Electricity Authority moves to rein in gentailers, boost competition

The Electricity Authority is pressing ahead with a package of reforms aimed at levelling the playing field between the country’s four large gentailers (Genesis, Contact, Meridian and Mercury) and smaller, independent power companies.

The moves come as part of the Energy Competition Task Force, a joint effort by the Authority, the Commerce Commission, and the Ministry of Business, Innovation and Employment, and are designed to strengthen wholesale market confidence, boost competition, and give New Zealanders better access to affordable electricity.

“Confidence in the market underpins healthy retail competition and affordable power prices,” Electricity Authority chair Anna Kominik says.

“We are concerned that aspects of the wholesale market may be eroding the confidence required for independent players to compete, and we are acting to address these concerns.”

Three key interventions

The Authority has confirmed three pro-competition interventions, which could be in place by mid-2026:

1. Wholesale hedge trading: Gentailers could be required to trade minimum volumes of a new hedge product, introduced in January, if voluntary trading volumes remain low. An issues and options paper is now open for feedback.
2. Non-discrimination rule: Draft code changes will be published in October to prevent gentailers from giving preferential treatment to their own retail arms over independent retailers.
3. Market-making review: A review of electricity futures market rules will be published in November to ensure they promote competition and transparency.

The Authority has also signalled it could step in urgently if supply of “shaped hedges” drops sharply. These hedges are vital for stabilising prices when demand peaks.

“Targeted and timely interventions are needed to encourage new generators and independent retailers to enter, grow and compete in the market,” Kominik says.

“These initiatives will promote healthy competition, retail innovation and investment in the sector – all of which are essential to deliver a reliable and affordable electricity supply.”

Govt welcomes move

Energy Minister Simon Watts welcomed the reforms, describing them as a crucial step in easing cost-of-living pressures.

“We know many Kiwis are struggling with the cost of living, with rising energy prices putting more pressure on their budgets. That’s why this Government is taking competition in the electricity market seriously because more competition means Kiwis can have access to more affordable electricity,” Watts says.

“Currently the large power companies can cross subsidise themselves because they both produce energy and sell it. The new rule will mean they have to offer their generation at the same rate to everyone and can’t offer themselves discounts. This will level the playing field by giving smaller companies a better chance to compete and will mean Kiwi consumers have more choices.”

Watts said the Government expected the Authority to continue pushing for “a more efficient, competitive, and reliable electricity market”.

“I have also received the final report of the electricity markets performance review, which looked at how we can improve the market to support economic growth and ensure access to reliable and affordable electricity for consumers. I will have more to say on the review’s outcomes in due course, once Cabinet has given careful consideration to its findings and recommendations,” he says.

Regulator and watchdog united

Commerce Commission chair Dr John Small says the interventions would work together to improve access and transparency.

“These initiatives are designed to work together to promote increased competition in the sector,” he says.

“Combined they increase transparency for market participants transacting with the gentailers and improve access to the wholesale electricity contracts they need. They would also give new players and investors confidence to enter the market and encourage the development of innovative new products and services.

“We don’t expect these proposed changes would materially increase gentailers’ costs but do expect they would lead to more choices and lower power prices over the long term.”

The Authority said it received more than 40 written submissions and held over 20 meetings during consultation earlier this year, with views ranging from strong support for faster change to concerns about regulatory overreach.

Kominik says the proposals were focused on measures that could be rolled out quickly.

“We know from the conversations we’re having that some feel that regulatory change is not happening fast or hard enough. The proposals being announced today target measures that can be rolled out in months, not years, driving timely progress while ensuring all parties can participate in and contribute to the process,” she says.