17 Repeal of section 46 and new sections 46A and 46B inserted

  (1)  The principal Act is amended by repealing the heading preceding section
46 and section 46 (no expansion of control by trust-like agencies in
electricity supply).

  (2)  The principal Act is amended by inserting, before the Part 3 heading,
the following heading and sections:

    "Exemption and rules for distributed generation

    "46A Exemption for new distributed generation from new renewable energy
source

    "(1)  The following activities do not cause any person to breach the
ownership separation rules:

    "(a)  generating electricity from new distributed generation using only---

    "(i)  a new renewable energy source; or

    "(ii)  a new renewable energy source and fossil fuels if fossil fuels
provide no more than 20% of the total fuel energy input for the generator or
generators comprising the generation plant in any 12-month period or any
larger amount approved by the Minister under subsection (3):

    "(b)  selling electricity referred to in paragraph (a):

    "(c)  owning or operating, directly or indirectly, new distributed
generation, or any other core generation assets used in connection with new
distributed generation, that is capable of generating electricity referred to
in paragraph (a).

    "(2)  Subsection (1) applies only if and as long as sections 24 and 25 are
complied with (corporate separation and arms length rules).

    "(3)  The Minister may increase the thresholds in subsection (1)(a)(ii) or
in paragraph (b) of the definition of new renewable energy source to approve a
particular activity for the purposes of subsection (1) (on the conditions, if
any, he or she thinks fit) after first taking into account whether or not the
generation uses new or advanced technology.

    "(4)  In this section,---

"new distributed generation   means distributed generation that is not existing
on the date on which this section comes into force

"new renewable energy source---

    "(a)  means an energy source that occurs naturally and the use of which
will not permanently deplete New Zealand's energy sources of that kind, because
those sources are generally expected to be replenished by natural processes
within 50 years or less of being used; but

    "(b)  does not include hydro or geothermal energy sources at a generator or
generators comprising a generation plant that has an aggregate generating
capacity (determined according to nameplate or nameplates) of more than
5 MW, unless approved by the Minister under subsection (3).

    "(5)  This section does not limit section 5(2)(e) (exclusion from
definition of electricity supply business).

    "46B Electricity lines business to publicly notify acquisition or increase
of distributed generation

    "(1)  The purpose of this section is to require an electricity lines
business that proposes to acquire or increase distributed generation, in
reliance on section 5(2)(e) (exclusion from definition of electricity supply
business) or on section 46A, to give public notice of its proposal.

    "(2)  A person who is carrying on an electricity lines business must not,
without first publicly notifying the proposal to do so in accordance with
subsection (3), acquire or increase (directly or indirectly through any other
person) an ability to generate electricity from distributed generation or an
interest in a person that has that ability.

    "(3)  The person must publish the following matters in each major daily
newspaper in Auckland, Hamilton, Wellington, Christchurch, and Dunedin at least
30 days before the person enters into the first contract to acquire or increase
that ability or interest:

    "(a)  the type of generation proposed (for example, windfarm,
co-generation, or other) and the alternative types of generation and
alternative methods for reducing demand for electricity considered by the
person (if any); and

    "(b)  the date on which the person will acquire or increase an ability to
generate electricity or that interest; and

    "(c)  the estimated increase in direct or indirect generating capacity of
the person, determined according to nameplate, as a result of the acquisition
or increase; and

    "(d)  the estimated cost of acquiring or increasing the ability to carry
out the generation or that part of the cost of acquiring or increasing the
interest that is attributable to that ability; and

    "(e)  the relative efficiency of the proposed generation and each
alternative referred to in paragraph (a) considered by the person (if any); and

    "(f)  the address of the person, a statement to the effect that any person
may make a submission on the proposal by sending a written submission to that
address, and a closing date for submissions.

    "(4)  The person must also provide a copy of the public notification to the
Commerce Commission as soon as practicable after publishing it.

    "(5)  This section does not apply to the acquisition by a person of an
interest in another person that carries on an electricity lines business."