New Zealand Legislation: Acts

10 New headings and sections 17 to 17G substituted

• Section 17 and the heading above section 17 are repealed and the following sections and headings substituted:

  “Ownership separation

  “17 Ownership restrictions

  • “(1) The purpose of this section is to prevent a person being involved both in a line, and in generation or supply, in certain circumstances.

    “(2) It is a contravention of this Part if a person has an involvement that is a breach of either or both of the following:

    • “(a) the connected generation cap:

    • “(b) the connected customers selling cap.

  “Connected generation and connected customers selling caps

  “17A Connected generation cap rule

  • “(1) The connected generation cap is breached by a person if—

    • “(a) any of the person’s connected generation with a capacity greater than 5 MW in total (determined according to nameplate or nameplates) was commissioned before 20 May 2003; or

    • “(b) the person’s connected generation has a total capacity (determined according to nameplate or nameplates) that exceeds the greater of—

      • “(i) 50 MW; or

      • “(ii) 20% of the average of the maximum demand, in the immediately preceding 3 financial years, on the local network area.

    “(2) This section is subject to section 17B.

  “17B Small or encouraged connected generation

  • The following connected generation is not counted for the purpose of section 17A (but is counted for the purposes of section 17D, which relates to the threshold for corporate separation and arm’s-length rules):

    • “(a) generation commissioned on or after 8 August 2001 if the electricity generated from it is produced only from renewable energy sources:

    • “(b) generation commissioned on or after 8 August 2001 if the electricity generated from it is produced partly from renewable energy sources, as long as fossil fuels provide no more of the total fuel energy input for the generator or generators comprising the generation plant in any 12-month period than—

      • “(i) 20%; or

      • “(ii) any larger amount approved by the Minister (on the conditions, if any, he or she thinks fit) after first taking into account whether or not the generation uses new or advanced technology:

    • “(c) generation where the total capacity (determined according to nameplate or nameplates) of the generator is 5 MW or less if the generation was owned or operated, directly or indirectly, by the relevant person—

      • “(i) before 23 June 1998; and

      • “(ii) continuously between that date and the date when the person counts that generation for the purposes of section 17A:

    • “(d) generation that is disregarded under section 19.

  “17C Connected customers selling cap rule

  • “(1) The connected customers selling cap is breached by a person if the person is involved in selling more electricity to connected customers within a local network area, in total, in a financial year, than the equivalent of the person’s qualifying generation within the local network area.

    “(2) The person’s qualifying generation is the sum of the total annual nominal MWh capacity of the following generation (calculated as if the generation were operated at total capacity (determined according to nameplate or nameplates) for 24 hours for 365 days per annum):

    a + b + c

    where—

    a

    is the person’s connected generation that is counted for the purpose of the connected generation cap in section 17A; and

    b

    is any connected generation referred to in section 17B(a), (b), or (c) in which the person has an involvement; and

    c

    is any generation referred to in section 17B(a) or (b) that is connected to the national grid, if,—

    • (a) on application by or on behalf of the person, the Commission has determined, by notice in the Gazette, that the generation should be treated as being within the local network area of the lines in which the person is involved; and

    • (b) the total capacity (determined according to nameplate or nameplates) of all generation in which the person has an involvement does not exceed 100 MW.

    “(3) The Commission may not determine that any generation should be treated as being within more than 1 local network area.

  “Corporate separation and arm’s-length rules

  “17D Threshold for corporate separation and arm's-length rules

  • A business is a connected electricity business if the business, or a person involved in the business, has an involvement in more than 10 MW (determined according to nameplate or nameplates) of connected generation (including any connected generation referred to in section 17B and any generation that the Commission has determined under section 17C(2) should be treated as being within a local network area).

  “17E Corporate separation and arm’s-length rules imposed

  • “(1) Every person or persons who carry on a connected electricity business must carry on the business involving the relevant line in a different company from the company that carries on the business involving the qualifying generation or the selling to connected customers.

    “(2) Every person who is involved in either of the connected electricity businesses must comply, and ensure that the person’s electricity businesses comply, with the arm’s-length rules.

  “Use-of-systems agreements rules for businesses with 5 MW or more of connected generation

  “17F Use-of-systems agreements rules for businesses with 5 MW or more of connected generation

  • “(1) This section applies to an electricity business—

    • “(a) that either—

      • “(i) is required to comply with the arm's-length rules; or

      • “(ii) would be required to comply with the arm's-length rules if the threshold for those rules were set at 5 MW of connected generation (instead of 10 MW); and

    • “(b) that sells more than 5 GWh of electricity to connected customers in a financial year.

    “(2) Every director of that electricity business must ensure that—

    • “(a) the business has a comprehensive, written use-of-systems agreement that provides for the supply of line services (to the extent that those services are for the purpose of retailing) to the business that is involved in selling electricity (entered into, in the case of a business to which the corporate separation rule does not apply, as if the businesses were separate legal persons); and

    • “(b) the terms of that use-of-systems agreement do not discriminate in favour of one business and do not contain arrangements that include elements that the business usually omits, or omit elements that the business usually includes, in use-of-systems agreements with parties that are—

      • “(i) connected or related only by the transaction or dealing in question; and

      • “(ii) acting independently; and

      • “(iii) each acting in its own best interests; and

    • “(c) the business operates in accordance with that use-of-systems agreement; and

    • “(d) the business publishes that use-of-systems agreement on an Internet site maintained by or on behalf of the business so that it is available to the public at all reasonable times.

    “(3) The directors of that electricity business must publish on an Internet site maintained by or on behalf of the business, so that it is available to the public at all reasonable times, a certificate, signed by those directors, stating whether or not, in the preceding calender year,—

    • “(a) the terms in the use-of-systems agreement are a true and fair view of the terms on which line services were supplied in respect of the sales to which the agreement relates during that year; and

    • “(b) this section was otherwise fully complied with during that year.

    “(4) Every director commits an offence who—

    • “(a) refuses or knowingly fails to comply with this section; or

    • “(b) publishes a use-of-systems agreement or a certificate knowing that it is false or misleading in a material particular.

    “(5) Every director who commits an offence under subsection (4) is liable on summary conviction to a fine not exceeding $200,000.

  “Exemption for Transpower

  “17G Exemption for Transpower New Zealand Limited for purpose of deferring investment in national grid

  • “(1) In this section, unless the context otherwise requires, Transpower means Transpower New Zealand Limited and any subsidiary of or successor to that company.

    “(2) This section applies if, and to the extent to which, Transpower contracts with another person for that person to generate electricity for the purpose of deferring the need for investment by Transpower in the national grid.

    “(3) Transpower is not involved in that person’s electricity generation for the purposes of this Act.”