Energy Competition Task Force identifies new ways to empower electricity consumers

The Energy Competition Task Force (Task Force) has identified new ways to give consumers more control over their energy costs and to harness the power of rooftop solar and batteries. The Electricity Authority Te Mana Hiko (the Authority) is now seeking feedback on three proposed changes to regulation to promote competition, reliable power supply, and efficient operation of the electricity market for the long-term benefit of all New Zealanders.

Two of the three proposed changes are about rewarding consumers for supplying electricity to the network at peak times, typically through their own solar and battery systems. The other would make ‘time-of-use’ power plans (plans that reward off-peak electricity use) available to most New Zealanders.

Electricity Authority Chair and Task Force member Anna Kominik says there are real benefits if consumers are empowered to more actively participate in the electricity market, including increased energy resilience and reduced power costs over time.

"New Zealand’s electricity market currently relies on a few big generators to supply electricity at select locations and transmit it to households and businesses across the country. But as uptake of solar and battery systems continues to increase, more consumers will be able to contribute to our electricity system. And as smart electronics and vehicles become more ubiquitous, consumers will also be able to more actively manage their own energy use and costs.

"We’re proposing three changes to help support this consumer empowerment and decentralisation of our energy system. Over time, this will increase community resilience and lower power costs for everyone," she said.

The proposals would require:

• Consumer-supply rebates from distributors: lines companies to provide a rebate when consumers supply energy into congested parts of the network (Task Force Initiative 2A)
• Time-varying retail pricing for consumption: large electricity retailers to offer at least one time-of-use pricing plan to all their customers (Task Force Initiative 2B)
• Time-varying retail pricing for supply: large electricity retailers to offer at least one time-varying rate for when they buy electricity from consumers (Task Force Initiative 2C).

Making ‘time-of-use’ power plans more widely available for Kiwis

Commerce Commission Chair and Task Force member, Dr John Small, said the Initiative 2B proposal would significantly increase availability of ‘time-of-use’ pricing plans. These plans reward consumers for using power during off-peak hours, meaning they can take advantage of cheaper off-peak power, instead of paying a single flat rate.

"While time-of-use pricing plans aren’t new, many consumers don’t have access to one through their current retailer. As these plans provide a simple, effective tool for consumers to manage their energy use and costs, we’d like to see all major retailers offer them, so more consumers have this choice."

Dr Small said the plans have the additional benefit of reducing overall electricity costs for consumers across the country.

"People on these plans are incentivised to shift their use away from peak periods when electricity is most expensive. The more consumers shift their use at these times - for example by running EV chargers later at night when electricity demand is generally lower - the less high-cost electricity needs to be generated, and this lowers costs for everyone," he said.

Rewarding consumers for supplying electricity to the network at peak times

Kominik explains that the initiative 2A and 2C proposals would reward consumers who can supply electricity when demand on the network is peaking, typically through their own solar and battery systems.

"We’d like to see people fairly rewarded for supplying power when it’s needed, and incentivise efficient uptake of flexible, small-scale electricity generation systems such as rooftop solar and batteries. Energy from rooftop solar supplied at peak times can ease pressure on the electricity network, reducing demand and keeping the lines costs we all pay for through our power bills to a minimum.

"By incentivising households and businesses to invest in their own generation, we can help meet New Zealand’s electricity needs when demand is high and improve community resilience," she said.

The Task Force invites feedback on these proposals through the six-week consultation period, which closes at 5pm on Wednesday 26th March, with two further weeks for cross-submissions.

Visit the Task Force Package Two webpage for more information about these proposals and details on how to have your say.

As part of this consultation package, the Electricity Authority is releasing an issues paper that explores whether the existing pricing rules for distributed generation are fit for purpose. The issues and potential solutions explored in this paper support the proposals in the Task Force initiative 2A consultation paper. Visit this Authority webpage for more information on the issues paper.

This diagram illustrates the various charges between distributors, retailers and consumers and where proposals for initiatives 2A and 2C would be incorporated.