Electricity watchdog idea winning support

By CHRIS DANIELS

As the Commerce Commission prepares to re-evaluate a plan to govern the electricity market, some in the industry say they would prefer a Government regulator.

The commission decided last month that the proposal for an Electricity Governance Board could allow domination by the industry's big names - those "vertically integrated" companies that generate and sell electricity.

While the commission did not think it allowed big companies to design rules to shut out smaller companies, it said that they could join forces to vote down rules proposed by smaller members.

Now the commission has published submissions from the industry on whether it should change its opinion that the plan for a board was inadequate.

The whole idea of the Electricity Governance Board is for the power industry to mind its own affairs, thus avoiding the need for expensive and unwelcome Government regulation.

A governance board would bring together the three existing power industry agreements that cover the operation of the wholesale electricity market, and metering and technical protocols.

It would include consumer representatives and oversee the operation of all aspects of the electricity market, run a judicial system and try to improve competition in the industry.

But Comalco, which uses 15 per cent of all the country's electricity, opposes the plan, saying the "public benefits of the proposed arrangements do not outweigh the competitive detriments".

Transpower, the owner and manager of the national grid, is also opposed to the current plans for a governance board.

It says the proposed rulebook would lessen competition in the electricity markets, compared to what would happen under a Government regulator.

Transpower's main objection to the idea of an industry governing body is that industry participants will have ultimate control of the rules.

Transpower agrees with the commission that "individual participants would vote in their own self-interest, which may not always be in the interests of overall efficiency".

It says there is a need for a regulator that has the authority to make decisions that are in the wider public interest, even if those are not supported by a majority of the market participants.

Contact Energy says the commission has overstated the ability of companies such as itself to vote down pro-competitive rule changes.

It says there is no pattern of that happening already, and the power of the Government to replace the governance board with a Crown board would act as a check on it happening.

The Commerce Commission will hold a conference on the issue in Wellington next month and is expected to make its decision in July.

* In an attempt to increase the amount of public information available about the electricity wholesale market, the Marketplace Company is seeking permission from the Commerce Commission to publish bids and offer prices two weeks after the transactions take place.