ECNZ Split - Another Step Closer to Lower Electricity Prices

Competition from the three new SOEs to be formed from the split of ECNZ will reduce the wholesale price of electricity and bring savings of at least $150 million a year to households and businesses, ECNZ shareholding Ministers Rt Hon Bill Birch and Hon Tony Ryall said today.

The Ministers said that work on the split of ECNZ into three new SOEs will proceed to the next step, now that the Electricity Reform Transition Unit has reported that the split will meet the Government's objective of a more competitive electricity generation market.

"The report found that increased competition from the three-way split of ECNZ could reduce wholesale electricity prices by at least 10%," the Ministers said.

"Recent Government reform of the retail electricity sector means that the expected reductions in the wholesale price of electricity will be passed onto households and businesses, bringing savings of at least $150 million.

"As we work to lower costs to businesses and improve international competitiveness, lower electricity prices from the split of ECNZ will be welcomed by New Zealand businesses and industry."

The report found that the three new SOEs (Waikato, Huntly, and South Island) will be viable companies requiring no additional Government funding.

The report sets out a detailed implementation plan for effecting the split, including the transfer of assets and existing contracts from ECNZ to the new SOEs, the transfer of staff, a financial structure, and arrangements for ECNZ's debt.

Today's announcement to proceed to the next stage of the ECNZ split means three Interim Development Groups (IDGs) will be established to represent each of the SOEs until they are formally established with their own boards and management.

Mr Birch and Mr Ryall said the IDGs have a heavy workload ahead of them to prepare business plans and develop the organisational design and corporate structures for the new SOEs.

A final decision on the formation of the three new SOEs will be made in December and will be conditional on satisfactory progress with Treaty of Waitangi, environmental and security of supply issues.

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INTERIM DEVELOPMENT GROUPS ANNOUNCED
The new chairs of the IDGs are:

Waikato IDG -- Rob Challinor

Mr Challinor will step down from his current position as director on the Board of ECNZ to take up the role of chairman. He has extensive experience as director of a number of public and private companies.

Huntly IDG -- Keith Smith

Mr Smith is an Auckland based company director with a finance and business consulting background including work on the formation of the Warehouse Group, of which he is presently chairman. Mr Smith is Vice President of the Institute of Chartered Accountants of New Zealand.

South Island -- Wayne Boyd

Mr Boyd is Chairman of Auckland International Airport and the New Zealand Blood Service. He is a former director of Capital Coast Health and is a director of other private companies.