New Zealand Legislation: Bills

7 New sections 6 and 7to 7A substituted

• Sections 6 and 7 are repealed and the following sections substituted:

  “6 Meaning of business A and business B

  • “(1) Where section 20 uses the term business A, it refers to a business that would have to be have its ownership separated under sections 17 to 17F, and the term business B then refers to a business from which business A must be separated under those sections.

    “(2) Where the rest of this Act uses the term business A, it refers to a business that is required to be carried out in 1 company under sections 17D and section 17E, and the term business B then refers to a business that is required to be carried out in another company under those sections that section.

    “(3) Where this Act applies to business A, it applies equally to business B, and vice versa.

    “(4) References to trust A and trust B have corresponding meanings and application.

  “7 Meaning of involved

  • “(1) For the purposes of this Act, a person is involved—

    • “(a) in a line if the person conveys electricity by the line, or owns or operates, directly or indirectly, the line or any other assets used in connection with the line, either alone or together with its associates and either on its own or another’s behalf:

    • “(b) in any generation if the person generates electricity from the generator, or owns or operates, directly or indirectly, the generator or any other assets used in connection with the generator, either alone or together with its associates and either on its own or another’s behalf:

    • “(c) in selling electricity to a customer if the person sells to the customer either on its own or another’s behalf:

    • “(d) in any of the things referred to in paragraphs (a) to (c) if the person—

      • “(i) carries on a business that does any of those things, either alone or together with its associates and either on its own or another’s behalf; or

      • “(ii) exceeds the 10% threshold in section 8 in respect of a business that does any of those things; or

      • “(iii) has material influence over a business that does any of those things.

    “(2) Involvement has a corresponding meaning.

  “7A How to measure involvement

  • “(1) This section applies for the purposes of calculating the caps and thresholds referred to in the following sections:

    • “(a) section 17A (connected generation cap):

    • “(b) section 17C (connected customers selling cap):

    • “(c) section 17D (threshold for corporate separation and arm's-length rules).

    “(2) A person is involved in any connected generation only in proportion to the extent of the person’s interest in the connected generation.

    Examples

    LineCo has a 20% shareholding in a joint venture company that operates a connected 100 MW generating plant.

    LineCo is therefore involved in 20 MW of generation. Consequently, 20 MW of generation counts towards the cap on connected generation (50 MW in the case of thermal generation and unlimited in the case of renewable generation).

    LineCo can sell to connected customers all of the total annual nominal MWh capacity of the 20 MW. The selling cap does not change in proportion to the extent of LineCo’s interest in the business selling the electricity. For example, if the business selling the electricity is a joint venture company in which LineCo has only a 30% shareholding, then LineCo’s selling cap is the same as it would have been if LineCo had a 100% shareholding in the selling business.

    Fred is a director of LineCo. That directorship is his only interest in anything. Fred’s involvement in respect of both generation and selling is the same as LineCo’s.

    LineCo must corporately separate and operate the generation and retail businesses at arm's-length (because the 20 MW exceeds the 10 MW threshold). However, it does not need to have separate managers because the 20 MW does not exceed the 30 MW threshold for separate managers in the arm's-length rules.