A new regulatory regime designed to enhance wholesale competition in New Zealand’s fuel markets is coming into effect.
A key feature is introduction of a terminal gate pricing (TGP) regime, similar to that in Australia.
A TGP is a spot price at which wholesale suppliers will sell fuel to wholesale customers at storage terminals. This price will act as a benchmark for wholesale customers negotiating supply agreements.
The introduction of a TGP was one of the key recommendations made by the Commerce Commission following a year-long fuel market study it was instructed to do by the Government.
The Wednesday, August 11 start date for the regime follows the passing of the Fuel Industry Act 2020.
The Commerce Commission, which has a monitoring and enforcement role under the Act, says its staff have been meeting in recent weeks with businesses in the fuel sector to help them understand their obligations and rights under the new rules before the regime goes live.
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The features of the Act that will affect businesses in the fuel industry are:
- Terminal gate pricing – Wholesale fuel suppliers must publish a spot price for their fuel at storage terminals and are generally required to sell fuel to any wholesale customers that want it at that price, even if they’re competitors.
- Wholesale contract rules – These will limit the use of restrictive terms in wholesale contracts, freeing up wholesale customers like distributors and petrol stations to shop around for the best deal to meet their needs.
- Dispute resolution – The Act provides a process for wholesale fuel suppliers and their wholesale customers to resolve disputes about wholesale contracts and terminal gate price rules.
Under additional rules that are scheduled to take effect from February 2022, petrol stations will have to display the standard prices of all fuels they sell on price boards. Fuel businesses will also need to disclose key information to the Commission to help it monitor and report how competition in fuel markets is evolving.
The Commission can seek court-imposed penalties of up to $5 million if fuel businesses do not comply with these new rules.