Energy Minister Simeon Brown and Associate Energy Minister Shane Jones have released the terms of reference to review the electricity market's performance.
The review, initiated by the Coalition Government during the winter power crisis, will examine whether current regulations and market design support economic growth and access to reliable and affordable electricity.
“New Zealand’s economic growth and prosperity relies on Kiwi households and businesses having access to affordable and secure electricity at internationally competitive prices,” said Brown.
“Businesses must be able to invest and operate with the confidence that they will have internationally competitive energy and electricity prices. Households, schools and hospitals must be able to rely on an efficient and affordable system that won’t let them down when it matters most.”
The review will address areas including investment and access to capital, market rules and competition, and market performance monitoring.
“We know that electricity demand is expected to grow significantly as our economy continues to electrify, and we have already made significant progress in enabling investment in the generation, infrastructure, and resources we need to double New Zealand’s renewable electricity generation,” said Jones.
The terms of reference set out how a secure and affordable electricity supply requires markets that:
- Incentivise timely investment in infrastructure and resources to reliably meet current and future demand (by existing market participants and prospective new entrants).
- Achieve efficient outcomes: considering productive, allocative and dynamic efficiency.
- Are effectively competitive at wholesale and retail levels, ensuring entry is feasible and placing downward pressure on prices, so export businesses are globally competitive.\
- Have effective regulation in markets where competition is not possible.
- Are regulated predictably and proportionately, enabling participants and consumers to plan, invest and trade confidently.
“The terms of reference released set out how a secure and affordable electricity supply requires markets that incentivise timely investment in infrastructure, achieve efficient outcomes, are effectively competitive, and have effective regulation that enables participants and consumers to plan, invest, and trade confidently,” said Jones.
Brown added the past winter brought into sharp focus the many challenges in the sector.
“We need to ensure our regulatory settings are effective at ensuring retailers have the interests of New Zealanders front and centre.”
The review is just one piece of the Government's work to improve energy security and keep electricity prices down for Kiwis.
The Government recently released the first Government Policy Statement on electricity to clarify its role in the market.
“We’ve already taken significant action to strengthen our national and regional energy security further. We look forward to seeing the findings of this electricity market performance review to ensure New Zealand has an electricity sector that works in the long-term interests of consumers,” said Brown.
The review is expected to get underway early in the new year.
