Unison fights to stop Commerce Commission control

Hawke's Bay's Unison may be the first electricity network company to come under the direct control of the Commerce Commission.

The lines company failed last week to gain an injunction from the High Court to stop the commission from publishing an intention to declare control of the company.

Unison is challenging the decision in the Court of Appeal.

Unison is in breach of the commission's regulatory regime based on price and quality thresholds.

Chief executive Ken Sutherland said the commission effectively froze lines charges between August 2001 and April 2004 but Unison raised its prices twice during that period -- in April 2002 and March 2004.

Unison's line charges were now just under the national average, he said.

"Our prices were one of the lowest in the country and were not sustainable.

Unison is seeking the injunction to protect its position before a judicial review it has sought -- which challenges the entire "thresholds" regulatory regime -- is heard in the High Court on October 10.

Meanwhile, Mr Sutherland said Unison would ask the Government to change the Electricity Industry Reform Act if it was blocked from building a $300 million wind farm by the legislation.

Unison has applied for an exemption to the act to build a 150-megawatt wind farm in Hawke's Bay with its partner, Hydro-Electric Corporation of Tasmania.

Mr Sutherland said Unison wanted management and board control over the investment but the law required a separation of the wind farm development from Unison. It prohibited Unison from having its directors and management in control of the development.

Unison believed the commission would grant the exemption because Unison would not cross-subsidise its lines business with the wind farm business.

It proposed to connect the wind farm to the national grid and would look to sell the electricity to a retailer under "a fixed-price, variable-volume arrangement".

The purpose of the legislation is to stop power companies cross-subsidising energy retailing with the less risky lines business.

Unison will apply for a resource consent next week for the first stage of the development and the second stage in early September.

It hopes to start construction next year. It would take a year to build.

- nzpa