Why we monitor market performance
Our statutory objective is to promote competition, ensure that there’s a reliable supply of electricity and the electricity industry is operated effectively for the long-term benefit of consumers.
We monitor market performance on an ongoing basis to make sure market improvements are taking place according to our statutory objective and to evolve the Code (which sets out industry participant responsibilities, including our own duties and responsibilities).
The monitoring we do:
- tries to ascertain whether the observed market performance is consistent with a well functioning and disciplined market - and therefore to the long-term benefit of consumers
- reviews initiatives we’ve undertaken to see if they’re working as planned
- investigates whether long-term opportunities and incentives for efficient entry, exit and investment and innovation in the market are occurring
- checks whether industry participants are efficiently developing and operating the electricity system to manage both the security and reliability of our electricity supply.
We also monitor industry participants to make sure they are complying with the Code.
How we perform monitoring
We track and report statistics like final prices, retail market share and monthly switching reports on the electricity industry on the EMI website. We also:
- track and monitor all aspects of the sector - some examples include the evolution of offers to supply, the accuracy of pre-dispatch or indicative prices to align with final prices (determined after the fact), forward markets and their ability to provide long-term forward price signals and hedging instruments, hydrology conditions and their impact on wholesale prices
- provide regular statistics and reports
- provide in-depth reviews and studies of particular topics
- maintain databases and have analytical tools (such as vSPD and DOASA) available to improve industry participants’ own monitoring capacity.
Last updated: 19th August 2016
The Commerce Commission is responsible for promoting competition in markets for the long-term benefit of consumers by ensuring compliance with the Commerce Act.
The nature of electricity markets is such that market power can be exercised extensively and very briefly - no other market has this feature. It’s driven by many things, but capacity constraints and very inelastic supply and demand in the short run are the main reasons. The Commerce Commission deals with the detrimental impacts of long-term or permanent market power whereas the Authority is interested in the short-term, transitory exercises.
While there can be some overlap between our work and the Commerce Commission, our focus is on the competitiveness of electricity markets rather than the conduct of any particular market participant or group of participants.
We have a memorandum of understanding with the Commerce Commission.