NZ Launches Independent Review of Electricity Markets for Energy Security

The review aims to evaluate the effectiveness of current regulatory settings in delivering long-term consumer benefits, maintaining competitive pricing, and ensuring energy security.

The New Zealand Government has appointed a panel of independent experts to conduct a comprehensive review of the country's electricity markets, announced Energy Minister Simon Watts and Associate Energy Minister Shane Jones.

"The power crisis we experienced last winter underscored the critical need for affordable and secure electricity at internationally competitive prices," said Minister Watts. "Electricity is vital to the economic growth and prosperity of Kiwi households and businesses alike."

The review aims to evaluate the effectiveness of current regulatory settings in delivering long-term consumer benefits, maintaining competitive pricing, and ensuring energy security. As New Zealand transitions towards doubling its renewable electricity generation, the Coalition Government emphasizes the need for market-led solutions to energy challenges.

"Energy security is a top priority for our government as we move towards a more electrified economy," Watts added. "We expect this review to provide insights that will help keep prices down for Kiwis and ensure consistent, reliable access to power."

Addressing Last Winter's Crisis

Associate Minister Jones highlighted the urgency of the review, referencing the severe energy shortages experienced during the winter of 2024, which led to business shutdowns, halted manufacturing, and the importation of cheap coal to meet demand.

"New Zealand cannot afford another winter like 2024," Jones stated. "Power shortages stifle economic growth and force our businesses into impossible choices—between shutting down production or laying off staff. Our resourceful nation must have the infrastructure and policies in place to prevent such crises."

The Review Team

Global consultancy Frontier Economics has been appointed as the lead reviewer, tasked with addressing the seven critical questions outlined in the review's terms of reference. Their expertise in international electricity market design, risk management, competition policy, and financial instruments positions them well to tackle these complex challenges.

To ensure the highest standards of accuracy and robustness, two peer review roles will be undertaken by a team of international experts specializing in energy economics and market design. These peer reviewers will provide an additional layer of quality assurance throughout the process.

New Zealand-based Concept Consulting will serve as the local expert advisor, ensuring that Frontier Economics has a deep understanding of New Zealand's unique market conditions and regulatory environment.

"Collectively, these independent experts bring a wealth of experience, insight, and fresh perspectives essential for this type of review," said Watts.

Timeline and Next Steps

The final reports from the review are expected by the end of June 2025. Upon receiving the reports, Cabinet will deliberate on the recommendations and decide on subsequent actions to enhance the resilience and efficiency of New Zealand's electricity markets.

The Government's proactive approach aims to prevent future energy crises, support economic growth, and ensure that Kiwis have access to affordable, reliable, and sustainable electricity.