Government improves the investment regime for transmission and distribution

On 7 August 2006, the Ministers of Energy and Commerce made a joint announcement about a Government policy initiative to encourage investment in infrastructure in the energy sector.

Energy Minister David Parker announced that the Government Policy Statement on Electricity will be amended under the provisions of the Electricity Act to:

• emphasise the importance of adequate transmission, including its ability to cope with extreme events;
  
  
• better provide for diversity of supply routes, especially for major cities;
  
  
• ensure that the grid facilitates competition in generation and retail, by minimising transmission constraints;
  
  
• ensure that transmission planning supports the government's goal of facilitating renewable energy, and reducing greenhouse gases;
  
  
• emphasise that, to the extent possible, grid upgrade plans should be comprehensive and considered in the context of long term plans; and
  
  
• allow Transpower to recover the reasonable costs of acquiring land corridors in advance of approval of the detail of upgrade plans.

The Electricity Commission is required to give effect to the statement. The Minister will consult with the Electricity Commission and after considering its comments, a statement will be finalised and gazetted.

Commerce Minister Lianne Dalziel announced the Government's policy under the Commerce Act on incentives for regulated businesses to invest in infrastructure. The Commerce Commission is required to have regard to the statement. It provides that objectives to encourage infrastructure investment will be achieved by regulatory stability, transparency and certainty; regulated rates of return being commercially realistic; and regulated businesses being confident they will not be disadvantaged if they invest.

It also provides for the interests of consumers of regulated businesses to be protected by ensuring that:

• they are not disadvantaged by the investments of regulated businesses in other infrastructure and services;
  
  
• regulated businesses are held accountable for making investments in that business where those investments have been provided for in regulated revenues and prices; and
  
  
• regulated businesses provide infrastructure at the quality required by consumers at an efficient price.

 

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