The Electricity Authority is taking steps to create a more balanced playing field between the four major gentailers (Genesis, Contact, Meridian, and Mercury) and independent participants in the electricity market.
The Authority confirmed three specific measures to enhance competition, restore confidence in the wholesale market, and provide Kiwis with improved access to affordable electricity.
The Electricity Authority said it will implement the following changes, which are set to take effect by mid-2026.
- Options for requiring gentailers to trade minimum volumes of the new wholesale electricity hedge product introduced in January to help independent participants manage their risk. Regulation would only apply if voluntary trading volumes do not grow. The issues and options paper is now available for feedback.
- Code changes necessary to introduce mandatory non-discrimination obligations for the four large gentailers, with draft Code amendments published for feedback in October. This will provide greater confidence that the gentailers’ wholesale businesses are not treating independent retailers differently to their own retail businesses.
- A review of ‘market making’ in the electricity futures market to ensure it promotes healthy competition and transparency. This will be published for feedback in November.
EA said it is prepared to take immediate regulatory action if there is a sudden decrease in the supply of shaped hedges in order to stabilise the market while a long-term solution is developed.
By locking in costs during peak energy demand, shaped hedges assist retailers in managing risk and maintaining stable, affordable prices, even during periods of market strain.
“Targeted and timely interventions are needed to encourage new generators and independent retailers to enter, grow and compete in the market. These initiatives will promote healthy competition, retail innovation and investment in the sector – all of which are essential to deliver a reliable and affordable electricity supply,” Electricity Authority Chair Anna Kominik said.
John Small, Chair of the Commerce Commission and member of the Task Force, stated that the goal was to encourage competition within the sector.
“Combined they increase transparency for market participants transacting with the gentailers and improve access to the wholesale electricity contracts they need. They would also give new players and investors confidence to enter the market and encourage the development of innovative new products and services. We don’t expect these proposed changes would materially increase gentailers’ costs but do expect they would lead to more choices and lower power prices over the long term,” Small said.