Formation of Genesis, Mighty River Power and Meridian
1997 - 1998

Objective

To establish greater competition in the wholesale electricity market in New Zealand

Key steps

Like the formation of Contact Energy, this was a major policy and commercial transaction, with a challenging set of processes and relationships. The essential elements were similar to the Contact exercise, but with some further layers of complexity.

• Discuss with the Prime Minister and Minister of Finance progress toward a competitive market
• Analyse possible generation configurations, including expected impacts on value, financial viability, electricity prices, security of supply, the environment, existing supply contracts, and transmission.
• Develop options for further changes to the regulatory regime
• Negotiate with ECNZ on a major generation restructuring, including detailed discussions with ECNZ's financial, economic, engineering and environmental consultants
• Discuss with distribution companies Government proposals to separate lines from retail and generation functions
• Consult with a broad range of interest groups
• Draft public documents outlining the reform proposals
• Advise Cabinet on final in-principle decisions
• Present package to industry and media
• Undertake consultation with Maori under Crown Treaty obligations
• Negotiate sale and purchase agreements for transfer of assets and liabilities to new SOEs (Gensis, MRP and Meridian)
• Form and oversee transition unit, to prepare business plans for new companies, and to carry out more detailed financial viability testing
• Establish new boards of directors
• Draft electricity reform legislation
• Draft new government policy statements on electricity pricing, transmission, security of supply and retail competition
• Support the Select Committee process
• Review final certification from the transition unit in relation to financial viability and other critical success factors.

My role

My role was to lead this project for the Government through each of the key steps outlined above.

Publications

"A Better Deal for Electricity Consumers", NZ Government, April 1998. Tony was the principal writer of this document, which sets out the key elements of the Government's 1998 industry restructuring package, including the formation of Genesis, Meridian and Mighty River

Electricity Industry Reform Act 1998, NZ Government. Tony led a small team of specialists drafting this Act to implemented the Government's policies set out in "A Better Deal for Electricity Consumers" (referred to above)

"Final Certification Report", Electricity Reform Transition Unit, December 1998
This was a group established to preview in detail whether each of the proposed new SOEs would be (among other things) financially viable and effective competitors. Tony was responsible for establishing and overseeing this group

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