Fuel Industry Regulations 2021

2021/174

Coat of Arms of New Zealand

Fuel Industry Regulations 2021

Patsy Reddy, Governor-General

Order in Council

At Wellington this 5th day of July 2021

Present:
Her Excellency the Governor-General in Council

These regulations are made under sections 13, 20, 24, and 47 of the Fuel Industry Act 2020

(a)

on the advice and with the consent of the Executive Council; and

(b)

on the recommendation of the Minister of Energy and Resources made in accordance with sections 13(2), 20(2), 24(3), and 47(2) of that Act.

Regulations

1 Title

These regulations are the Fuel Industry Regulations 2021.

2 Commencement

(1)

These regulations, apart from Part 3, come into force on 11 August 2021.

(2)

Part 3 comes into force on 11 February 2022.

3 Interpretation

In these regulations, unless the context otherwise requires,—

ambient temperature basis, in relation to engine fuel, means the condition of the fuel at the temperature at the time of transfer to the purchaser

biofuel has the same meaning as in regulation 5(1) of the Engine Fuel Specifications Regulations 2011

diesel has the same meaning as in regulation 5(1) of the Engine Fuel Specifications Regulations 2011

heavy motor vehicle has the same meaning as in section 2(1) of the Land Transport Act 1998

petrol has the same meaning as in regulation 5(1) of the Engine Fuel Specifications Regulations 2011

premium grade petrol has the same meaning as in regulation 5(1) of the Engine Fuel Specifications Regulations 2011

price board means a board, sign, or notice at a retail fuel site that displays the prices of types of engine fuel for retail sale at the site

regular grade petrol has the same meaning as in regulation 5(1) of the Engine Fuel Specifications Regulations 2011

standard retail price, in relation to an engine fuel, means the price per litre that is available to all retail customers at a retail fuel site, before the application of any discounts available only to customers meeting specified eligibility criteria

truck stop means a retail fuel site—

(a)

that is designed to predominantly refuel heavy motor vehicles; and

(b)

at which the majority of fuel sold is invoiced to the purchaser for later payment, rather than paid for at the time the fuel is collected.

Part 1 Terminal gate pricing

4 Exclusion of certain fuels from terminal gate pricing requirements

For the purpose of subpart 1 of Part 2 of the Act, the following fuels are excluded from the definition of specified engine fuel:

(a)

any premium grade petrol with a research octane number of 98.0 or higher:

(b)

any diesel that contains more than 1% biofuel by volume:

(c)

any petrol that contains more than 1% biofuel by volume.

5 Form and publication of terminal gate prices

(1)

For the purpose of section 9(1) of the Act, a wholesale supplier must, when posting the terminal gate price of a specified engine fuel that it has the right to draw at a bulk storage facility as the owner or a co-owner of the fuel,—

(a)

express the price in cents per litre, on an ambient temperature basis,—

(i)

inclusive of taxes and all other costs to be paid by the buyer for the supply of the fuel at the bulk storage facility; and

(ii)

exclusive of any charges for services supplied in addition to the supply of the fuel; and

(b)

specify the time and date that the terminal gate price was posted and the bulk storage facility at which the terminal gate price applies.

(2)

The wholesale supplier must publicly post, on an Internet site that is maintained by, or on behalf of, the wholesale supplier,—

(a)

the information required by subclause (1); and

(b)

the contact details of the wholesale supplier, including a phone number, for making a request for supply of a specified engine fuel at the terminal gate price.

6 Form and timing of request for same-day supply

(1)

For the purpose of section 10 of the Act, a reseller may request same-day supply of a specified engine fuel from a wholesale supplier using the contact details of the wholesale supplier published under regulation 5(2)(b).

(2)

The request must be made between 9 am and 5 pm on any day of the week for supply during hours in which the bulk storage facility is operating.

(3)

The reseller must include the following information in the request:

(a)

the bulk storage facility from which the reseller requests supply:

(b)

the specified engine fuel for which the reseller requests supply:

(c)

the volume of specified engine fuel of which the reseller requests supply:

(d)

the proposed means of payment.

(4)

In addition, if requested by the wholesale supplier, the reseller must provide the following information to the wholesale supplier:

(a)

whether the driver of the vehicle that will be used to collect the engine fuel meets any relevant site access requirements for the bulk storage facility and legislative requirements to transport engine fuel:

(b)

whether the vehicle that will be used to collect the engine fuel complies with all relevant legislation.

7 Wholesale suppliers must prepare and publish pre-certification procedure

(1)

This regulation applies to a wholesale supplier that has the right to draw specified engine fuel at a bulk storage facility as the owner or a co-owner of the fuel.

(2)

The wholesale supplier must prepare a procedure for pre-certification that sets out the evidence required to enable the wholesale supplier to assess a reseller’s ability to—

(a)

pay for the supply of engine fuel; and

(b)

comply with health and safety requirements at 1 or more of the bulk storage facilities at which the wholesale supplier has a right to draw fuel as an owner or a co-owner of that fuel.

(3)

The wholesale supplier may, as part of its pre-certification procedure, request the following:

(a)

the names of the workers who transport fuel for the reseller, and evidence that they meet all legislative requirements to transport engine fuel:

(b)

information about the vehicle or vehicles that transport fuel for the reseller, and evidence that the vehicle or vehicles meet all legislative requirements to transport engine fuel:

(c)

any other information that may be necessary to determine the ability of the reseller to pay or to comply with health and safety requirements at the bulk storage facility or facilities at which the reseller is likely to make a request for supply for specified engine fuel.

(4)

The wholesale supplier must publish, on an Internet site that is maintained by, or on behalf of, the wholesale supplier,—

(a)

its procedure for pre-certification; and

(b)

information about any actions or things that would not meet health and safety requirements at a bulk storage facility that the wholesale supplier has the right to draw fuel from as the owner or a co-owner of the fuel, such as the materials that are prohibited from being brought onto the bulk storage facility.

8 Minimum purchase amount

For the purpose of section 12(1)(a) of the Act, the minimum purchase amount for each type of specified engine fuel is 5,000 litres.

9 Period for which fuel demand is forecast

For the purposes of section 12(1)(e)(ii) and 12(2) of the Act, the period is 28 days from the date of the request by the reseller.

10 Minimum supply amount

(1)

For the purpose of section 12(2) of the Act, the minimum supply amount in a time period for a wholesale supplier at each location listed in subclause (2) at which it has the right to draw from 1 or more bulk storage facilities as the owner or a co-owner of the fuel is—

(a)

30,000 litres per week for diesel; and

(b)

30,000 litres per week for regular grade petrol; and

(c)

30,000 litres per month for premium grade petrol.

(2)

The locations are—

(a)

Auckland (including Wiri):

(b)

Bluff:

(c)

Dunedin:

(d)

Christchurch (including Lyttleton and Woolston):

(e)

Marsden Point:

(f)

Mount Maunganui:

(g)

Napier:

(h)

Nelson:

(i)

New Plymouth:

(j)

Timaru:

(k)

Wellington.

(3)

For the purposes of subclause (1)(a) and (b), a week starts at 12.00 am on a Monday and ends at 11.59 pm on a Sunday.

(4)

For the purposes of subclause (1)(c), a month starts at 12.00 am on the first day of a calendar month and ends at 11.59 pm on the last day of the calendar month.

11 Notice of refusal to supply

A wholesale supplier that has relied on section 12(1)(e)(i) or (ii) of the Act to refuse supply must,—

(a)

on the request of the reseller, provide, within 5 working days of the request, written notice to the reseller of the grounds for refusal to supply; and

(b)

within 10 working days of the refusal to supply, provide to the Commerce Commission a written notice stating—

(i)

the identity of the reseller who made the request; and

(ii)

the date and time of the request; and

(iii)

the date of the refusal to supply; and

(iv)

the relevant specified engine fuel and bulk storage facility; and

(v)

the amount of specified engine fuel that was requested; and

(vi)

the grounds for refusal to supply; and

(vii)

any evidence to support a belief that the requested specified engine fuel was needed to meet the matters specified in section 12(1)(e)(i) or (ii) of the Act; and

(viii)

whether the wholesale supplier has provided the minimum supply amount for that fuel at that location in the relevant period as set out in regulation 10(1).

Part 2 Fixed wholesale contractual terms

12 Transparent pricing under fixed wholesale contracts

(1)

For the purpose of section 16(1) of the Act, a wholesale supplier must ensure that its fixed wholesale contracts—

(a)

specify the elements of the pricing method by which the price of any engine fuel supplied under those contracts is to be calculated, which may, without limitation, include any of the following:

(i)

a terminal gate price:

(ii)

an international reference port price assessment:

(iii)

taxes; and

(b)

explain how the elements of the pricing method interact with each other to produce a price for engine fuel.

(2)

If the pricing method of a fixed wholesale contract is a formula, the wholesale supplier must set out that formula in the wholesale contract.

13 Variations of pricing methods

For the purpose of section 16(2) of the Act, a pricing method in a fixed wholesale contract may be varied only if—

(a)

the party seeking to vary the pricing method gives the other party 1 month’s notice of the proposed variation; and

(b)

both parties to the contract agree in writing to the variation.

14 Distributor may terminate fixed wholesale contract after 5 years

For the purpose of section 17 of the Act, the maximum duration is 5 years.

15 Maximum percentage of annual requirement for engine fuel that may be subject to exclusivity is 80%

For the purpose of section 18 of the Act, the maximum percentage is 80%.

Part 3 Consumer information requirements

16 Where, and to which engine fuels, customer information requirements apply

For the purpose of section 22 of the Act, this Part applies—

(a)

at retail fuel sites that are neither truck stops nor sites that are designed to predominantly refuel marine vehicles; and

(b)

to the following engine fuels:

(i)

regular grade petrol:

(ii)

diesel:

(iii)

each grade of premium grade petrol.

17 Information that must be displayed

(1)

A person described in section 22 of the Act must, in respect of a retail fuel site to which this Part applies, display on a price board the standard retail price of each engine fuel listed in regulation 16(b) and sold at that site.

(2)

Subclause (1) applies at any time that the retail fuel site is open for business.

(3)

The information required to be displayed on a price board under subclause (1) must be visible to a person in a motor vehicle at, or passing by, the site, unless any other legislation that restricts the location or size of signage at that site would make compliance with this requirement unlawful.

Part 4 Mediation

Initiation of mediation

18 How mediation is initiated

(1)

A party to a dispute to which section 46 of the Act applies may, at any time, make a written request for mediation to the other party or parties to the dispute.

(2)

A party must reply to a mediation request within 10 working days after receiving the request.

(3)

The reply must—

(a)

be in writing; and

(b)

state whether the party agrees to participate in mediation; and

(c)

if the party does not agree to participate in mediation, state the reasons for declining the request.

(4)

The party that makes a written request for mediation may, at any time, withdraw that request

Mediation process

19 Appointment of mediator

(1)

Mediation under section 46 of the Act must be carried out by a mediator who is accredited as a mediator by—

(a)

the Arbitrators and Mediators Institute of New Zealand; or

(b)

the Resolution Institute.

(2)

The party who makes a written request for mediation and the party who replies to the mediation request may choose a mediator within 10 working days of the reply under regulation 18(2).

(3)

If the parties cannot agree on a mediator within the time period specified in subclause (2),—

(a)

the party who was served the mediation request under regulation 18(1) must nominate one of the following:

(i)

the Arbitrators and Mediators Institute of New Zealand; or

(ii)

the Resolution Institute; or

(iii)

the Māori Allied Dispute Resolution Organisation; and

(b)

the person nominated under paragraph (a) must, within 10 working days of being nominated, appoint a mediator after having regard to—

(i)

any information submitted by the parties as to their ability to pay; and

(ii)

what experience and training would be relevant to the dispute.

20 Procedure agreement

(1)

Once a mediator is agreed upon by the parties or appointed under regulation 19(3), the parties and the mediator must enter into an agreement relating to the procedure for the mediation.

(2)

The procedure agreement may include 1 or more of the following matters:

(a)

who has authority to represent and bind the parties:

(b)

who may attend the mediation, including any interested parties, legal counsel, and experts:

(c)

requirements as to confidentiality and privilege in respect of the mediator, the parties, and any other persons attending the mediation, including who may be informed about any confidential matter:

(d)

whether the mediator may engage an expert adviser for a stated or any other purpose:

(e)

whether any liability of the mediator is excluded:

(f)

withdrawals from mediation or other termination of mediation:

(g)

how the procedure agreement may be varied or terminated:

(h)

any other matter that the mediator and the parties agree is appropriate to best meet the needs and interests of the parties, having regard to the nature of the issues between the parties.

(3)

A procedure agreement is binding on the parties in accordance with its provisions.

21 When mediation must begin and be completed

(1)

Mediation must begin—

(a)

as soon as practicable after the parties have agreed upon a mediator and entered into a procedure agreement, but not more than 20 working days after the date on which a party has agreed to participate in mediation under regulation 18(3); or

(b)

if the parties cannot agree upon a mediator, as soon as practicable after a mediator has been appointed under regulation 19(3)(b) and the parties have entered into a procedure agreement, but not more than 30 working days after the date on which a party has agreed to participate in mediation under regulation 18(3).

(2)

The parties to the dispute must, within 60 working days after the date on which a party has agreed to participate in mediation under regulation 18(3),—

(a)

reach a settlement agreement; or

(b)

if a settlement agreement cannot be reached, cease mediation.

22 Settlement agreement

(1)

Any agreement reached between the parties in the course of a mediation must be recorded in a written settlement agreement.

(2)

The settlement agreement may cover the whole of the dispute, or part of it.

23 When parties unable to resolve dispute at mediation

For the purposes of section 46(4) of the Act, the parties are unable to resolve the dispute at mediation if—

(a)

a party has failed to reply to a mediation request within the time specified in regulation 18(2); or

(b)

a party has declined to participate in mediation under regulation 18(3); or

(c)

the parties have failed to begin a mediation within the time frames set in regulation 21(1)(a) and (b); or

(d)

a party has withdrawn from the mediation process; or

(e)

the parties have failed to reach a settlement agreement over the whole or part of the dispute within 60 working days after the date on which a party has agreed to participate in mediation under regulation 18(3).

24 Division of mediation costs

Each party to a dispute must—

(a)

pay their own costs and expenses in relation to the mediation; and

(b)

pay on an equally shared basis the fees and expenses of the mediation.

Michael Webster,
Clerk of the Executive Council.

Explanatory note

This note is not part of the regulations, but is intended to indicate their general effect.

These regulations, most of which come into force on 11 August 2021, are made under the Fuel Industry Act 2020 (the Act).

Part 1 relates to the terminal gate pricing regime, which requires wholesale suppliers—

  • to publicly post a price (a terminal gate price) for each specified engine fuel that it has the right to draw at a bulk storage facility; and

  • to supply resellers with the requested amount at its terminal gate price, unless the wholesale supplier has reasonable grounds to refuse to supply.

The Part includes regulations—

  • prescribing engine fuels that are excluded from the definition of specified engine fuel for the purpose of the terminal gate pricing regime. They are premium grade petrol with a research octane number of 98.0 or higher, diesel that contains more than 1% biofuel by volume, and petrol that contains more than 1% biofuel by volume:

  • prescribing requirements relating to posting terminal gate prices:

  • prescribing requirements relating to requests by resellers for same-day supply:

  • prescribing terms and conditions for the purposes of sections 11(3) and 12(1)(b) of the Act:

  • prescribing 5,000 litres to be the minimum purchase amount for each type of specified engine fuel for the purpose of section 12(1)(a) of the Act:

  • prescribing 28 days to be the period over which demand may be forecast for the purpose of section 12(1)(e)(ii) of the Act:

  • prescribing different minimum supply amounts and time periods for the purpose of section 12(2) of the Act:

  • prescribing requirements relating to notices of refusal to supply.

Part 2 relates to the requirements in the Act for fixed wholesale contractual terms, which apply to fixed wholesale contracts for any engine fuel.

The Part includes regulations—

  • relating to the specification of a pricing method in fixed wholesale contracts for the purpose of section 16(1) of the Act:

  • prescribing the circumstances in which a pricing method may be varied for the purpose of section 16(2) of the Act:

  • prescribing 5 years to be the maximum duration after which a distributor may terminate a fixed wholesale contract:

  • prescribing 80% to be the maximum percentage for the purpose of section 18 of the Act.

Part 3 prescribes requirements relating to the display of information at retail fuel sites about the price of engine fuels.

Part 4 relates to mediation. Section 46 of the Act provides that certain disputes between a wholesale supplier and a reseller that arise under subpart 1 (which relates to terminal gate pricing) or 2 (which relates to fixed wholesale contractual terms) of Part 2 of the Act must be referred to mediation if the dispute is unable to be resolved by agreement between the parties. Part 4 prescribes mediation procedures and provides a method of calculation for how mediation costs must be split between the parties.

Regulatory impact statement

The Ministry of Business, Innovation, and Employment produced a regulatory impact statement on 17 March 2021 to help inform the decisions taken by the Government relating to the contents of this instrument.

Issued under the authority of the Legislation Act 2012.

Date of notification in Gazette: 8 July 2021.

These regulations are administered by the Ministry of Business, Innovation, and Employment.