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Enabling investment and innovation

Updating regulatory settings for distribution networks

Improving competition and innovation on distribution networks to support a low-emissions economy.

  • Distribution

    • Overview

    The Electricity Authority Te Mana Hiko is looking at how to improve the regulatory settings for distribution networks, so they better support the electricity sector’s transition to a low-emissions economy. This work aims to give consumers confidence that distribution networks are able to support the way they want to access and use electricity and new technologies and allow them to increasingly choose if and how they participate in electricity markets now and in the future.

    We've published our workplan for the next 24 months which focuses on four areas:

    • Improved monitoring of the distribution sector to create a fuller picture of what information already exists, and what are the challenges faced by distribution networks
    • Better access and use of data and information to understand what’s happening on the low voltage networks and drivers of congestion
    • Looking at market settings to ensure they encourage participation, innovation, investment and coordination
    • Ensuring the regulatory system keeps pace with the volume, size and complexity of distributed generation and demand response applications so Aotearoa New Zealand can realise the full value of distributed energy resources.

    Consumers are becoming more able to play a role in either producing electricity for themselves or for the wider network, having more choice about how to access the energy they need, and adopting technologies to lessen the load on electricity networks at peak times. This work will give consumers confidence that distribution networks are able to support the way they want to access and use electricity. It also facilitates new technologies and allows consumers to choose if and how they participate in electricity markets now and in the future.

    One of the actions in the work programme was to address the risk that distribution businesses use their natural monopoly advantages in their core distribution business – or are perceived to be doing so – to impact on developing competition in the flexibility services market. We are developing guidance on distributor involvement in the flexibility services market to address this potential risk. We have also updated our guidelines on Code exemptions to better support industry trials of new electricity products, services or business models. This is another initiative to have come out of our work to update the regulatory settings for distribution networks.

    Timeline

    Past activity

    Project background

    Distribution networks provide the critical local infrastructure that connects electricity users with the national grid. These systems are vast and need to deliver electricity reliably and efficiently to all electricity users.

    As New Zealand transitions to a low-emissions economy, electrification of transport and process heat will create a substantial increase in electricity demand which distribution networks will need to meet. Technological change means more solar panels, electric vehicles and batteries will be connected, creating both new challenges and opportunities for distribution networks.

    The regulatory settings that govern the distribution network need to be at their optimum to ensure that challenges can be met, and opportunities taken advantage of, to encourage and enable distribution networks to support the low-emissions economy transition at the lowest possible cost to consumers.

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    Improving visibility of generation investment

    Improving information on investments in new generation connecting to the transmission and distribution network.

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    Distributor involvement in flexibility services market

    Developing guidance to support a competitive flexibility services market for more efficient and cost-effective use of the distribution network.

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    Transmission pricing methodology

    Allocating investment and funding correctly to ensure the best outcomes for consumers.

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