ayres and J Braithwaite, Responsive Regulation: Transcending the Deregulation Debate, New York, Oxford Univ Press, 1992.
- Sec 5(2) of the RMA, at the heart of the Act, requires that resource management avoids, remedies, or mitigates any adverse effects of activities on the environment, so a competitor's proposal to duplicate a transmission line or like facility for competition purposes alone may not secure approval.
Journal of Energy & Natural Resources Law
Volume 16, 1998 - Issue 4