UPDATED - The government has announced backstop regulations to address potential difficulties arising from the liquidation of gas retailer E-Gas.The Gas Governance (Insolvent Retailers) Regulations 2010, which took effect today, will provide transition ar
UPDATED - The government has announced backstop regulations to address potential difficulties arising from the liquidation of gas retailer E-Gas.
The Gas Governance (Insolvent Retailers) Regulations 2010, which took effect today, will provide transition arrangements for customers of insolvent gas retailers where there is a risk those customers could end up without a retailer.
Energy and Resources Minister Gerry Brownlee said in a press release that the regulations would “protect consumers and provide certainty and reduce risk for industry participants.”
“Circumstances dictated that the regulations be made without the consultation and assessment requirements that would normally be undertaken by the Gas Industry Company (GIC).”
“I have asked the GIC to advise me on the form and content of permanent backstop regulations once it has completed the usual consultation and assessment processes,” Mr Brownlee said.
E-Gas went into voluntary liquidation on 18 October 2010, just prior to a Rulings Panel hearing that would have penalised it for breaching an industry rule related to data provision - now on hold until further notice.
An investigator's report released this month indicates that E-Gas may have breached five additional gas industry rules prior to entering liquidation, while an earlier audit found that the company had over-charged thousands of customers.
E-Gas had about 7000 customers in the North Island at the time of the liquidation.
A liquidators’ committee, including major industry players, has been appointed to determine the next step for the company.
Liquidators BDO has received multiple offers from potential buyers and expect to announce the outcome of the sale process in the near future.
BDO spokesman Jeff Hart said today that the new regulations would have no impact on the liquidators' ability to achieve a sale.
The regulations announced today will allow the GIC to transfer the customer contracts of an insolvent retailer to other retailers, under certain conditions.
The new retailers must continue to supply gas under the transferred contracts for a transition period of a minimum of 30 days.
The transferred customers may switch to another retailer, without any fee or penalty, during the transition period, and otherwise will roll over into a contract with the new retailer at the end of that period.
The regulations set out procedures and methods for allocating customer contracts among other retailers based on retailers’ relative market shares.
It also deals with various matters relating to customer transfers, including where customers are part-way through the process of switching to an alternative retailer.
This latter may prove particularly relevant - Todd-owned Nova Gas has pursued E-Gas for several years over alleged breaches of customer switching rules.
