Electricity Industry Reform Amendment Act 2001

1: Title
1: This Act is the Electricity Industry Reform Amendment Act 2001.
2: In this Act, the Electricity Industry Reform Act 1998 the principal Act
2: Commencement
This Act comes into force on the day after the date on which it receives the Royal assent.
3: Interpretation
1: Section 3(1) agency
2: Section 3(1) customer co-operative section 42 distributed generation line nameplate .
3: Section 3(1) paragraph (b) exempt person or section 46A
4: Section 3(1) settling trust settling trust sections 37 to 45
5: Section 3
3: In relation to sections 4(2), 5(2), and 19
a: limitations, exclusions, or exemptions under those sections may be applied cumulatively; and
b: references to an activity being carried out only or solely for a particular purpose or in a particular way, or to a person having an involvement or interest only or solely for a particular reason, must not be read as excluding reliance on any other limitation, exclusion, or exemption in any of those sections.
4: Meaning of electricity supply business
1: Section 5(2) paragraph (e)
e: generating electricity from distributed generation, and selling the electricity generated, where—
i: the generating capacity of the distributed generation is no more, at any one time, than the greater of 5 MW (determined according to nameplate or nameplates) and 2% of the maximum demand, in the immediately preceding financial year, of the system to which the distributed generation is connected; and
ii: the distributed generation is owned or operated by a business that also conveys electricity by line and that distributed generation is connected to those lines:
f: selling financial transmission rights that hedge risks arising from the effects of losses and constraints on the national grid:
g: owning or operating, directly or indirectly, a generator referred to in any of paragraphs (b) to (f) or subsection (3)
2: Section 5
4: For the purposes of subsection (2) financial transmission right
a: is funded exclusively by the difference between purchaser payments and generator receipts on the sale and purchase of electricity in the wholesale market that arises from the effect of losses and constraints on the national grid; and
b: entitles the holder to receive, or requires the holder to make, payments in accordance with a formula based on prices for quantities of electricity at 1 or more points on the national grid financial year maximum demand system
5: Repeal of
section 13 The principal Act is amended by repealing section 13
6: Certain businesses and involvements to be disregarded
Section 19(1) paragraph (g)
ga: that person is involved because the person has an interest in a business that generates electricity from a geothermal energy source if—
i: the geothermal plant was commissioned between 1 January 1998 and the date on which this paragraph comes into force, and is currently owned by the person that commissioned it; and
ii: the output from the geothermal plant is less than 12 MW (determined according to nameplate or nameplates); or .
7: Corporate separation
Section 24 (mirror trusts) or section 46A
8: Arms length rules
Section 25(1) (mirror trusts) or section 46A
9: Purpose of sections
1: of the principal Act is amended by omitting the expression sections 28 to 45 sections 28 to 46B
2: Section 27
j: a permanent exemption for new distributed generation from a new renewable energy source and public notification requirements for electricity lines businesses that acquire or increase an ability to carry out distributed generation ( sections 46A and 46B
10: New
section 37 The principal Act is amended by repealing section 37
37: Mirror trust option
1: The mirror trust option means that an electricity trust involved in business A ( settling trust mirror trust
2: The mirror trust option is an exemption, under section 43 section 20
3: Those exemptions are subject to the conditions in sections 38 to 41
11: Qualifying conditions on mirror trust option
Section 38 subsections (1) (2)
1: A settling trust may use the mirror trust option if the settling trust is a customer trust or community trust or both a customer and community trust.
2: If the mirror trust option is used, the settling trust and the mirror trust, and any companies in which either the settling trust or mirror trust is involved, must comply with the rules in sections 24 and 25 sections 40 and 41
12: Repeal of
section 39 The principal Act is amended by repealing section 39
13: Terms of trust deeds for mirror trusts
Section 41(1) 23 June 1998 the date on which the mirror trust is established
14: New
section 42 The principal Act is amended by repealing section 42
42: Mirror co-operatives
1: For the purposes of this Act (except for sections 60 and 62
2: In this Act, customer co-operative section 38(3)
3: The provisions relating to mirror trusts, and section 38(3)
15: Repeal of
section 44 The principal Act is amended by repealing section 44
16: New
section 45 The principal Act is amended by repealing section 45
45: Trusts that cease to be mirror trusts
Section 43 sections 24 and 25 and sections 38 to 41
17: Repeal of
section 46 sections 46A 46B
1: The principal Act is amended by repealing the heading preceding section 46 46
2: The principal Act is amended by inserting, before the Part 3 Exemption and rules for distributed generation
46A: Exemption for new distributed generation from new renewable energy source
1: The following activities do not cause any person to breach the ownership separation rules:
a: generating electricity from new distributed generation using only—
i: a new renewable energy source; or
ii: a new renewable energy source and fossil fuels if fossil fuels provide no more than 20% of the total fuel energy input for the generator or generators comprising the generation plant in any 12-month period or any larger amount approved by the Minister under subsection (3)
b: selling electricity referred to in paragraph (a)
c: owning or operating, directly or indirectly, new distributed generation, or any other core generation assets used in connection with new distributed generation, that is capable of generating electricity referred to in paragraph (a)
2: Subsection (1) sections 24 and 25
3: The Minister may increase the thresholds in subsection (1)(a)(ii) paragraph (b) new renewable energy source subsection (1)
4: In this section,— new distributed generation new renewable energy source
a: means an energy source that occurs naturally and the use of which will not permanently deplete New Zealand's energy sources of that kind, because those sources are generally expected to be replenished by natural processes within 50 years or less of being used; but
b: does not include hydro or geothermal energy sources at a generator or generators comprising a generation plant that has an aggregate generating capacity (determined according to nameplate or nameplates) of more than 5 MW, unless approved by the Minister under subsection (3)
5: This section does not limit section 5(2)(e)
46B: Electricity lines business to publicly notify acquisition or increase of distributed generation
1: The purpose of this section is to require an electricity lines business that proposes to acquire or increase distributed generation, in reliance on section 5(2)(e) section 46A
2: A person who is carrying on an electricity lines business must not, without first publicly notifying the proposal to do so in accordance with subsection (3)
3: The person must publish the following matters in each major daily newspaper in Auckland, Hamilton, Wellington, Christchurch, and Dunedin at least 30 days before the person enters into the first contract to acquire or increase that ability or interest:
a: the type of generation proposed (for example, windfarm, co-generation, or other) and the alternative types of generation and alternative methods for reducing demand for electricity considered by the person (if any); and
b: the date on which the person will acquire or increase an ability to generate electricity or that interest; and
c: the estimated increase in direct or indirect generating capacity of the person, determined according to nameplate, as a result of the acquisition or increase; and
d: the estimated cost of acquiring or increasing the ability to carry out the generation or that part of the cost of acquiring or increasing the interest that is attributable to that ability; and
e: the relative efficiency of the proposed generation and each alternative referred to in paragraph (a)
f: the address of the person, a statement to the effect that any person may make a submission on the proposal by sending a written submission to that address, and a closing date for submissions.
4: The person must also provide a copy of the public notification to the Commerce Commission as soon as practicable after publishing it.
5: This section does not apply to the acquisition by a person of an interest in another person that carries on an electricity lines business.
18: New
section 56A The principal Act is amended by inserting, after section 56
56A: Limits on defences and penalties for failure to publicly notify acquisition or increase of distributed generation
Sections 48, 52(b) and (c), 53, 54, 55, and 56 section 46B
19: Mirror co-operatives
1: Section 61 subsection (1)
1: This section applies if a customer co-operative establishes a mirror company ( mirror co-operative section 37
2: Section 67(2)(b) 61(1)(a) 61(1)
20: Mirror trusts
Section 62 subsection (1)
1: This section applies if—
a: 1 or more electricity trusts owns or own all of the voting interests and market value interests (if any) in an electricity company ( existing company
b: a mirror trust is established in respect of each electricity trust; and
c: the mirror trust incorporates or the mirror trusts incorporate a company ( mirror trust company
d: for the purpose of the trust using the mirror trust option in section 37
21: Shareholders of lines co-operatives
Section 73 Electricity Ashburton Limited and Otago Power Limited customer co-operatives
22: Exemptions
Section 81 subsections (1) (2)
1: The Commission may, for the purposes of this Act, in its discretion and upon the terms and conditions (if any) that it thinks fit, by notice in the Gazette
a: any business, involvement, or interest, or class of business, involvement, or interest, from the application of this Act; or
b: any person or class of persons from compliance with any provisions of this Act or any regulations made under it.