4 Meaning of electricity supply business

  (1)  Section 5(2) of the principal Act is amended by repealing paragraph (e),
and substituting the following paragraphs:

    "(e)  generating electricity from distributed generation, and selling the
electricity generated, where---

    "(i)  the generating capacity of the distributed generation is no more, at
any one time, than the greater of 5 MW (determined according to nameplate or
nameplates) and 2% of the maximum demand, in the immediately preceding
financial year, of the system to which the distributed generation is connected;
and

    "(ii)  the distributed generation is owned or operated by a business that
also conveys electricity by line and that distributed generation is connected
to those lines:

    "(f)  selling financial transmission rights that hedge risks arising from
the effects of losses and constraints on the national grid:

    "(g)  owning or operating, directly or indirectly, a generator referred to
in any of paragraphs (b) to (f) or subsection (3) or any other core generation
assets used in connection with those generators."

  (2)  Section 5 of the principal Act is amended by adding the following
subsection:

    "(4)  For the purposes of subsection (2),---

"financial transmission right   means a financial instrument issued by the real
time co-ordinator of electricity supply and demand in New Zealand that---

    "(a)  is funded exclusively by the difference between purchaser payments
and generator receipts on the sale and purchase of electricity in the wholesale
market that arises from the effect of losses and constraints on the national
grid; and

    "(b)  entitles the holder to receive, or requires the holder to make,
payments in accordance with a formula based on prices for quantities of
electricity at 1 or more points on the national grid

"financial year   means a period of 12 months ending on 31 March

"maximum demand   means, in relation to a system, the single highest
half-hourly input (in kilowatts), during a particular financial year, to the
system, after allowing for diversity of the demand at each point of input

"system    means all of the works over which a business conveys or intends to
convey electricity."