Govt to Ease Restrictions on Electricity Distributors Investing in Generation

Energy Minister Simon Watts and Associate Energy Minister Shane Jones confirmed the reforms as part of the coalition agreement between New Zealand First and National.

In a significant policy shift aimed at strengthening New Zealand's energy network, the Government has announced changes to restrictions on electricity lines companies investing in generation. Energy Minister Simon Watts and Associate Energy Minister Shane Jones confirmed the reforms as part of the coalition agreement between New Zealand First and National.

The move will allow electricity distribution businesses to invest more freely in generation projects, thereby increasing regional resilience and enhancing the national energy supply. Under the current regulations, distribution businesses are prohibited from owning more than 250 MW of generation connected to Transpower's national grid or more than 50 MW of generation connected to their own networks unless they establish a separate company or seek an exemption from the Electricity Authority.

"The existing rules impose unnecessary costs on distributors, despite other regulatory safeguards covering similar areas," Minister Jones stated. "Additionally, the exemption process creates delays and uncertainty, which we are working to eliminate."

Both the Electricity Authority's Code and the Commerce Act will continue to provide safeguards against anti-competitive behavior as distribution companies increase their generation investments.

Minister Watts emphasized the importance of the change in supporting energy security. "It is challenging to foster economic growth when energy security is uncertain. This reform is one of several initiatives our Government is pursuing to ensure businesses and everyday New Zealanders have access to a stable and secure energy supply."

The policy adjustment will be included in the Energy and Electricity Security Bill, which is scheduled to be introduced in the first half of this year. This legislative change is expected to unlock greater investment in electricity generation while maintaining a competitive market and enhancing national energy security.