Govt begins consultations on Open Banking and Open Electricity for Greater Competition and Lower Costs

Mr. Bayly highlighted the significance of banking and electricity as essential services for both personal wellbeing and economic stability.

Greater competition and reduced prices for New Zealand consumers are on the horizon as the government begins consultations on 'open banking' and 'open electricity,' according to Commerce and Consumer Affairs Minister Andrew Bayly and Energy Minister Simeon Brown.

Mr. Bayly highlighted the significance of banking and electricity as essential services for both personal wellbeing and economic stability. Currently, these sectors are dominated by a few large, profitable companies, creating a 'walled garden' that hampers competition and innovation. The introduction of 'open banking' and 'open electricity' aims to dismantle these barriers and foster a more competitive environment.

The first step in this initiative was the Customer and Product Data Bill, which establishes a legislative framework for secure data sharing across the economy. The next phase involves creating specific regulations for how this data-sharing regime will function in different sectors. Open banking will be the initial focus, with regulations expected to be developed by the end of 2025, ahead of the Commerce Commission's recent banking market study target.

Simultaneously, feedback is being sought on how to implement a consumer data regime for the electricity sector. The long-term goal is to extend this approach to other sectors such as insurance and telecommunications.

Minister Brown emphasized the potential benefits of open electricity, noting that Consumer NZ's research indicates an average savings of $524 per year for those who switch electricity providers. Despite these savings, only 10% of households changed providers in the past year, highlighting the high barriers to comparing plans and switching providers.

The current process for accessing electricity consumption data is considered outdated, with consumers only able to request this information up to four times a year. Open electricity will make this data more accessible, allowing consumers to better understand their energy needs and select the most suitable plan. This change is expected to improve transparency, reduce promotional gimmicks from energy companies, and encourage new entrants to offer competitive and innovative products, such as rooftop solar options.