Energy Competition Task Force

This option supports the development of new intermittent generation, such as wind and solar. Access to firming (from flexible generation that can run at any time, such as hydro or gas peakers) enables developers to enter into power purchase agreements (PPAs) with large users and retailers that match their supply of electricity to their customers’ demand profile, and manage the risks of variable generation volume (eg, when the wind does not blow or the sun does not shine). The Authority will consider requiring gentailers to offer a minimum volume of flexible electricity in the form of long-duration contracts that could be used to firm new generators’ PPAs. A deeper and more active market for PPAs will enable more generation investment.

The Authority has facilitated the development of standardised flexibility products through an industry co-design group. The Group recommended a super peak product which will provide buyers with protection against high prices in morning and evening peaks. See the product specification sheet for details.

Aotearoa Energy is facilitating voluntary trading in the products by running fortnightly trading events. The Authority is actively monitoring trading and is supporting the initiative by publishing a subset of anonymised data on our EMI platform.

Standardised flexibility products will help all wholesale electricity buyers and sellers to manage their price risk while increased transparency of trading volumes and pricing will reduce transaction costs and assist purchasers in managing price risk and support investment in flexibility services.

These are important for retailers, industrial consumers, and generators, and are expected to become more important as the proportion of intermittent generation, such as wind and solar, increases.

With support from participants the expectation is that more efficient competition will benefit consumers by putting downwards pressure on prices.

This option would design rules to require gentailers to offer a minimum volume of their flexible generation base to buyers in the form of risk management contracts. This option will be considered as a backstop if previous measures aimed at increasing the supply of firming contracts in the market don’t produce the intended uplift in competition. This is consistent with the Market Development Advisory Group’s recommendation 13. Although this is a backstop measure, designing the rules now will advance the work so it can be implemented quickly if needed.

The Task Force will investigate the pros and cons of various measures to ensure a level playing field between gentailers and independent retailers. It will help us understand what measures would be appropriate, the risks and possible triggers, and inform the development of a stronger regulatory response if other measures in this Task Force work package aren’t creating the change needed. Possible measures that will be investigated include non-discrimination rules, which would require generators to treat the retail arm of their operations the same as they treat other retailers.

Thanks to early input from stakeholders who have provided the following feedback to help ensure our level playing field measures work is comprehensive.

We propose requiring distributors to pay a rebate when consumers supply energy to the system when certain parts of their network are congested. Under this proposal, any rebate would be taken off distributors’ charges to retailers. Our proposals under Initiative 2C would complete the process by ensuring the rebates are shared with consumers through retailers’ buy-back pricing plans. We expect this would lead to lower costs for all consumers over the long term as less flexible generation and network investment would be required. This initiative aims to avoid the need for distributors to build more infrastructure to cope with higher demand peaks, meaning lower overall costs, and lower prices for consumers in the long run. This initiative would also further incentivise investment in home solar and battery systems.

Time-of-use plans encourage consumers to shift their electricity use away from peak periods. We propose requiring all retailers above a certain size to offer these plans. When households and businesses intentionally shift their energy use to reduce demand at peak times, those consumers benefit through off-peak pricing and the electricity system benefits through reduced peak demand. This behaviour change also benefits all New Zealanders over time, as reduced demand on the system lowers the prices we all pay through our power bills.

We propose requiring all retailers above a certain size to offer variable buy-back rates to reflect the higher value of electricity supplied by consumers at peak times. This will fairly reward those consumers who have rooftop solar and batteries and will incentivise other consumers to make that investment.

Electricity retailers already pay consumers for energy they supply into the electricity network, for example from rooftop solar systems. However, most retailers' buy-back rates do not reflect the changing value of electricity throughout the day. Only a small number of retailers currently offer variable buy-back rates.

One of the ways to help manage our electricity supply is to lower demand at peak times. Industrial plants that use a lot of electricity can make a meaningful contribution to this by using less electricity when it’s scarce and expensive. The Task Force is considering measures that would enable industrials to be appropriately rewarded for the benefit their flexible electricity use brings to the system, freeing up more supply and reducing the need for more expensive electricity generation to manage peaks. This could also provide industrials with an additional revenue stream.

You can contribute to the Task Force programme by:

• attending events advertised on this page (See timeline)
• providing feedback via the consultation process for each proposal. Consultation timeframes can be found in the work programme above. We provide links to new consultation papers at the top of this page and promote them via our Market Brief newsletter and our LinkedIn page
• contacting us directly at taskforce@ea.govt.nz if you have something you would like to discuss.

The Task Force comprises representatives from the Electricity Authority and Commerce Commission, with staff from the Ministry of Business, Innovation and Employment as observers.

The Task Force will make recommendations to the Boards of the Commission and the Authority, as appropriate, for final decisions.

The Authority Board makes all decisions requiring Code changes, because the Authority is the only agency with the power to change or add to the Code. 

We are not suggesting industry make changes until decisions have been made. However, we do encourage market participants to consider what the proposals might mean for them and to share their feedback with the Task Force.

Where we are consulting, you can provide this information via the consultation process, alternatively you’re welcome to email us at taskforce@ea.govt.nz.

The two Packages are complementary - we see independent value in exploring initiatives under both Packages

Not at all - we want to hear a wide range of perspectives to help inform our work. Our door has always been, and remains, open to questions, suggestions and feedback from all interested parties.

We are keeping the Minister for Energy and Associate Minister for Energy informed of our work as it progresses.

Initiative 1C builds on an MDAG recommendation to design a targeted measure to address the concentration of control in the supply of flexibility products. We have drawn from MDAG’s model to develop 1C with some adjustments to reflect feedback from stakeholders, including the Electricity Authority’s Advisory Group.

We recognise the importance of having well defined triggers that are clearly linked to the problem the backstop measures are seeking to address. We are still developing proposed options for trigger tests.

The trigger test for 1C could consider open interest (the volume of active contracts that have been traded but not yet closed) alongside other indicators such as price, liquidity, number and type of active participants and ability to influence price.

For 1D, we expect the recent findings of the ‘Internal Transfer Price and Retail Gross Margin post implementation review’ and the current Risk Management Review consultation will provide important context when considering triggers for level playing field measures.

Under our Initiative 2A proposal, any rebate would be taken off distributors’ charges to retailers. Our proposals under Initiative 2C would complete the process by ensuring the rebates are shared with consumers through retailers’ buy-back pricing plans.

We are currently considering three options for how distributors' rebates should be determined, if this proposal goes ahead. Under two of the options, rebates would only apply to areas on the network that are congested. In the third option, the rebate is linked to the distributor’s rate for consumption and not toon whether there is congestion on the network.

We are seeking feedback on these options in a consultation paper currently out for feedback. Submissions close at 5pm on 26 March.

Yes. A cost-reflective distribution injection tariff is one of the options being explored in the current Initiative 2A consultation paper. Submissions close at 5pm on 26 March.

The Commerce Commission and the Electricity Authority are very aware of the cost pressures some households are facing. Both regulators recognise they have a role to play in an all-of-government approach to reducing energy hardship. Our respective work programmes aim to support smart investment that is efficient and reduces costs to consumers over time.

Where those with solar panels provide a service that benefits the energy system when needed at a particular time - and in doing so save money for consumers as a whole – we think it right they are rewarded. Those providing this service could in future, be communities or schools as well as particular households.

In addition, the Authority has specific work programmes underway to encourage more retail competition, such as improving comparison and switching services, to put downward pressure on prices.  The Authority’s Consumer Care Obligations will begin to come into effect from 1 January 2025, mandating key protections for consumers in New Zealand.

In addition to lowering costs for all consumers, more rooftop solar and batteries can improve the security of the national electricity supply as it can create a bigger buffer in the system for use when demand is high, and supply is tight.   

In October last year, the Authority undertook a survey of retailers to understand the extent of time-of-use pricing plans being offered. The results showed that some of the largest retailers do not currently offer time-of-use pricing plans or only offer them to select customers.

Our view is that time-of-use pricing plans are a simple, yet effective way to provide consumers with more ability to manage their own electricity use and costs and should be more widely available.

The Task Force has not yet determined what specific incentives to implement. However, we are open to what could work best in the New Zealand context, if needed, and welcome ideas from affected parties.

The Task Force is taking a broad approach to reviewing how industrial flexibility is offered into the market, and any potential solutions that are progressed. This includes a broad range of potential measures, some of which may be non-regulatory and may not require a formal consultation process.

We have indicated the likely timeframes of a consultation, without yet knowing if it’s needed, so interested parties are aware of this possibility. Even if formal consultation is not required, we will be having ongoing discussions with stakeholders throughout this process.

We are examining industrial demand response to determine whether our market settings need to change. A key part of this work is understanding what’s preventing wider uptake of existing incentives.

This Task Force initiative is being progressed in tandem with the Authority’s existing work to address some operational barriers to industrial demand response.

Addressing these barriers will make it easier for a broader range of consumers to participate in demand response. We recognise this will not address concerns from some consumers (particularly industrials) that avoiding high spot prices is an insufficient incentive to participate in these schemes. This issue is being looked at as part of initiative 2D.