Climate Change Response (Auction Price) Amendment Act 2021

1: Title
This Act is the Climate Change Response (Auction Price) Amendment Act 2021.
2: Commencement
This Act comes into force on 15 March 2021.
1: Amendments to principal Act
3: Principal Act
This Part amends the Climate Change Response Act 2002 principal Act 2021-03-15 Climate Change Response Act 2002
4: Section 30GA amended (Regulations for auctions to sell New Zealand units)
After section 30GA(2)
2A: If regulations are to be made under this section,—
a: the Minister may, after considering the main matters and additional matters in section 30GC(5) and (6) of the Act, recommend the making of regulations that provide for the Minister to set a methodology that the person who conducts an auction must use to calculate a minimum price that,—
i: if the price is greater than the lowest trigger price prescribed under section 30GB(2)﻿(e)﻿(ii), must be recalculated as that trigger price (despite the initial calculation); and
ii: if the price (as recalculated or, if not, as initially calculated) is greater than the minimum price prescribed under section 30GB(2)﻿(e)﻿(iii), becomes the confidential reserve price
b: the Minister must, if recommending the making of regulations under paragraph (a)
i: specify criteria or requirements for the Minister’s decision to set the methodology, including a requirement to ensure that the methodology promotes the purpose of confidential reserve prices; and
ii: specify that the purpose of confidential reserve prices is to prevent sales by auction under section 6A at prices significantly below the prices of New Zealand units sold at the time in other ways (on secondary markets
iii: require the methodology and any calculated prices to be kept confidential so that they are not disclosed to any potential buyer who participates in an auction; and
iv: require the auction operator to provide the following information to the chief executive at a specified time after 1 or more auctions:
A: details of the calculation of the price or prices using the methodology; and
B: details of the auction bids in a form that does not identify any bidder, so that the chief executive can assess how any confidential reserve prices are working.
5: Section 30GB amended (Regulations about limits and price control settings for units)
Replace section 30GB(2)﻿(e)﻿(iii)
iii: the minimum price below which units must not be sold by auction, which may be zero.
2: Amendments to Climate Change (Auctions, Limits, and Price Controls for Units) Regulations 2020
6: Principal regulations
This Part amends the Climate Change (Auctions, Limits, and Price Controls for Units) Regulations 2020 principal regulations 2021-03-15 Climate Change (Auctions, Limits, and Price Controls for Units) Regulations 2020
7: Regulation 3 amended (Interpretation)
In regulation 3(1) auction monitor confidential reserve price regulation 15A(1)﻿(b)
8: Regulation 15 amended (Price control settings for units)
In regulation 15
2: To avoid doubt, if there is a confidential reserve price at an auction, that price (rather than the prescribed minimum price) is the lowest price at which New Zealand units may be sold at that auction.
9: New regulations 15A to 15D and cross-heading inserted
After regulation 15 Methodology and calculation of confidential reserve prices for auctions
15A: Minister must set methodology for calculating confidential reserve price
1: The Minister must set a methodology that an auction operator must use to calculate a price that,—
a: if the price is greater than the lowest trigger price for the auction, must be recalculated as that trigger price (despite the initial calculation); and
b: if the price (as recalculated or, if not, as initially calculated) is greater than the prescribed minimum price for the auction, becomes the confidential reserve price
2: In setting the methodology, the Minister must—
a: consider the main matters and additional matters in section 30GC(5) and (6) of the Act; and
b: ensure that the methodology promotes the purpose of confidential reserve prices, which is to prevent sales by auction under section 6A of the Act at prices significantly below the prices of New Zealand units sold at the time in other ways (on secondary markets
c: ensure that the methodology includes—
i: a way to determine a representative price for New Zealand units sold on secondary markets recently before the auction, taking into account any volatility in prices; and
ii: a way to determine a price below the representative price that will achieve the purpose of confidential reserve prices.
3: In setting the methodology, the Minister must consult—
a: the Minister of Finance; and
b: the 1 or more auction monitors, if any.
4: The Minister—
a: must ensure that the methodology is set, and remains set, from the commencement of this regulation; but
b: may change the methodology by setting it differently at any time.
15B: Minister must review methodology after certain auctions
1: This regulation applies if, at any auction, no bids are successful because the final clearing price is less than the confidential reserve price.
2: The Minister must—
a: review the methodology by complying with regulation 15A
b: if required, change the methodology by setting it under that regulation.
15C: Auction operator must calculate confidential reserve price
1: The chief executive must provide the methodology to an auction operator as soon as is reasonably practicable after it is set under regulation 15A
2: The auction operator must use the methodology to calculate a price that, if greater than the prescribed minimum price for the auction, is the confidential reserve price.
3: The methodology that must be used is the one that, 2 working days before the start of the day of the auction, had been most recently provided by the chief executive.
15D: Methodology and calculated prices are confidential
1: The auction operator, and any other person, must keep confidential the methodology and the calculated price so that they are not disclosed to any potential buyer who participates in an auction.
2: To avoid doubt, as long as that information is not disclosed to any potential buyer who participates in an auction, this regulation does not prevent information from being provided (for example, under regulation 36A
10: Regulation 16 amended (Auction operator must make auction notices publicly available)
After regulation 16(2)﻿(d)
da: a statement that there may also be a confidential reserve price for the auction that is not known to bidders:
11: Regulation 30 amended (Process for determining auction results)
Replace regulation 30(5)﻿(b)
b: sell units at that price if required by regulation 33 (if there are successful bids under that regulation).
12: Regulation 33 amended (Requirement to sell at final clearing price)
In regulation 33
2: However, no bids are successful, and no units may be sold to bidders, if—
a: there is a confidential reserve price at the auction; and
b: the final clearing price is less than the confidential reserve price.
13: Cross-heading above regulation 36 replaced
Replace the cross-heading above regulation 36 Publication of auction results and provision of certain information
14: Regulation 36 amended (Requirement to make auction results publicly available)
1: In regulation 36(2) In this regulation, auction results The auction results
2: After regulation 36(2)
3: However, if no bids were successful because the final clearing price was less than the confidential reserve price, the auction results
15: New regulation 36A inserted (Requirement to provide information relevant to confidential reserve price)
After regulation 36
36A: Requirement to provide information relevant to confidential reserve price
The auction operator must, as soon as is reasonably practicable after an auction, provide the following information about the auction to the chief executive:
a: details of the calculation of the price using the methodology set under regulation 15A
b: the bid volume and bid price of each bid in a form that does not identify the bidder.
16: Schedule 1 amended
In Schedule 1, after Part 1
a: insert the Part set out in the Schedule
b: make all necessary consequential amendments.
17: Schedule 3 amended
In Schedule 3 Minimum price below which units must not be sold by auction ($)