New Zealand Law Society - Feedback sought on related party transactions

Feedback sought on related party transactions

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The Commerce Commission has released a paper which seeks feedback on how transactions between energy networks and related businesses should be regulated.

Deputy Chair Sue Begg says the Commission would like to hear from energy network businesses and their existing suppliers, as well as from independent suppliers of outsourced services.

She says the paper provides an overview on the Commission's initial findings on the problems it has identified and some potential solutions for resolving them.

“We are interested in hearing from anyone who seeks to provide services to regulated energy network businesses, including contracting services, corporate services and communication services which may be relevant to our review of the regime," she says.

"We welcome the expertise of gas and electricity suppliers in working through the problems we have identified.”

The Commission says its review of the related party transactions regime forms part of the Input Methodologies Review. It is focused on understanding the impact of the current rules for transactions between regulated suppliers and related parties.

In particular, the Commission wants to understand whether there are inappropriate opportunities under the current rules for regulated businesses to pay more for the services they get from related parties than they would from an independent supplier in order to increase their overall combined profits.

The Commission also wants to understand the extent to which suppliers may be incentivised to use related parties to provide services to their business when that may not be the most efficient option available.

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