Strengthening the wholesale market for winter 2025

Electricity Authority Te Mana Hiko (Authority) are progressing recommendations from the 2023 Market Development Advisory Group (MDAG) report to strengthen competition and support security of supply for winter 2025 and beyond.

We report quarterly to share our progress– read the January to March 2025 Quarterly Report.

MDAG recognised that incentivising retailers and generators to innovate, invest and compete is vital to deliver reliable electricity at the lowest possible cost and increase choice for consumers. We continue to deliver on many of MDAG’s recommendations, including progressing our thinking on opportunities via the Energy Competition Task Force (Task Force):

• In January 2025 we introduced a standardised flexibility ‘super-peak’ hedge product, developed by a Task Force industry co-design group. Since then, 50.8 MWs have been traded, giving participants better access to the tools they need to manage risk trading in the wholesale market (MDAG recommendation 8).
• The Task Force has recently proposed non-discrimination measures to level the playing field for retailers. This includes an outline of virtual disaggregation of the flexible supply base, as proposed by MDAG (MDAG recommendation 13).
• We are shining a spotlight on retail tariffs available to consumers. Increased retail reporting will enable the Authority to protect consumer interests, make proactive regulatory changes that support their needs and hold the industry to account (MDAG recommendation 3).
• We launched the Power Innovation Pathway, the Authority’s approach to unlocking innovation in our electricity sector and have approved several pilots that involve demand-side flexibility interface systems and protocols (MDAG recommendation 10).

Security of supply is our top priority as we look to winter 2025 and beyond. We’ve made changes that will help keep the lights on and support participants to manage risk and better forecast supply and demand:

• To improve forecasting of wind and solar energy, we’re procuring a new intermittent generation forecaster. We published our decision on amendments to the Electricity Industry Participation Code 2010 (Code) in February and are conducting trials to select a centralised forecaster. Improved forecasts will provide more accurate pricing and dispatch of generation, improving security of supply (MDAG recommendation 1).
• We recently consulted on proposals to extend and simplify the stress test regime to incentivise participants to manage their exposure to spot market risk. This is critical to ensure reliable supply and avoid consumer harm (MDAG recommendation 7).
• In March, we published a paper with our decision to update the energy scarcity values, reserve scarcity values and default value for controllable load in the Code. This will ensure the correct price signals for industry to respond, should a shortage situation emerge. It will also encourage investments in demand side flexibility, batteries and fast-start generation (MDAG recommendation 16).
• On March 14 we undertook an urgent Code change to give the System Operator enhanced information-gathering powers to better manage security of supply risks.

The MDAG report recommendations help guide our work to strengthen the wholesale electricity market and meet consumer demand in an increasingly renewables-based electricity system. We will continue to provide regular updates on our progress as we progress this important work.