By Pattrick Smellie
Jan 10 (BusinessDesk) - The Commerce Commission has given itself an extra two months to consider competition issues raised by Vector's proposed purchase of Contact Energy's gas metering business, following submissions claiming the move will create a "virtual monopoly" in gas metering in Auckland.
While Vector's application for clearance of the purchase by the competition watchdog attracted only two submissions, the commission has extended its original decision date of Dec. 21 last year to Feb. 22 "to allow further detailed enquiry and analysis," a spokesperson said.
The $63 million transaction was announced last October and attracted opposition from the Southern Cross Healthcare group and an Auckland gas industry consultancy, Energy Select.
Both argued Vector's application underplayed or mis-stated how difficult it would be for competitors to establish competitive gas meter service provision and decried the loss of Contact as the only non-network owner to provide gas meters.
"Replacement of existing assets is already almost non-existent and allowing one participant to have 76 percent of the market (nationwide) can only further lessen competition," said Energy Select's Shaun Hayward in a submission published on the commission's website. As a retail business rather than a monopoly network owner, Contact's ownership of gas meters "creates 'some' competitive tension."
Southern Cross Hospitals technical services manager Brendon Clifford described as "offensive" to suggest gas metering was low cost when there were major variations between the daily charges applied for industrial consumers of similar amounts of gas.
"If Vector is permitted to go ahead, Southern Cross Hospitals could expect Vector to align the current Contact customers with the Vector pricing schedule."
In some cases, that could see meter rental costs rise 350 percent, in a situation where customers cannot see how metering charges are set.
"The gas industry keeps a very closed shop and the fee schedules not published or available to customers," Clifford said in his submission.