Discussion paper released on investment in electricity generation

The Ministry of Economic Development has released a discussion paper examining options to encourage electricity lines companies to make increased investment in generation. Options discussed in the paper include allowing lines companies to trade in electricity hedges, relaxing some arm's-length separation rules for lines companies involved in generation, and clarifying parts of the Electricity Industry Reform Act 1998 to help reduce uncertainties about how the legislation is applied in practice.

In March 2005, the Ministry of Economic Development (MED) released a discussion paper entitled "Facilitating Investment in Generation by Lines Companies: A Discussion Note" which drew a number of comments from market participants on possible options for minimising the effects of unnecessary barriers to lines companies' investment in generation.

The primary purpose of this discussion paper is to promote further discussion with the industry on the issues of lines and energy separation. The paper:

• sets out the current regulatory settings and the policy rationale underpinning those settings;
• outlines the perceived legislative barriers and options for addressing those;
• presents the MED's analysis and draws some conclusions.

A copy of the discussion paper can be downloaded from the Ministry of Economic Development website at www.med.govt.nz.

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