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Government wields big stick to deal to power but treads softly on phones

Friday 15th December 2000

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POWER PLAY: The Electricity Industry Bill gives Pete Hodgson 'backstop regulation-making powers' to get the industry to do what the government wants

By Rob Hosking

The two big deals on the government's regulation radar this year were electricity and telecommunications.

Once termed "natural monopolies" - a phrase you hear less and less these days - the two industries were the focus of major inquiries by the government.

In the case of electricity - an industry in which billions of dollars of taxpayers' money is still invested - the government's final decision was announced a few weeks ago.

That included the Electricity Industry Bill, which will allow Minister of Energy Pete Hodgson "backstop regulation-making powers" to direct the industry if it fails to deliver what the government thinks it should.

It also includes changes to other laws, including the Commerce Act, the Consumer Guarantees Act and other electricity statutes already on the books.

Overall, the legislation will:

  • establish an Electricity Governance Board;
  • require electricity firms to release information on spill from hydro dams and on aggregate future electricity prices;
  • beef up the Commerce Commission's powers to determine transmission pricing methodologies;
  • establish rules for connecting distributed generation to distribution lines;
  • require retailers to offer pre-payment meters at reasonable prices; and
  • limit fixed charges in the bills of domestic consumers.

Meanwhile, the result of the telecommunications inquiry should be announced next week. Unlike the electricity industry, telecommunications is privately owned, with most of the capital coming from overseas, and the ministers have been careful to tread very carefully not to upset those investors.

This is particularly important as it is not only Telecom that is arguing against much regulatory change. Telstra Saturn and Vodafone, which have substantial networks of their own, are reluctant to see rules that would require them to open up their networks to other players.

In an apparent reference to this issue, Minister of Finance Michael Cullen told a session at the government's e-commerce summit in October that "if there is one thing I have learned this year, it is that the perception of interference with property rights is extremely damaging for a government."

And while the inquiry team, headed by Hugh Fletcher, recommended establishing a separate regulator outside the Commerce Commission, the signals coming from the Beehive suggest that instead the function will be folded into a beefed up Commerce Commission.

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