Electric Kiwi complains to ComCom about ‘big four’ gentailers

Energy retailer Electric Kiwi has filed a complaint with the Commerce Commission accusing Meridian, Mercury, Genesis and Contact of “abusing their market dominance” in the electricity industry.

Electric Kiwi chief executive Luke Blincoe says the four gentailers (power generators and retailers) have been able to keep competition out of the wholesale and retail electricity markets and keep electricity prices up.

Its Commerce Commission complaint follows the four power firms recording their biggest annual increase in their combined operating profits – about $2.7 billion in the year to June 30.

Electric Kiwi had filed the complaint because the regulations had been changed in April to make it easier for the commission to target practices that were anticompetitive, without having to prove intent, Blincoe says, adding it had also been waiting for the four to present their annual results.

Electricity Authority chief executive Sarah Gillies says its review into competition in the wholesale market did not draw any definitive conclusions on the exercise of market power.

“Stemming from that review we are exploring better information sharing processes and obligations with the Commerce Commission on any information the authority collects that may raise concerns about anti-competitive practices, including collusion or misuse of market power,” she explains.

“Additionally, we will consider options to strengthen wholesale market competition if new information arises on the exercise of market power or impediments to competitive entry, as part of our monitoring or other activities and investigations.

“In recent years we have introduced a suite of measures to improve trust and confidence in the wholesale market. This includes improving the disclosure of wholesale market information, publishing internal transfer pricing and profitability information, adding a commercial market-making scheme and introducing new trading conduct rules.

“We actively and transparently monitor the exercise of market power in the spot market and report on this analysis weekly.”

The authority considers any alleged code breaches brought to its attention and refers matters to the Commerce Commission where appropriate.

It is appropriate that complaints about the misuse of market power are dealt with by the Commerce Commission, says Gillies, adding the authority is “constructively working with smaller retailers to update them on our plans to improve how we monitor the retail market so we build a better evidence base to make decisions in the future”.

Consumer NZ has already voiced its concern about the four gentailers’ profits.

Meanwhile, the Commerce Commission has asked fuel companies to explain alleged pricing anomalies.

Commission chair John Small says the latest Quarterly Fuel Monitoring Report for the period ended March 31, 2023, has further highlighted pricing variation between cities and towns – and within individual centres.

Some of the pricing levels and variations are “concerning, with no clear underlying factors”, Small says, adding the commission is engaging with fuel companies to seek further information on how they are setting fuel prices for their retail sites to determine whether the pricing can be justified based on costs or other factors.

“In a competitive market, we’d expect to see prices at the pump reflect the cost of supplying fuel at the pump, whereas what we are seeing is retailers in some towns and cities charging a lot more for what is essentially the same product with similar cost components.”