Govt Moves to Ensure Fair Competition in Electricity Market with Non-Discrimination Obligations

Energy Minister Simon Watts and Associate Energy Minister Shane Jones emphasized that any advantage provided by gentailers to their own retailers will not be tolerated.

The New Zealand Government is reinforcing its commitment to a fair and competitive electricity market by supporting the Electricity Authority's (EA) proposal for mandatory non-discrimination obligations for electricity gentailers. Energy Minister Simon Watts and Associate Energy Minister Shane Jones emphasized that any advantage provided by gentailers to their own retailers will not be tolerated.

The proposal stems from the recommendations of the Energy Competition Task Force and aims to establish a more level playing field in the energy sector. The EA has launched a consultation process on these measures, which will be implemented progressively with increasing levels of regulatory intervention if necessary. The proposed approach includes:

1. Step 1: Implementing principles-based non-discrimination requirements.
2. Step 2: Introducing detailed non-discrimination requirements.
3. Step 3: Mandating that all gentailer-supplied hedge contracts be traded through a regulated market on equal terms for all buyers.

"These measures send a clear signal that unfair advantages in the electricity market will not be tolerated, ensuring that New Zealanders have access to a more secure and affordable energy supply," Mr. Watts stated.

The Government sees a reliable and secure energy supply as critical to delivering more affordable prices for consumers. By promoting increased competition, the proposal aims to encourage investment in new electricity generation and foster a more competitive retail market.

Associate Energy Minister Shane Jones highlighted the significance of these measures for independent and smaller electricity market players. "If these proposals are implemented, gentailers will be required to offer the same terms to independent retailers and generators as they do to their own retail arms. This will create a more competitive market and benefit consumers," he said.

The Electricity Authority and Commerce Commission, with oversight from the Ministry of Business, Innovation and Employment (MBIE), established the task force in response to last winter's power crisis. The focus is on enabling new generators and independent retailers to enter and fairly compete in the market, providing more options for consumers.

Mr. Watts, who recently met with gentailers, reaffirmed the Government's stance against a repeat of last winter's power issues. He stressed that all gentailers have a role in maintaining an affordable and reliable electricity supply and that further action will be taken if required.

"This consultation will provide a clearer understanding of what additional steps are needed to ensure reliable electricity supply, complementing the ongoing independent review of our electricity markets," Mr. Watts said.

The Government encourages stakeholders to participate in the EA's consultation process to help shape the final regulatory framework and contribute to a more competitive and consumer-friendly electricity market in New Zealand.