Lines control under review

The Commerce Commission's powers to regulate electricity-lines businesses are to be reviewed, but the Government says it is not a response to the competition watchdog's recent moves against Vector.

Commerce Minister Lianne Dalziel foreshadowed last May a review of parts 4 and 5 of the Commerce Act, but at that stage part 4A, which specifically relates to regulatory control of electricity-lines companies, was to have been excluded.

But the commission's generic powers to declare control of firms with natural monopolies are part of the review and, citing the need for consistency, the Government has extended the review to include the provisions specific to lines companies.

Any law changes arising from the review will not come into effect until 2008 at the earliest and therefore would not affect the regulatory processes under way with respect to Vector, Unison Networks and Transpower, officials say.

The review will look at whether there is enough clarity about the policy intent of imposing control and whether there is appropriate guidance for business and regulators alike on when and how control is likely to be imposed.

A Cabinet paper on the issue, released yesterday, also raises the question of whether allowing "merits review" would improve the quality of the commission's decision making.

At the moment, the commission's decisions can be appealed against in the courts only on matters of law and process - on the substantive grounds for its decisions, the commission has the last word.

Vector in particular has been pressing for allowing merits review. But any improvement in accountability has to be weighed against the potential for delay.

As well as looking at provisions relating to the regulation of natural monopolies, the review will look more broadly at the commission's accountability and the way it approaches its task in matters relating to mergers and acquisitions, and price fixing.

But it will not re-examine where the lines in the sand are beyond which a firm should apply for clearance or authorisation from the commission.

The review will look at whether the current time frames for considering applications are appropriate.

It will seek views on whether there is enough rigour in the way the commission analyses costs and benefits.

And it will look at whether the commission has enough flexibility to accept undertakings from firms, and to enforce undertakings if it does.