NZ Launches Review of Electricity Market to Ensure Reliable Power Supply

“New Zealand’s economic growth and prosperity rely on Kiwi households and businesses having access to affordable and secure electricity at internationally competitive prices,” said Mr. Brown.

The Coalition Government has announced the terms of reference for a wide-ranging review of New Zealand’s electricity market, responding to challenges highlighted during this winter’s power crisis. Led by Energy Minister Simeon Brown and Associate Energy Minister Shane Jones, the review aims to evaluate the effectiveness of current regulations and market structures in delivering affordable, reliable electricity to support the country’s economic growth.

“New Zealand’s economic growth and prosperity rely on Kiwi households and businesses having access to affordable and secure electricity at internationally competitive prices,” said Mr Brown. “Businesses need to invest and operate with confidence in stable and globally competitive energy markets, while households, schools, and hospitals must have a system they can rely on when it matters most.”

The review will examine several core areas, including investment and access to capital, competition within the market, and ongoing market performance monitoring. A significant rise in electricity demand is anticipated as New Zealand continues its shift toward electrification and renewable energy, according to Mr. Jones. “We have already made progress in bolstering the investment in renewable electricity generation infrastructure that we’ll need to support this demand,” he said.

The terms of reference outline key goals for the market, including:

Investment Incentives: Supporting investment in infrastructure to meet growing demand, both from existing participants and new entrants.

Efficient Outcomes: Ensuring productivity and dynamic efficiency in electricity provision.

Effective Competition: Fostering competition in wholesale and retail markets to reduce costs, making energy prices more affordable for both consumers and export businesses.

Regulation: Implementing effective regulation in cases where competition cannot occur, and ensuring that regulations remain predictable and proportionate, allowing participants to invest and plan confidently.

Mr. Jones highlighted that the terms of reference also emphasize the need for a market that can withstand increased demand without compromising service or affordability. “This review will ensure our electricity market incentivizes timely investments, encourages competition, and provides effective regulation, supporting New Zealanders’ long-term interests,” he said.

The recent winter season, with its pronounced supply challenges, underscored the need for regulatory reassessment. “We must ensure that gentailers prioritize the interests of New Zealand consumers,” said Mr. Brown, addressing concerns that regulatory gaps may have contributed to the winter power issues.

This review joins a series of government efforts aimed at enhancing the reliability and cost-effectiveness of New Zealand’s energy sector. Recently, the Government Policy Statement on Electricity was introduced to clarify the government’s role and expectations in the electricity market, with a particular focus on energy security and price control.

“Our government has already taken steps to enhance both national and regional energy security, and we look forward to reviewing the findings of this electricity market performance review,” added Mr. Brown. “Our goal is to ensure that New Zealand’s electricity sector remains robust and serves the long-term interests of all Kiwis.”

The review is scheduled to commence early in the new year, with findings expected to inform future regulatory and policy decisions aimed at safeguarding New Zealand’s energy future.