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Comalco (NZ) Ltd and Television New Zealand Ltd - 1994-014

Dated

18th April 1994

Number

1994-014

Programme

Frontline

Channel/Station

TV One

Broadcaster

Television New Zealand Ltd


Summary

A Frontline programme broadcast on 12 September 1993 focused on the electricity pricing

arrangements between Comalco (NZ) Ltd and ECNZ and raised questions about the rates

charged to domestic and large commercial consumers.

Comalco (NZ) Ltd, through its solicitors, complained to Television New Zealand Ltd that

the item lacked objectivity and left misleading and damaging impressions. In particular it

objected to the implication that Comalco's electricity was subsidised by domestic consumers,

and to the suggestion that its recent pricing agreement with ECNZ was to be kept secret so

as to avoid embarrassing the government in the pre-election period.

Maintaining that an investigation of the pricing arrangements was in the public interest,

TVNZ rejected all aspects of the complaint. It argued that the question about whether the

arrangement was a subsidy or a discount was balanced by comment from Comalco

officials and from energy analysts. It noted that the suggestion that secrecy about the

pricing agreement was politically motivated was raised as a valid question and was fairly

and reasonably reported.

Dissatisfied with TVNZ's decision, Comalco referred the complaint to the Broadcasting

Standards Authority under s.8(1)(a) of the Broadcasting Act 1989.

For the reasons given below, the Authority upheld the aspect of the complaint that the

item which referred to the Deane memorandum lacked balance, a majority upheld a

second aspect of the balance complaint which referred to Comalco's contribution to the

national economy and the Authority declined to uphold any other aspect of the complaint.


Decision

The members of the Authority have viewed the programme and read the lengthy

correspondence (summarised in the Appendix). Comalco requested the opportunity to

present oral submissions but, in view of the extensive and comprehensive submissions it

has received, the Authority followed its usual practice and determined the complaint

without a formal hearing.

An investigation of power pricing arrangements between Comalco and ECNZ raised

questions about the rates charged to a large commercial user such as Comalco in a

Frontline programme broadcast on 12 September 1993. Acknowledging that Comalco

was the single biggest user of electricity in New Zealand, the report traversed the history of

Comalco's pricing agreements and speculated about future arrangements. Analysis and

comment was heard from Comalco executives both in New Zealand and Australia, from

politicians, ECNZ representatives and energy analysts.

Comalco, through its solicitors, complained that the programme was not objective and left

misleading and damaging impressions. Expressing its disappointment at what it described

as the programme's lack of integrity, Comalco complained that false impressions were

given about the company's business activities in New Zealand. Comalco's dissatisfaction

with the programme was aggravated by the fact that it had provided substantial

background material to the producers which, it claimed, was ignored. Comalco believed

that it was wrong for the programme to give the impression that the price of power

supplied to Comalco was subsidised by other consumers, that Comalco paid less than the

cost of production and that its pricing arrangements with ECNZ adversely affected all

other consumers. It maintained that not only were these impressions wrong but they

were not supported by the material supplied. Comalco maintained that the chart supplied

by it clearly indicated that the contention that Comalco received subsidised power, to the

detriment of other consumers, was without foundation. Its principal concerns were that

the implication was made that Comalco's favourable deal with ECNZ amounted to a

subsidy funded by all other users in New Zealand; and secondly, that it was suggested that

its recent power pricing arrangement with ECNZ was being kept secret for 180 days to

avoid embarrassing the government in the pre-election period.

Comalco then identified the statements and omissions which it claimed would have given a

misleading impression to viewers. It argued that standards G1, G4, G6, G7 and G20 of

the Television Code of Broadcasting Practice were breached. Those standards require

broadcasters:

G1  To be truthful and accurate on points of fact.

G4  To deal fairly and justly with any person taking part or referred to in any

programme.

G6  To show balance, impartiality and fairness in dealing with political matters,

current affairs and all questions of a controversial nature.

G7  To avoid the use of any deceptive programme practice which takes

advantage of the confidence viewers have in the integrity of broadcasting.

Standard G20 reads:


G20 No set formula can be advanced for the allocation of time to interested

parties on controversial public issues. Broadcasters should aim to present all

significant sides in as fair a way as possible, and this can be done only by

judging every case on its merits.


In response to Comalco's complaint, TVNZ expressed its view that an investigation into the

question of why domestic power charges go up while big consumers negotiate discount

arrangements was in the public interest. Explaining that investigative journalism required

that information be gathered from a variety of sources, TVNZ advised that the

background material supplied by Comalco was assessed and balanced alongside other

publicly available information and comment from authorities both on and off the record.

It believed that the programme accurately reflected the divergence of views held and that

the disparate views were balanced and made a fair and impartial programme. TVNZ

argued that given the history of the power supply arrangement and the fierce debate at

public and official level in the past, it was justified in scrutinising Comalco's deal with

ECNZ. Acknowledging that Frontline may not have given Comalco an "easy ride", TVNZ

nevertheless maintained that it was balanced, impartial and fair. It declined to uphold the

complaint.

Aspects of the programme allegedly in breach of the standards


Comalco identified a number of aspects of the programme which it claimed were in breach

of the Television Code of Broadcasting Practice. For clarity, Comalco's arguments, TVNZ's

responses and the Authority's findings on each of these points are set out below.

1. The subsidy issue


Comalco argued that it was inaccurate to suggest that it has been and is being subsidised

by other electricity users in New Zealand. It rejected the proposition made in the

programme that the price that Comalco had paid did not meet the costs of electricity

production and the implication that it survived only because of the special deal it

negotiated with ECNZ. Acknowledging that it was sensitive about the accusation that it

receives "subsidised" electricity, Comalco accused TVNZ of failing to distinguish between

subsidy and discount. It was also critical of TVNZ's failure to use a chart provided by

Comalco which showed that it paid more for its electricity than the cost of production.

Comalco maintained that the cost of supplying power to the smelter was about 20% of the

price Comalco paid for its electricity and further, that even if the cost of supply was based

on the whole South Island system, the supply cost was still only 30% of the price Comalco

paid.

TVNZ denied that it ignored the figures and background material provided by Comalco,

maintaining that that material was weighed alongside information from other sources.

TVNZ believed that the decision about what to include had been made in a balanced and

fair manner.

Secondly, TVNZ pointed out that the claim that Comalco's electricity was subsidised was

not a new one. It had been made by Dr Deane (Electricorp's first Chief Executive) in 1987

and also by Dr Bertram, an economist, who was familiar with energy issues. TVNZ

observed that both Mr McDonald and Mr Stump of Comalco (Chief Executives in New

Zealand and Australia respectively) took the opportunity to rebut the suggestion that the

pricing arrangement amounted to a subsidy.

The Authority considered that the subsidy/discount debate was well traversed by both

parties in the programme. It noted that the introduction to the item had used the term

"discount" and it was of the view that this set the tone for the ensuing comments.

Although the issue of subsidy was raised by Comalco's critics, Mr McDonald and Mr Stump

were given the opportunity to rebut the suggestion that Comalco did not pay its own way

and did so competently and convincingly.

The Authority also noted that there was some debate about the connotations of the word

"subsidy", and accepted and understood Comalco's sensitivity about the accusation that its

electricity was subsidised. However, it believed that sufficient information was given to

enable the viewer to understand Comalco's argument that the price paid by Comalco,

while less than that paid by domestic consumers, was a special rate negotiated because the

cost of getting power to a single large consumer was substantially less than to domestic

consumers and, in addition, Comalco was obliged to "take or pay for" a fixed amount per

annum.

While Comalco provided a good deal of information about its operations, including

comprehensive financial reports, it did not disclose the actual price paid for its electricity.

Accepting that Comalco was not obliged to disclose commercially sensitive information, the

Authority acknowledged that it was appropriate that TVNZ investigate the suggestion that

it paid less than the cost of supply, particularly as that was Dr Bertram's view and one

which appeared to be supported by Dr Deane's 1987 memorandum.

The Authority concluded that the impression given by the programme – that Comalco paid

less than average consumers for its electricity – was not in dispute. It noted that Dr

Bertram's comment that other electricity users paid more as a consequence of the Comalco

deal was clearly his opinion only and was refuted by Mr McDonald and Mr Stump of

Comalco and by Dr Turner of ECNZ who refused to say whether Comalco received a

subsidy or a discount. The Authority was of the view that the debate had been balanced by

arguments from both sides and it declined to uphold the complaint that the discussion

about whether or not the pricing arrangement was a subsidy was unbalanced.

2. The vital piece of information

Comalco reported that it had given the programme makers factual information

supporting the figures it provided which showed that the cost to ECNZ of electricity

Comalco received was less than the price paid. That information was compiled in 1987

and was contained in a report which was sent to ministers. Comalco advised that at a pre-

programme meeting the reporter was told that Coopers and Lybrand had been briefed by

Comalco to verify the figures and was shown a copy of the report which contained its

analysis. It also reported that TVNZ was provided with a chart which displayed this

information. In Comalco's view, failure by TVNZ to use the chart implied that the

information could not be believed. It maintained that the "open question" approach taken

by TVNZ to the power cost issue was wrong because it was not able to be supported in light

of the facts provided.

In response, TVNZ explained that the reason it did not state that Comalco paid more than

the cost of production was because the vital piece of information it required to verify that

claim was denied it. Accordingly, it argued, it was not possible to state with certainty

whether or not Comalco paid more.

The Authority sought clarification from TVNZ about "the vital piece of information" which

it claimed was denied. The Authority learned that the reporter was of the view that when

Coopers and Lybrand verified Comalco's analysis of price and cost (for the February 1987

report sent to ministers), a separate report was written by Coopers and Lybrand and when

he tried to get a copy of that report he was denied it. In fact, according to Comalco, there

was no separate report by Coopers and Lybrand. That company had been engaged to

review independently the relevant data before it was sent to the ministers and the reporter

was informed of this. He was apparently also shown a copy of ministerial briefing papers

prepared by Comalco.

TVNZ elaborated further, explaining that in fact the vital piece of information it required

was the actual price Comalco was paying. Since none of the material provided disclosed

this, TVNZ advised that the reporter was entitled to conclude that Comalco was unable to

support its assertion that even though it paid less than other consumers, it provided a

better rate of return to ECNZ.

In the Authority's view, TVNZ was entitled to challenge that assertion. However, it

regarded as unfortunate that the claim that a vital piece of information was missing was

predicated on the false assumption that a Coopers and Lybrand report existed and that it

was being withheld from the reporter. The Authority learned, from the correspondence

between Comalco and TVNZ which ensued after the broadcast, that TVNZ also relied on

information from an anonymous official who suggested that it had never been accepted

by the negotiating officials that Comalco was paying more than the cost of production.

There was nothing on the record, according to TVNZ, confirming the Crown's acceptance

of the report which Comalco said had been verified by Coopers and Lybrand.

The Authority accepted that it was legitimate for TVNZ to challenge the veracity of the

1987 report which contained the figures showing the pricing analysis, especially when it

appeared that one of the negotiating officials had provided information to support such a

challenge.

Overall, the majority concluded that the discussion about the relative costs of supply and

the prices paid by Comalco as compared to domestic consumers was balanced. The

majority noted that Comalco's representatives explained why the pricing arrangement was

favourable for Comalco and believed that viewers would readily understand that the cost

of providing electricity to Comalco was considerably less than for domestic consumers and

that accordingly, Comalco was able to negotiate a lower rate. Comalco was given the

opportunity to respond to the argument, put by Dr Bertram, that it paid less than the cost

of production for its electricity. The majority declined to uphold the complaint that this

aspect of the programme lacked balance.

A minority believed that it was unfair not to question the Comalco representatives directly

about the existence of an independent confirmatory report instead of relying on

assumptions about its existence. Further, the opinions of Comalco's opponents about the

accuracy of the pricing information should have been balanced by giving more emphasis

to the data provided by Comalco, for example by providing the data in pictorial form as

was done with the figures from its opponents. The minority considered that TVNZ did not

sufficiently balance the two opposing interpretations.

The Authority declined to determine the complaint that this aspect of the programme

breached the standard requiring accuracy, on the basis that it did not have sufficient

information.

3. The 180-day period


Comalco objected to the suggestion made in the programme that its recent price

negotiations were being kept secret so as not to confirm the existence of a subsidy and to

avoid embarrassing the government in the pre-election period. It argued that this was a

straightforward commercial arrangement which had nothing to do with the election and

suggested that the inference made in the programme was consistent with TVNZ's theme

that Comalco was unduly secretive about its affairs. It maintained that such a view could

not be supported, and pointed to the large amount of material it had put on record.

TVNZ denied that any inference could be drawn that the arrangements were kept secret so

as not to confirm the existence of a subsidy. It also maintained that the programme did

not put as a proposition the suggestion that the 180-day period was related to the election.

It pointed out that the matter was raised as a valid question, and was responded to by Dr

Turner of ECNZ.

In its evaluation of this aspect of the complaint, the Authority took into account the

introductory remarks of the presenter when she said:

The deal's been done behind closed doors and it will remain secret for another one

hundred and eighty days while Comalco decides if it can live with it.


When, later in the programme, the suggestion of a political motivation was raised, the

Authority considered it was effectively dealt with by Dr Turner who emphatically denied

the suggestion that there had been a conspiracy between Comalco and the government.

The Authority was unable to conclude there was any breach of broadcasting standards in

the discussion of this issue.

4. Comalco's contribution to the economy

Comalco complained that the implication was made that it received power at a price less

than the cost of production and as a result other electricity users paid more. Comalco

maintained that this left the impression that Comalco was a drain on the New Zealand

economy. Arguing that such an inference was unfair and damaging, Comalco pointed out

that all reputable analyses showed that it made a positive contribution to the economy.

TVNZ denied that such an inference could be drawn and although it acknowledged that it

would have been good to have some reference to Comalco's contribution to the economy,

it did not believe the programme was seriously deficient for its absence.

A majority of the Authority was inclined to the view that questioning whether Comalco's

discount rate was justifiable should have been balanced by comment about its role as a

significant export earner and employer. The majority could understand why Comalco was

aggrieved. However it did not believe it was a major breach because viewers could be

expected to be aware, at least in general terms, of Comalco's contribution to the New

Zealand economy. It upheld the complaint that this aspect of the programme was in

breach of standard G6 because it was unfair to Comalco and lacked balance.

The minority believed it was outside the scope of the programme to comment on the wider

role of Comalco in the economy and failure to do so was not a breach of broadcasting

standards.

5. Impact of Comalco's power supply arrangements on other users


Comalco complained that it was inaccurate and unfair to compare the price paid by

domestic consumers with that paid by Comalco. It accepted that it was valid to question

why power prices for domestic consumers went up while a big consumer was able to

negotiate discount arrangements. However, Comalco objected to the fact that the

programme failed to explain the reasons for the disparity.

TVNZ denied that the programme said, or implied, that New Zealand consumers paid more

for power because Comalco gets it for less. That, it reported, was the view of the

Tasmanian Green Party representatives. Further, it noted that although the item

legitimately, in its view, compared the price Comalco paid with that of home consumers, it

also included comment from Mr Stump of Comalco denying any parallel between the

figures.

The Authority noted first that it was Dr Bertram who made the suggestion that domestic

consumers paid more for power because Comalco got it for less and that he was referring

to the New Zealand scene. However, in the Authority's view, Comalco's point, that the cost

of supplying a large take-or-pay consumer was substantially less per unit than the cost of

supplying domestic consumers, was well made, apart from the minority's reservations

expressed in point 2 above. Although the Authority agreed with Comalco that it could be

misleading to make direct superficial price comparisons, it observed that the programme

clearly made the point that Comalco got its power relatively cheaply because its demand

was consistent, unlike household supply. The point was also made by Mr Stump that the

distribution of transmission assets was a factor in domestic pricing – a factor which was

the responsibility of government and not of Comalco.

Overall, the Authority concluded that the debate on price disparity was conducted fairly

and that there was no breach of broadcasting standards.

6. The Deane memorandum


There was considerable reliance in the programme on a confidential memorandum

written in 1987 by the then Chief Executive of Electricorp, Dr Deane, in which he stated

that the smelter had been subsidised to a far greater extent than all other electricity

consumers and referred to a purported benefit to Comalco of $1–$1.5 million per week.

Comalco maintained that the essence of Dr Deane's memorandum was entirely

incompatible with the graphs supplied by it to TVNZ. It argued that Dr Deane's figures

had been thoroughly discredited by ECNZ and that Dr Deane himself had made it clear

that those numbers did not have any merit. It argued that although Dr Deane had not

been available to comment to the Frontline reporter initially, he did respond to TVNZ a few

days later but the reporter had not followed up with him.

TVNZ responded that the issue had been controversial for a number of years. It advised

that it attempted to contact Dr Deane for comment but that he had been unavailable.

TVNZ expressed surprise at Comalco's assertion that Dr Deane had attempted to respond a

few days later, reporting that it knew of no such attempt.

In support of its reliance on Dr Deane's figures, TVNZ repeated that it relied on

information from one of the Crown negotiating officials who advised that it was never

accepted by those officials that Comalco was paying more than the cost of production.

Furthermore, TVNZ argued, Comalco was given the opportunity to respond to Dr Deane's

figures.

The Authority could understand why Dr Deane's memorandum played a significant role

in TVNZ's interpretation of the pricing arrangements. It noted that Mr McDonald had the

opportunity to put Comalco's opinion that the numbers quoted by Dr Deane had no

validity and to make the claim that that view was supported by the chairman of ECNZ and

now by Dr Deane himself. The Authority accepted that TVNZ attempted to contact Dr

Deane to ascertain his views but that he was unavailable. It cannot resolve the dispute

between TVNZ and Comalco about whether or not Dr Deane was available at a later time.

However, the Authority was of the view that it would have been fair to Comalco, in the

absence of up to date comment from Dr Deane, to have sought comment directly from

ECNZ as to the credibility of the Deane figures. TVNZ's failure to do so was unfair to

Comalco and resulted in a breach of the standard G6.

Conclusion

In conclusion, the Authority comments first on its application of the standards which

Comalco alleged were breached in the programme. Comalco maintained that standard G1

was breached because misleading impressions were left by the programme. The Authority

decided that it was unable to determine the complaint that aspects of the programme were

inaccurate since it did not have access to the actual figures which would have verified the

facts. However, it observed that the essence of this aspect of the complaint was whether or

not the impressions created by the programme were fair to Comalco and this point was

considered under standards G4 and G6.

The second standard cited by Comalco was standard G4 which requires broadcasters to

deal justly and fairly with any person taking part or referred to in the programme. On

this occasion the Authority considered that the concerns raised under standard G4 were

subsumed under standard G6, also cited by Comalco, which requires broadcasters to show

balance, impartiality and fairness when dealing with controversial issues. It was this

standard which the Authority believed captured most of the complainant's concerns.

The Authority considered that standard G7, also raised by Comalco, was not applicable to

this programme. It referred to a previous decision (No:27/93) where it had decided that

the reference in standard G7 to "a deceptive programme practice" refers to some explicit

technique used by the broadcaster. No such technique was identified by Comalco, nor

could the Authority detect one.

The remaining standard raised by Comalco in its complaint, standard G20, requires

broadcasters to present all significant sides in as fair a way as possible. In the Authority's

assessment, the essence of this standard is that opposing views be balanced and it believed

Comalco's concerns were adequately addressed in its consideration of balance and fairness

under standard G6.

 

For the reasons set forth above the Authority upholds the complaint that

the broadcast by Television New Zealand Ltd of an item on Frontline on 12

September 1993 breached standard G6 of the Television Code of

Broadcasting Practice because it was unfair not to include comment from

ECNZ about Dr Deane's memorandum, and a majority upholds the

complaint that standard G6 was breached because it was unfair to Comalco

not to comment on its contribution to the New Zealand economy.


A majority of the Authority declines to uphold the complaint that standard

G6 was breached in the discussion about the accuracy of pricing

information.

The Authority declines to uphold any other aspect of the complaint.

Having upheld a complaint, the Authority may make an order under s.13(1) of the

Broadcasting Act. Overall, the Authority considered that this was a responsible

programme and although it has upheld two aspects of the complaint – that it was unfair

to Comalco not to include comment from ECNZ about Dr Deane's memorandum and that

no comment was given on Comalco's contribution to the New Zealand economy – it

believed that the general impression about Comalco was neither unfair nor unbalanced. It

observed that Comalco's critics were given opportunities to put their views, and that its

representatives were likewise given opportunities to challenge those views and both did so

persuasively. Although, as noted above, aspects of the complaint were upheld, the

Authority did not believe that the overall impression was unfavourable to Comalco.

Signed for and on behalf of the Authority

 

Iain Gallaway
Chairperson
18 April 1994


Appendix


Comalco (NZ) Limited's Complaint to Television New Zealand Limited

On 14 September 1993, the solicitors acting for Comalco (NZ) Ltd complained to

Television New Zealand Ltd that the broadcast of an item on Frontline on TV1 on 12

September lacked objectivity and left misleading and damaging impressions. This was

despite the fact that Comalco had made available substantial background material

(showing that such impressions were unjustifiable) which was simply ignored.

The programme was concerned with the recently announced agreement to review the

power supply arrangement between Comalco and ECNZ. It included background

information on power supply to Comalco and contemporary events involving a related

company in Tasmania.

Comalco stated that its principal concerns related to the main thrust of the programme

and the related propositions that:

a) Comalco is and has been subsidised by other electricity users (and perhaps

taxpayers) in New Zealand, and

b) the recent arrangements between Comalco and the supplier (currently,

ECNZ) have been kept secret so as not to confirm the existence of such a

subsidy and also as a premeditated attempt to avoid embarrassing the

present Government in the pre-election period.

More specifically, it continued, the misleading impressions left by the programme were

that:

a) the price of power supplied to Comalco is subsidised - that is, it is less than

the cost of production, and thus

b) other electricity users have paid and are paying a higher price because of

the Comalco power supply arrangements, and thus

c) Comalco is a drain on the New Zealand economy.


Comalco maintained that each of those propositions was wrong and was shown to be

wrong in the material supplied to (but ignored by) TVNZ before the programme was

broadcast and in interview answers which were omitted. It submitted that the item's

major themes were not proven, and particularly that the programme failed to show:

a) that there has been and can be no credible argument that Comalco pays less

than the cost of the power that it uses,

b) the meaning of "subsidy" in this context (and its distinction from the

concept of "discount"),


c) that all reputable analyses (including work by Dr Bertram) show that the

Tiwai Point smelter makes a very significant positive contribution to the

New Zealand economy,

d) that the valid comparison for electricity supply purposes is of cost of supply

against price, and not of prices alone for widely different types of

consumers,

e) that, with Comalco's location, 220,000 volt supply voltage to a single

supply point, and 24 hour day, 365 day year "take or pay" contracts, there

is no reasonable basis for comparison with the price paid by household or

small business consumers, and

f) the recent arrangement between Comalco and ECNZ, which incorporates a

period of 180 days during which Comalco and Sumitomo may decided

whether to confirm or reject the terms (including, of course, the price), is a

straightforward commercial arrangement and has nothing to do with the

forthcoming general election.

Comalco provided the transcript of the programme, copies of the materials it provided

Frontline and the covering letter from the Managing Director of Comalco (NZ) Ltd (Mr

McDonald). It also provided a copy of a chart which showed that Comalco was paying

more than the cost of production for its electricity. This chart, Comalco complained, was

not used by TVNZ and instead other graphs were shown which purported to compare

gross prices paid by various electricity purchasers in New Zealand. It was noted that the

producers of the programme were explicitly advised that the chart and related data had

been agreed with the Crown negotiating officials in 1986-87 and had been on the public

record, unchallenged, since then. The chart, it continued, showed that there was

absolutely no basis for contending that the supply of power to Comalco was subsidised.

Comalco argued that the use of other charts with gross price comparisons was misleading

and deceptive.

In addition, it noted that the programme "made significant play" of Dr Deane's 1987

reference, when ECNZ Chief Executive, to a purported benefit to Comalco over other

electricity consumers of $1 million to $1.5 million per week. Further, TVNZ failed to

acknowledge that ECNZ had disowned those numbers as having no validity and failed to

refer to published comments by Dr Deane and Mr Stein (ECNZ's General Manager,

Marketing), despite having explicit advice in Mr McDonald's letter of 1 September, that:

a) "electricity consumers were not subsidising Comalco" (Stein, Evening Post, 6

July 1989), and

b) "Each year the price adjustment with Comalco has been quite satisfactory as

far as we're concerned" (Deane, Evening Post, 19 July 1990).


Comalco advised that it believed that the programme breached standards G1, G4, G6, G7

and G20 of the Television Code of Broadcasting Practice.

TVNZ's Response to the Formal Complaint

TVNZ advised Comalco's solicitors of its Complaints Committee's decision in a letter dated 5

October 1993. It reported that the complaint had been assessed under standards G1, G4,

G6, G7 and G20, as nominated by them.

In its analysis of the complaint, TVNZ began by referring to the programme's introduction,

which, it said, pointed to the subject matter of the item and the issues to be raised. It

wrote:

The [Complaints] Committee felt that the issues raised were legitimate and in the

public interest. The question of why domestic power charges go up while big

consumers negotiate discount arrangements is clearly a matter that viewers have

an interest in.

It then proceeded to respond paragraph by paragraph to the points raised in Comalco's

complaint. (Comalco's arguments are underlined below).

1. The material made available which showed that the impressions given were

misleading and damaging was ignored.


TVNZ maintained that the background material provided by Comalco was not ignored. It

pointed out that the role of the investigative journalist was to obtain material from a

variety of sources and that Comalco's material was considered and balanced alongside a

great deal of other information from other sources. It believed that the decision about

what to include and what to leave out had been made in a fair and balanced way and

with a feeling for the issues at hand.

2. The item gave the impression that Comalco is and has been subsidised by other

electricity users (and perhaps taxpayers) in New Zealand.

TVNZ noted that this claim was not a new one and was made by Electricorp's first Chief

Executive Dr Deane in June 1987. The word "subsidy" was also used by Dr Geoff Bertram.

Both Mr McDonald (Managing Director of Comalco in New Zealand) and Mr Stump

(Comalco Australia) rebutted any suggestion that the pricing arrangement amounted to a

subsidy.

TVNZ maintained that the question of whether the arrangement was a subsidy or a

discount seemed to have been covered in the item.

3. The item gave the impression that the recent arrangements between Comalco and

ECNZ have been kept secret so as not to confirm the existence of a subsidy and

avoid embarrassing the Government in the pre-election period.


TVNZ denied that the programme contained any inference that the arrangements were

kept secret so as not to confirm the existence of a subsidy. The references to a subsidy, it

continued, were based on figures released in the past.

It also argued that the programme did not suggest that the arrangements included a 180-

day period of grace in order to keep the issue off the election agenda. That suggestion, it

noted, had been raised by other commentators.

4. The item suggested that the price of power supplied to Comalco is subsidised - ie it is

less than the cost of production.


Acknowledging that this opinion was given, TVNZ reported that it believed the views were

seen as being genuinely-held opinions by informed people and were therefore justified in

being reported. It referred to Dr Deane's memorandum in June 1987 which stated:

"Because the smelter has paid considerably less than a BST determined price, it has

been subsidised by the taxpayers to a far greater extent than all other electricity

consumers. With corporatisation, electricity consumers will now have to meet the

full cost of running the electricity system. Under the existing agreements, without

any explicit Government subsidy, all other electricity consumers will be subsidising

the smelter."


It believed that the clear message from this memorandum was that Comalco was not

meeting the full cost of supply.

TVNZ also argued that Comalco's definition of subsidy was much narrower than was

actually the case, noting that the Oxford Dictionary definition was "money granted by the

State or public body to keep down the price of commodities."

5. The item suggested that other electricity users have paid and are paying a higher

price because of the Comalco power supply arrangements.


TVNZ denied that the item said or implied that New Zealand consumers are paying more

for power because Comalco gets it for less. It noted that was the view expressed by

representatives of the Tasmanian Green Party in the context of a discussion about their

own situation.

It noted that while the programme compared the price paid by Comalco with that paid by

home consumers, it also included an interview with Mr Stump (Chief Executive of

Comalco in Australia) in which he denied any parallel between the two figures.

6. The item suggested Comalco is a drain on the New Zealand economy.


TVNZ denied that such an inference could be drawn from the programme, although it

added:

[The Complaints Committee] would have liked to see some reference in the

programme to Comalco's contribution to the economy overall, but did not believe

the programme was seriously deficient for its absence.


7. The programme failed to show that there has been and can be no credible

argument that Comalco pays less than the cost of the power it uses.


Pointing out that Frontline had approached both Comalco and Coopers and Lybrand for a

copy of the independent report which substantiated that view but was denied it, TVNZ

argued that when the information was not provided it was not possible to state with any

certainty whether or not Comalco paid more for its electricity than the cost of supply.

8. The programme failed to show the meaning of "subsidy" in this context (and its

distinction from the concept of "discount").

TVNZ argued that it was difficult to resile from the use of the word "subsidy" when it had

been specifically used by Dr Deane and others on the programme. It noted that Comalco's

representatives had put the case for the word "discount".

9. The programme failed to show that all reputable analyses show that Tiwai Point

smelter makes a very significant contribution to the New Zealand economy.


As acknowledged above, TVNZ agreed it would have preferred to have seen some reference

to Comalco's place in the national economy. However it accepted that the focus of the

programme, which was on Comalco's power supply arrangements did not make that

essential.

10. The programme failed to show that the valid comparison for electricity supply

purposes is of cost of supply against price, and not prices alone for widely different

types of consumers.


TVNZ had no argument with this but pointed out that Frontline was denied the data

necessary to make that comparison.

11. That with Comalco's location, 220-thousand volt supply to a single supply point,

and 24-hour a day 365 days a year "take or pay" contracts, there is no reasonable

basis for comparison with the price paid by household or small business consumers.


According to TVNZ, Mr Stump in his interview explained the "take or pay" 24 hour

provision, and it did not believe it was unreasonable that the two sets of figures were

provided.

12. The programme failed to show that the recent arrangement between Comalco and

ECNZ which incorporates a period of 180 days during which Comalco and

Sumitomo may decide whether to confirm or reject the terms (including, of course,

the price) is a straightforward commercial arrangement and has nothing to do

with the forthcoming election.


As indicated in #3 above, TVNZ's view was that it was a valid question to ask participants if

there was a relationship between the 180 day period and the election. The programme

also made it clear, TVNZ continued, that the power supply contract was a commercial

arrangement for Comalco.

13. The non-use of the chart supplied by Comalco (showing it paid more than the cost

of production) in comparison to the prominence given to charts purporting to

compare gross prices. The chart (and related data) had been agreed with the

Crown negotiating officials in 1986-87 and had been on public record,

unchallenged, since then. Comalco's chart showed that there was no basis for the

contention that its supply of power was subsidised. The use of other charts was

misleading and deceptive.


TVNZ noted that it had been advised by one of the Crown negotiating officials that it was

never accepted by those officials that Comalco was paying more than the cost of

production. The statement was simply Comalco's statement of position in the 1987

negotiations. It asserted that there appeared to be nothing on record which confirmed the

Crown's acceptance of that position and was of the view that Frontline was correct in

deciding not to use the chart.

14. The programme made significant play of Dr Deane's reference to a purported

benefit to Comalco of $1 million to $1.5 million per week but failed to acknowledge

that ECNZ had disowned the figures.

TVNZ asserted that it knew of no public record in which ECNZ disowned those figures. It

reported that Frontline specifically sought comment from Dr Deane as to whether he

resiled from the figures and he chose not to respond.

The Standards Allegedly Breached


Standard G1

TVNZ stated that it found no examples of inaccuracy on points of fact in the programme.


Standard G4

TVNZ argued that it did not believe the standard applied to a company and that standard

G6 was the more appropriate to deal with Comalco's concerns.


Standard G6

TVNZ stated that the reporter and director of the programme spoke to and gained

information from a number of sources and in addition, studied publicly available

information and interviewed various authorities both on and off the record. It believed

that the programme accurately reflected the divergence of views and ensured that

significant viewpoints were heard, including Comalco's. It was of the view that the

balance of viewpoints made for a fair and impartial programme.

Although it wondered whether or not it was fair to place Comalco and its power supply

arrangement under such intense scrutiny, TVNZ concluded that Frontline was justified in

taking this course. It added that it was mindful of a number of historical comments which

pointed to the need for the public to be kept informed, and concluded:

Given the history of the power supply arrangement and the fierce debate at public

and official level in the past, the Committee did not believe that the degree of

scrutiny to which the arrangement was subjected on Frontline constituted a breach

of Code G6. The programme may not have given Comalco (or ECNZ) an "easy ride"

but it was balanced, impartial and fair.

Standard G7

TVNZ observed that it could find no evidence in Comalco's letter to sustain a breach of

standard G7. It advised that a deceptive programme practice was usually taken to mean

that some technical trick was used to distort an image. It did not believe that the standard

was applicable to this complaint.

Standard G20

In TVNZ's view, the programme reflected significant viewpoints in a fair and balanced

manner. It noted that two representatives from Comalco were interviewed, as well as

representatives from the Green Party in Tasmania, representatives of ECNZ and an energy

lobbyist. It concluded that the programme dealt fairly with an important subject which is

in the public interest, pointing out that the focus was not so much on Comalco as on the

recent arrangement for power supply between ECNZ and its biggest customer.

It believed that the programme had been thoroughly researched and seemed to contain

information which was both accurate and fair, given that the precise details of the

arrangement between Comalco and ECNZ have not yet been released.

It found no breach of the programme standards in the broadcast.

Comalco (NZ) Ltd's Complaint to the Broadcasting Standards Authority

Dissatisfied with TVNZ's response, in a letter dated 3 November 1993, the solicitors acting

for Comalco referred the complaint to the Broadcasting Standards Authority under

s.8(1)(a) of the Broadcasting Act 1989.

Comalco explained that it took very seriously its obligations and reputation in New

Zealand and that was the reason it was pursuing the complaint. Expressing its extreme

disappointment at the programme's lack of integrity it reiterated the points made in the

complaint to TVNZ.

Comalco repeated that it believed the programme seriously and damagingly

misrepresented the position in relation to:

5.1 the suggestion that Comalco's New Zealand operations (in particular, the

Tiwai point smelter) are subsidised; and

5.2 the credibility and extent of information made public by Comalco on

various relevant issues; and

5.3 the suggestion of a "conspiracy" to suppress (until after the General Election)

details of the outcome of recent ECNZ/Comalco negotiations.

It noted that the programme made a case against Comalco by substantial references to Dr

Deane's 1987 memorandum and Dr Bertram's scepticism and further, that those

references were used to undermine its claims that:

(a) the electricity supplier receives a substantial margin over the cost of supply

of the power purchased for the smelter (the antithesis of subsidy), and

(b) that point has been accepted by NZED officials in negotiations with

Comalco.


Comalco argued that it was significant that the programme had failed to use the relevant

graphs and supporting information provided by Comalco and had persisted in using

graphs which illustrated inappropriate price comparisons. It stated that Comalco's

dissatisfaction was further exacerbated by the fact that it gave considerable assistance to

the programme makers:

in part to avoid a repetition of the defamatory and inaccurate contents of the June

1989 Frontline programme on Comalco and the smelter.


Accepting the inevitability that Comalco will be the subject of media attention, it argued

that it was still entitled to expect that broadcasting standards would be maintained and

that it believed a broadcaster acting with standards of integrity would have (at least):

(a) presented Comalco's pricing analysis (as illustrated in its graphs) as

Comalco's position and put it to Dr Bertram to probe his unspecific and

unsubstantiated but damaging scepticism,

(b) referred to Comalco's consistent, widely disseminated and unchallenged

public statements and communications with Ministers, officials and others

that its pricing analysis was accepted by negotiating officials in early 1987

(and, if there was an off-the-record dissent, to have come back to Comalco),

and

(c) referred to the ECNZ's chairman's refusal (in the June 1989 programme) to

endorse the data and conclusions in Dr Deane's 1987 memorandum.


Comalco suggested that there was a good current affairs programme to be made without

being unfair and damaging to it, but believed that TVNZ did not make it, even on the

second attempt.

Finally, Comalco submitted that given the seriousness of the breaches and the power of the

medium involved the only effective remedy would be a requirement that TVNZ broadcast

an appropriate statement approved by the Authority in terms of s.13(1)(a). It also

suggested that this might be an occasion on which the Authority should depart from its

usual practice and have a formal hearing, since the issues were important, numerous and,

at times, subtle.

Schedule to the Referral

Comalco appended a schedule to its referral in which it responded to points raised by TVNZ

in its letter of 5 October.

S4 Agreeing with TVNZ that the most important issue was why domestic power

charges go up while big consumers negotiate power agreements, Comalco

complained that the programme failed to explain three propositions:

a) that there were savings in cost of supplying a large consumer;

b) that it was normal for such a saving to be reflected in a discounted price;


and

c) that the differences between Comalco and an ordinary domestic

consumer were such that direct price comparisons were misleading.


S5 Arguing that over the years it had put a great deal of information on the public

record, Comalco complained that that information was not reflected properly in

the programme. It maintained that the programme should have put Comalco's

version as it has been consistently on the public record.

S6 Comalco maintained that the heart of its complaint was TVNZ's complete disregard

of the material supplied and this had not been squarely addressed by TVNZ.

S7 Comalco argued that the information it has put on the public record has not been

challenged.

S8 Comalco pointed to the material supplied by it to the programme makers and

requested that the Authority read it all.

S9 Comalco accused TVNZ of adopting an inaccurate and damaging equation of

"subsidy" with "discount".

S10 "Viewers were left with some challenged words from Comalco's spokesmen and

unchallenged smears from Dr Bertram. Comalco does not believe that approach

reflects the relevant broadcasting standards."

S11 The Deane memorandum. Comalco advised that although Dr Deane was

unavailable when initially approached to comment, he did respond several days

later but TVNZ did not follow up with him.

S12 According to Comalco Dr Deane's unavailability did not excuse the programme

makers from ignoring the content of Mr McDonald's letter of 1 September 1993.

S13 The essence of the Deane memorandum, Comalco argued, was entirely

incompatible with the graphs supplied by Comalco. It also took issue with TVNZ's

reliance on the opinion of an unnamed official, whose assertions were not put to

Comalco's representatives to challenge.

S14 Comalco inquired as to why earlier reported comments were not included.

S15 In response to TVNZ's expressed belief that the programme did not represent that

New Zealand consumers were paying more for power because Comalco gets it for

less, Comalco argued that that was the view given by Dr Bertram and he was

represented as knowledgeable on the subject and not challenged.

S16 Comalco challenged TVNZ's comparison of the price paid by Comalco and that paid

by home consumers.

S17 The Coopers and Lybrand report. Comalco disputed TVNZ's contention that the

Coopers and Lybrand report was the vital piece of information it required. It

pointed out that Coopers and Lybrand had been briefed to verify Comalco's analysis

(and the report sent to Ministers in February 1987 shown to the reporter) but that

no separate report by C&L had been made. It noted that the main graph given to

the reporter conformed with the corresponding graph in the report.

S18 Comalco denied that there was an "open question" about the power cost issue. It

maintained that there was a clear answer – which was unchallenged – and there

was no reason for the makers of the programme to reject the material provided.

S19 Comalco maintained, in spite of TVNZ's assertion to the contrary, that the clear

inference from the programme was that Comalco was a drain on the New Zealand

economy.

S20 Comalco noted that it had provided the programme makers with ample material

on its positive contribution to the economy and that it had been ignored.

S21 Comalco challenged TVNZ's assertion that it had been unable to detect an inference

that the reason the arrangements were kept secret was because there was a subsidy

and to publicise the fact would embarrass the government prior to the election.

S22 Comalco challenged TVNZ's assertion that the programme did not suggest that the

180 day period of grace was to keep the matter off the election agenda. Comalco

referred to page 13 of the transcript of the programme.

S23 Comalco argued that a persistent theme was that it was unduly secretive about its

affairs. This, it claimed, ignored the large amount of information on the public

record.

S24 Comalco submitted that it was wrong for TVNZ to suggest that standard G4 did not

apply to a corporation.

S25 Comalco added that it found it surprising that broadcasters might have the

freedom to deal unfairly with corporations when they were the subject of

broadcast programmes.

S26 Comalco submitted that TVNZ's interpretation of standard G7 was inappropriately

narrow. It argued that the non-use of Comalco's graphs was misleading and

accordingly a "deceptive programme practice".

S27 Comalco rejected TVNZ's conclusion that the programme was fair and balanced.

S28 Comalco argued that it was unfair to equate its stated position with the

unsubstantiated assertions of its detractors. It suggested this was an "equality of

opinions" argument which could only damage Comalco.

S29 Concluding, Comalco claimed that the programme contained unacceptable

breaches of broadcasting standards, "all of which are directed to programme

integrity."

TVNZ's Response to the Authority

As is its practice, the Authority sought the broadcaster's response to the complaint. Its

letter is dated 4 November 1993, and TVNZ's reply, 14 December.

TVNZ confirmed that it stood by the points made in its previous letter which outlined the

decision of the Complaints Committee. It maintained that the item was fair and accurate

and dealt with a matter of considerable public interest.

Referring to the numbered paragraphs (cited above) in Comalco's referral to the

Authority, TVNZ made the following additional comments:

5.1 ...the suggestion that Comalco's New Zealand operations (in particular the

Tiwai point shelter) are subsidised.


TVNZ responded that the programme reported a variety of genuinely-held opinions that

Comalco was indeed subsidised. It emphasised that it was essential that the news media be

able to report well-informed opinion and noted that the points were put to representatives

of Comalco whose replies (drawing a distinction between a subsidy and a discount) were

carried in the programme.

5.2 ...the credibility and extent of information made public by Comalco on

various relevant issues.


TVNZ argued that the specific thrust of the programme reflected the disquiet felt about the

undisclosed price at which Comalco was acquiring electricity. Several interviewees

including David Caygill, former Minister of Finance, voiced concern about the secrecy

surrounding the negotiations while Dr Geoff Bertram, an economist, noted that in spite of

vast amounts of material published, the key details about the pricing structure had not

been revealed.

5.3 ...the suggestion of a "conspiracy" to suppress (until after the General

Election) details of the outcome of recent ECNZ/Comalco negotiations.


TVNZ reiterated that the programme did not put the proposition that the arrangements

included the 180-day grace period to keep the issue off the election agenda. The matter

was raised as a valid question and was answered by Dr Keith Turner (ECNZ) and alluded to

by the minister. TVNZ described that as fair and accurate reporting.

Responding to Comalco's point that the programme made a case against it by referring to

Dr Deane's 1987 memorandum and Dr Bertram's scepticism, TVNZ maintained that it

regarded both sources as being well-informed and their views were relevant. It observed

that this had been a controversial issue for some years and that it was important that all

sides be heard. It argued that the reporting was fair and balanced since the significant

points raised by Dr Deane's memorandum and by Dr Bertram had been put to the

Comalco representatives and their replies reported.

With reference to Comalco's concern that graphs and other material supplied by it were

not used in the making of the programme, TVNZ responded that the decision about what

to include and what to leave out of the programme was made in a fair and balanced way.

It also noted Comalco's reference to a 1989 programme, observing that this complaint

was confined to the programme broadcast on 12 September 1993.

In response to the general observation that Frontline had breached acceptable

broadcasting standards, it expressed its view that the programme reported a subject

of considerable public interest in a fair, accurate and balanced manner.

It added that TVNZ believed that the programme presented all significant points of view in

as fair a way as possible, given that the figures at the centre of the debate were not

available.

It is pointed out that the issue of the cost of electricity to Comalco is one of

continuing public interest and that developments in this discussion are certain to be

covered in future news and current affairs programmes. Although this

programme was self-contained, it was at the same time part of an on-going series

of reports covering an issue "within the period of current interest" (as the

Broadcasting Act puts it).


TVNZ repeated its view that it saw no reason for the Authority to depart from its usual

practice of determining complaints "on the papers" and hold a formal hearing.

It then responded to points made in the Schedule to the referral letter. The numbering

below corresponds with the numbering in that schedule.

S4 In response to Comalco's claim that the programme failed to explain why domestic

charges go up while the price for big consumers is discounted, TVNZ cited three

extracts from the programme which, it argued, clearly explained the take or pay

pricing system.

S5–7 TVNZ maintained that it was wrong for Comalco to suggest that the programme

did not put its version of the facts. It noted that Mr McDonald had the

opportunity specifically to state the claim contained in his letter of 1 September. It

argued that the reporter took into consideration the material provided by Comalco,

adding:

We believe that it is only in rare circumstances that material not shown can

be the subject of the complaints procedure. Only when balance and fairness

are an issue should that occur and we do not accept that this item breached

the requirements for fairness and balance.


S9 The meaning of the word "subsidy". TVNZ pointed out that the word was

"susceptible of a number of different meanings", and noted that Dr Turner of ECNZ

had been unwilling to say whether the arrangement was a subsidy or a discount.


S11 With reference to Dr Deane's 1987 memorandum and Comalco's claim that TVNZ

had not tried to contact him to verify his stance, TVNZ recounted the events

surrounding the approach to Dr Deane. It maintained that Dr Deane had never

spoken to the reporter on this matter or left any messages indicating a wish to do

so.

S12–13 TVNZ repeated that it stood by its reporting.


S14 Quoting statements reported by Comalco representatives, TVNZ denied that

Comalco was not given an opportunity to respond to Dr Deane's comments.


S15 TVNZ denied that the programme conveyed only one view (that of Dr Bertram).


S16 TVNZ noted that Comalco has never disclosed the actual price it pays for power.


S17 The reason the independent analysis from Coopers and Lybrand was not used was

because it was not available to the programme makers.


S18 TVNZ maintained that the various sides of the issue were reported in a fair and

balanced manner and that so long as New Zealanders do not know the price of

power, the matter will be an open question.


S19–20 TVNZ denied that there was an inference that Comalco was a drain on the

economy.


S24–25 TVNZ acknowledged that standard G4 can apply to corporations but argued

that the primary issue was one of balance and that it was better subsumed under

standard G6.


S26 TVNZ referred Comalco to a previous decision of the Authority which defined a

deceptive broadcasting practice as something which involved a deliberate deception

on the part of the broadcaster.


S28 In response to Comalco's "equality of opinions" argument, TVNZ repeated that the

programme reported the genuinely-held opinions of a wide variety of people whose

claims were put to the Comalco representatives for response. It submitted that it

was unhealthy if the news media accepted without question that material

advanced by any organisation amounted to substantiated fact.


In conclusion, TVNZ restated its view that the programme was accurate, balanced and

impartial and that all significant views were represented. Comalco was given clear and

reasonable opportunities to respond and its views were included in the programme.

Comalco (NZ) Ltd's Final Comment to the Authority

When asked to make a final comment in response to TVNZ's reply, in a letter dated 10

January 1994, Comalco reiterated four points made in its earlier correspondence.

i) It maintained that it was insufficient for TVNZ to assert that the programme

complained of was about secrecy of information. It suggested that the "sting" of

the programme was that the secrecy was linked to the question of the subsidy.

Comalco also suggested the term "subsidy" was misused.

ii) Comalco argued that responsible broadcasting requires that due weight be given to

the contesting parties' ability to substantiate opinions in an area where factual

conclusions can be drawn. It maintained that its position was able to be

substantiated whereas Dr Bertram's position was not tested even though a

summary of his published work was made available to the makers of the

programme by Comalco.

iii) Comalco challenged TVNZ's interpretation of the Authority's decision (No 93/92)

where the Authority considered the applicability of standard G7. It argued that the

use of a misleading chart and the non-use of a relevant chart constituted a

"contrived" technique which deceived viewers.

iv) Comalco challenged TVNZ's argument that the Comalco executives were

experienced media performers and so ensured the necessary balance in the

programme. It argued that experience was immaterial if the editing and structure

denied credibility to what was said. It argued that this occurred when the final

word was given to Dr Bertram.

Finally, Comalco noted that the Authority had declined its request for an oral hearing.

Further Correspondence

The Authority sought from both Comalco and TVNZ clarification of the events at the pre-

programme briefing between the parties. Its letters were dated 3 February 1994.


TVNZ's Response

TVNZ's reply, dated 10 February, contained a response from the reporter which described

the course of events and the conclusions he drew.

1. He knew that Coopers and Lybrand had independently reviewed the Comalco

pricing arrangements. When he asked both Coopers and Lybrand and Comalco for

a copy of the report he was denied it.

2. The reporting team was shown a mountain of material at the pre-programme

briefing, none of which they took away with them. They were shown the graphs

which had already been sent to them by mail.

3. The vital piece of information which would have allowed them to verify Comalco's

claims was the actual price they were paying. Since this was not disclosed, the

reporter, the director and Dr Bertram concluded that nothing provided by

Comalco supported its assertion that it provided a better rate of return to ECNZ

than other consumers.

The reporter concluded he was being denied a vital piece of information because he

was not told the price.

Comalco (NZ ) Ltd's Response

Comalco's response, dated 18 February, included two letters from Mr McDonald which

referred to TVNZ's 10 February letter.

Comalco explained that the price it paid for electricity was not disclosed for reasons of

commercial confidentiality. It maintained that the "vital" information was the conclusion

drawn from the analysis, independently verified by Coopers & Lybrand and reflected in the

graphs provided.

Comalco argued that TVNZ was not entitled to simply ignore the material which had been

put on public record, especially since it had not been rebutted or challenged in any way. It

commented that the reporter was shown the material and did not raise any questions

about the validity of the data. According to Comalco, it was made clear to the reporter

that there was no Coopers & Lybrand report, but simply a letter which confirmed that

Coopers & Lybrand had reviewed the analysis.

Mr McDonald argued that price alone was not the issue, but it was the relationship

between the price paid and the cost of supply. He added that the reporter did not indicate

that he had doubts about the veracity of the material provided to him, nor did he say that

price was a vital piece of information, without which he would draw unfavourable

conclusions about Comalco.

TVNZ's Response

TVNZ maintained that the reporter was not given any evidence that the 1986-87 report

was verified by Coopers & Lybrand. He was not given the Coopers & Lybrand material in

either a report or letter form.

It repeated its belief that without knowledge of the actual price Comalco was paying the

graph's validity could not be verified.

TVNZ attached an article from The Independent which it believed provided new

information on the subject. According to TVNZ the article not only highlighted some of

the concerns in the Frontline item but new information gave a different insight into this

ongoing issue.


Comalco (NZ) Ltd's Response

Comalco's solicitors, while claiming to resist triggering a further round of correspondence,

commented in a letter dated 1 March:

1. TVNZ appeared to continue to suffer from the misapprehension that a Coopers &

Lybrand report existed.

2. TVNZ appeared not to accept that while it was inappropriate for Comalco to reveal

its price, independent verification was entirely appropriate and justified the validity

for the graphs.

3. The article from The Independent (18 February) was entirely irrelevant. Comalco

requested explicit acknowledgment to that effect by the Authority. Comalco

maintained that Cabinet papers (likely to be released soon) would reveal the true

position.

In a further letter dated 18 March, Comalco's solicitors repeated their view that the article

from The Independent was irrelevant. Comalco again sought an acknowledgment to that

effect by the Authority.

Comalco also reported that it had sought an independent review of the analysis on which

the article in The Independent was based. It noted that the review concluded that there

were major deficiencies in that analysis and more importantly, that the impact of the new

Comalco power arrangements on non-Comalco consumers was negligible and the net

national benefits for New Zealand exceed $500 million.

Therefore, Comalco noted that not only was The Independent article irrelevant but also

the conclusions drawn by the article were very wrong indeed.