• Max Bradford

The New Zealand Government is not alone in reaching the conclusion that the most effective way to promote competition in the electricity market is to require power companies to split into separately owned lines and energy trading businesses, Energy Minister Max Bradford said today.

Releasing a copy of a consultation paper by the United Kingdom's electricity regulator OFFER, Mr Bradford said the paper showed parallels with the New Zealand situation.

(OFFER was set up by the UK Government to foster competition in the electricity market together with providing adequate regulation of the natural monopoly line businesses.)

The paper shows UK electricity companies are currently required to prepare separate accounts for their distribution and retailing activities. Their licences state that there must be no cross-subsidies between businesses, and that they must not restrict access to their distribution lines by competing retailers.

Nevertheless, independent retailers have raised concerns that incumbent companies are restricting access to their lines by competing retailers, and that they are giving a higher priority to defending their existing dominant market positions than to putting in place the mechanisms required to facilitate retail competition.

Mr Bradford said the paper shows the UK Government has announced proposals to amend the Electricity Act 1989 to require electricity companies' distribution businesses to be licenced separately to their retail businesses.

"OFFER's view is that the most effective way to promote retail competition would be for companies distribution and retail activities to be owned separately," he said.