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Electricity Line companies taking advantage of their monopoly positions will face strict controls under legislation to be
introduced in Parliament, Enterprise and Commerce Minister Max Bradford announced today.

Mr Bradford said the legislation would ensure that benefits arising from other parts of the electricity reforms - such as the
introduction of competition in electricity generation and retail - flowed through to consumers. (See second press statement
for further announcements).

The Commerce (Controlled Goods Or Services) Amendment Bill will be tabled in Parliament at 2pm and is expected to be
debated early next week. It gives the Commerce Commission the power to impose price and revenue caps on electricity line
companies which are overcharging consumers.

Mr Bradford said the controls were needed because the companies which delivered electricity to retailing companies were
monopolies and had only weak incentives to minimise costs and prices.

"The reforms are already delivering benefits to businesses and consumers. Wholesale power prices have fallen two-thirds
since the end of March and retail prices have fallen for consumers in major centres over the past year.

"But it has become obvious that many companies have used the reforms as an excuse to increase their profit, while others are
simply increasing their prices because they think they can get away with it.

"This Government will not allow lines companies to act as a roadblock to the benefits of the power reforms getting through
to ordinary Kiwi families," Mr Bradford said.

Mr Bradford said that if the problem was not addressed, consumers would continue to be fleeced.

"The aim is to ensure that electricity lines companies are put in an environment similar to other parts of the industry, where
there are strong incentives to be efficient."

Mr Bradford said all OECD countries that had deregulated their electricity industries used some form of price control on
their lines businesses. "The New Zealand Government announced more than a year ago that it would be imposing
light-handed regulation on lines company. "However, the behaviour of some lines companies in recent weeks has showed a
softer, information disclosure regime and the threat of price contol is not enough to do the job, he said. Mr Bradford said
line charges should be falling because of efficiency gains in line businesses, the effect of increased demand and line
companies' lower costs of doing business following the sale of meters, call centres, billing and load control.

The legislation introduced into Parliament today:

• updates the price control provisions of the Commerce Act 
• gives the Commerce Commission increased flexibility in administering price control by providing powers for the Commission to use incentive-based price control or revenue caps such as CPI-x and associated service quality standards 
• places all electricity line businesses under price or revenue control 
• includes the Government owned national grid company Transpower 
• the Commission is required to implement the new regime for the largest line businesses by 31 Dec this year, for the remaining local line businesses by 31 March next year and for Transpower by 30 June next year.