MINISTER RELEASES TRANSPOWER REPORT

A Ministry of Commerce report has found there is no evidence of abuse of monopoly power by Transpower, Enterprise and Commerce Minister Max Bradford said today when releasing the report.

Transpower is the State Owned Enterprise which owns and operates the national electricity grid. The Ministry of Commerce's 1996/97 report on Transpower's performance is produced as part of the Ministry's regular monitoring of the performance of electricity line businesses.

"The key interest of the Government in Transpower is that it operates efficiently and sets its prices appropriately, in the interests of the economy as a whole," Mr Bradford said.

"While the report finds no evidence of abuse of monopoly power, it does indicate that there are continuing issues concerning the valuation of Transpower's assets, the way its pricing is set, and the reliability of the service it provides," Mr Bradford said.

The report was produced before Transpower announced on 20 August this year that its valuation had reduced from $2.853 billion on 30 June 1997 to $2.310 billion as at 30 June 1998. Transpower said the new valuation is aligned to the environment within which the company operates and will enable it to earn an appropriate rate of return. Previously the company has fallen well short of its target rate of return.

Mr Bradford said the recent write-down indicates that Transpower is sensitive to the changing environment in which it operates.

He said that given the importance of Transpower in the electricity industry, there will be increased monitoring and analysis of Transpower. Additional funding for analysis of information made available under the information disclosure regulations was announced earlier this year as part of the electricity reforms.

"The regulatory regime introduced by the Government for dealing with the monopoly power of electricity line businesses, applies equally to Transpower as it does to the local line businesses," Mr Bradford said.

"The increased monitoring and analysis will help ensure that Transpower's performance is transparent, that its performance can be put in perspective, and that Transpower is directed toward providing the best service at the best
possible price."

Media Inquiries:

Ann Howarth,
Press Secretary to the Minister for Enterprise and Commerce,
(04) 471-9836 or (025) 424 565

or James Forsberg,
Ministry of Commerce Energy Markets Regulation Unit,
(04) 472-0030

Copies of the report have been distributed to the Parliamentary Press Gallery.

An on-line version is available free of charge at:
http://www.moc.govt.nz/ran/emisg/emru.

Paper copies ($11.25 cost) are available from
James Forsberg,
Ministry of Commerce,
Phone (04) 472-0030,
Fax (04) 473-9930,
E-mail: Forsberg@moc.govt.nz