New Zealand Targets Network Costs as Power Bills Rise

The Government has released a discussion document through the Ministry of Business, Innovation and Employment seeking feedback on possible changes to the regulatory framework.

The New Zealand Government is considering changes to the way electricity distribution businesses are regulated as households and companies face rising power bills, with Energy Minister Simeon Brown and Commerce and Consumer Affairs Minister Cameron Brewer saying network operators need to do more to improve affordability.

Electricity distribution network costs account for about a quarter of household power bills and have been responsible for roughly two-thirds of recent bill increases, according to the Government. Ministers say those figures make the performance of distribution companies an important part of efforts to deliver electricity that is affordable, reliable and capable of meeting growing demand.

The proposed reforms form part of the Government's wider energy programme following the Frontier Review, which has placed greater attention on electricity costs, investment requirements and the ability of the sector to support increased electrification.

Distribution companies face pressure to improve efficiency

New Zealand has 28 Electricity Distribution Businesses, commonly known as EDBs, which operate the local infrastructure carrying electricity to homes and businesses, including power lines, poles and substations. Some of these companies are covered by price-quality regulation, under which the Commerce Commission determines maximum revenues and minimum standards of service.

Brown said regulated revenues were last determined in 2024, when interest rates had climbed sharply after a period of high inflation. Those financing conditions have contributed to the costs consumers are now experiencing, while distribution businesses are also investing in networks to prepare for increased electrification and higher electricity demand.

The Government has released a discussion document through the Ministry of Business, Innovation and Employment seeking feedback on possible changes to the regulatory framework. The focus is on keeping networks reliable while ensuring consumers receive value for the money being invested in electricity infrastructure.

Collaboration and stronger regulation among options

One area under consideration is greater collaboration and standardisation among electricity distribution businesses. The Government is examining whether more consistent processes, pricing methods and customer interfaces could reduce costs and create efficiencies without forcing companies to merge or undergo wider structural consolidation.

Changes to economic regulation are also being considered. Options include giving the Commerce Commission stronger performance monitoring and benchmarking capabilities, broader information-gathering powers and additional regulatory tools that could be used when existing disclosure requirements are insufficient but full price-quality regulation may not yet be necessary.

Officials are also looking at ways to make regulation more flexible and create clearer pathways for stronger intervention when an electricity distributor's performance warrants additional scrutiny.

Governance forms the third major area of the consultation. Possible reforms include clearer objectives for distribution businesses, closer oversight of investments outside their core electricity operations, stronger governance capabilities and an examination of whether existing ownership structures remain suitable as networks become more complex and require greater investment.

Growing electricity demand puts affordability in focus

Brewer said the scale of investment needed during New Zealand's energy transition makes it important to examine whether existing arrangements will continue producing good outcomes for consumers. Households and businesses need confidence that money spent on electricity networks represents genuine value and that companies are actively working to control unnecessary costs.

Greater efficiency and innovation across distribution networks could help limit future price pressures while supporting productivity elsewhere in the economy, particularly as businesses and consumers become increasingly dependent on electricity.

The Government is also considering whether the Commerce Commission needs more modern regulatory powers to encourage better performance across the sector. Ministers believe updated legislation could place downward pressure on bills while giving electricity businesses enough flexibility to invest in infrastructure and new technology.

The consultation gives electricity companies, consumers and other interested groups an opportunity to comment on the proposals before the Government decides whether regulatory or legislative changes should proceed. Submissions can be made through the MBIE website, where the full discussion document has been published.