'Reset the market rules': Electricity Authority announces new rules for large energy companies

Economy / news

Large energy companies will have to offer pricing plan that gives consumers cheaper rates for off-peak electricity - Electricity Authority

16th Jul 25, 12:04pm by Mandy Te

An image of a the roof of a house which has solar panels.

Solar panel systems a house roof. Source: Unsplash

Large energy companies will have to offer a pricing plan which gives consumers cheaper rates for off-peak electricity by the end of June 2026.

This is one of the changes announced on Wednesday by the Electricity Authority (EA), who along with the Commerce Commission, had put together a task force to boost competition and encourage more investment in new generation.

Here are the specific changes:

Large retailers with 5% or more market share will have to offer a pricing plan that gives consumers rates for off-peak electricity by June 30 2026
Not all companies offer a rebate to households who supply power to the network from small-scale generation systems like rooftop solar and batteries, the EA says, so by July 1 2026, energy companies who don't offer plans that offer "fair rates" for power sold to the network at peak times will now have to pay these households

The changes have been welcomed by Energy Minister Simon Watts and Associate Energy Minister Shane Jones.

EA chair and task force member Anna Kominik says: “The decisions we’re announcing today reset the market rules to encourage choices that contribute to our electricity system for the benefit of all power consumers.”

Consumers who are active players in the power market will become important contributors to “a more sustainable and dynamic electricity system, and we will all benefit through lower power costs", Kominik says.

Commerce Commission chair and task force member John Small says currently, access to time-varying pricing plans for power use and supply is limited.

“The decisions announced today will help drive retail innovation and ensure most New Zealanders have access to these plans within a year so they can benefit from cheaper off-peak power.

“They also strengthen the case for rooftop solar systems with batteries, by rewarding people with these systems for the savings they provide the network when selling power into the system at peak times.”

'I want to see more New Zealanders benefitting from the smarter use of electricity'

Energy Minister Simon Watts says the Government is working on a review of the electricity sector with a focus on making sure New Zealanders get a "fair price and aren't hit in their pockets, and on addressing energy shortages".

"The changes today are welcome developments for consumers who are not getting a fair deal at present from the energy market."

The country needs more electricity generation to power the economy and New Zealanders “rightly expect abundant and affordable energy", he says.

“I want to see more New Zealanders benefitting from the smarter use of electricity. For this to happen, the electricity sector must appropriately reward consumers for the benefits they provide when they shift their power use away from peak times.”

Associate Energy Minister Shane Jones says small-scale systems will play an increasingly important role in enabling peak morning and evening demand to be met with local supply. “With new, fairer rebates in place, there will be better opportunities for people to receive income from solar electricity they sell back to the grid.”

'Our energy market is broken'

Businesses and consumer groups like the Auckland Business Chamber, Consumer New Zealand and the Employers and Manufacturers Association recently called on Prime Minister Christopher Luxon to fix the country's "broken" energy market.

"Our dysfunctional electricity market is holding back New Zealand's productivity, restricting out international competitiveness, and driving up the cost of living," the groups wrote in an open letter.

"The status quo cannot be allowed to continue."

The groups called for "comprehensive reform" that addresses "both the immediate supply challenges and the underlying structural problems that created them".

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18 Comments

by Keynes | 16th Jul 25, 3:05pm 1752635116

Remember everyone free-market privatized utilities deliver the best economic outcomes in all cases.

New Zealanders have consistently voted to retain a privatized market-oriented and monopoly electricity network because, we were told, this would deliver the 'best outcome for consumers'.

That may be questionable but the benefits to shareholders are not. Hundreds of millions of dollars paid out in dividends over the last decade or so. Straight from your electricity bill to some pension fund or investors ROI.

Scarcity of supply is essential to retaining good profit margins. Again, remember we voted in 2023 to put a stop to the hydro-lake storage project because it threatened to lower electricity prices over the long-term and make the sector less profitable.

To protect huge shareholder returns we must continue to prevent the electricity network from serving the needs of the broader economy and keep it solely focused on maximizing profits.

The deliberate stifling of generation capacity has to be allowed to continue to ensure that higher prices with less investment can be used to increase profit margins and dividend payments as has been the strategy up until now - with incredible results.

TBH - I'm laughing all the way to the bank as our industrial and manufacturing base is eroded and families and the elderly shiver in un-heated homes over winter.

One thing I know for sure this government won't change a thing - too many people in high places are making an absolute bomb.

by Keynes | 18th Jul 25, 11:26am 1752794806

Between 2014 and 2021, the four companies collectively paid out approximately NZ $8.7 billion in dividends to shareholders—even though their combined net profit over that period was around NZ $5.35 billion. This means they paid out about $3.7 billion more than they earned in profits

by interesting1234 | 16th Jul 25, 12:52pm 1752627150

It's good talk, but implementation and most importantly, monitoring and enforcement will be interesting to see play out come 2027 onwards.

by mfd | 16th Jul 25, 12:53pm 1752627216

These seem like fairly minor changes to me, although it would be interesting to know the details of what is a 'fair rate' for electricity sold to the provider. I thought most companies already offered variable rate options, and the best feed-in rates tend to come from the smaller companies (although I am happily selling my excess solar to Meridian for 17c for the next 4 years).

Looking at the Gentailers the share prices are essentially flat for the day, so investors aren't seeing much of a threat here.

As I usually do in these situations, I'll remind everyone of the coalition's catastrophic decision to cancel the NZ battery project just months before receiving the final report. What a waste of time and money.

by profile | 16th Jul 25, 4:47pm 1752641278

If people want access to off peak pricing wouldn't they just switch to wholesale spot pricing suppliers?

by Keynes | 16th Jul 25, 5:07pm 1752642442

Like the (now closed) paper mills did?

by profile | 16th Jul 25, 6:55pm 1752648958

They had had even more pricing options not open to the householder. If you want off peak or wholesale you can get it - you don't need a politician to help you. The hobby sized paper mills got wiped out by their uncompetitive scale and generations of unionism. Go big or go home in the paper business. Mechanical pulp is a very energy intensive process - if you don't have an internationally competitive power supply/efficiencies it is tough business. Who uses newsprint these days?

by CliveThorp | 17th Jul 25, 11:58am 1752710320

What has escaped the media's attention for some time is a paper on the EA's website reporting on a 'what if' scenario it conducted on the availability of wind and solar for electricity production. Its implications are stark if we want a secure power supply, implying we need lots more geothermal, gas or nuclear power to power our grid, irrespective of the wind and solar build-out.

The EA obtained hourly data from NZ's 89 weather stations from 1 Jan 2015 to 3 Dec2021, 7 years covering both La Nina and El Nino periods. It modelled wind generation at all sites (at the right height, etc) and solar at the 61 that had necessary data. The data show that during daytime, 20% of the time, solar is below 10% of its capacity. For wind, for about 5% of the time, (total) wind power was below 10% of installed capacity (cf, over a year, NZ's 13 wind farms have averaged 40% of capacity). These results imply, especially for peak morning and evening in the winter, that you would need 'firming' (ie, hydro, gas, geothermal) able to cover almost all the power otherwise obtained from wind and solar at least 5% of the time. In supply terms, wind and solar are alternatives only, and have to be backed up. Batteries are unlikely to be an affordable substitute at all.

So we need to be told this and about its implications, one of which has to be that overall price per unit is not coming down on average at all. The talking heads in this industry are unwilling to talk about his problem- supply continuity must be assured and it will be expensive and unattractive to many.

by mfd | 17th Jul 25, 1:12pm 1752714778

A great solution to this problem, as well as the longer term dry-year cycles, would have been Lake Onslow. Pump water up the hill when solar/wind are going well, then let it flow down when the clouds come over and the wind stops. This buffering would allow significant overbuild of intermittent generation.

Whether it's a cost effective solution is debatable, but it's certainly elegant and dramatically cheaper than current battery tech.

by Keynes | 17th Jul 25, 4:22pm 1752726142

Incumbent and entrant players in the generation sector complained that lake onslow scheme would create too much stability and predictability and make it less profitable and attractive to investors. And voters rejected it outright because "Da Maaaries was stealing all the water".

Being a voter in New Zealand is a smorgasbord of ignorant, self-indulgent stupidity and economic self-sabotage. And its an all you can eat menu of stupidity that churns out of Newstalk radio.

by mfd | 17th Jul 25, 4:25pm 1752726358

Yes, and wearing my other hat as a share holder in the big 4 gentailers isn't it great that we can persist with the system where so often coal and gas are required, bringing up the spot price of electricity dramatically? Isn't it great how this process drives the smaller competition who don't generate their own electricity out of business?

I wouldn't mind smaller dividends if it meant more competition, greener electricity, and competitive power prices to support NZ industry and households.

by Speedmax | 17th Jul 25, 9:27pm 1752744459

Obviously both wind and solar spend most of their time producing much less than their maximum rated output, because it’s not always blowing a gale and cloudless midday in June. What matters is the annual output they deliver, in MWh. And every bit of output produced leaves some water in hydro lakes for later. The way forward for cheap reliable power for NZ is to drastically scale up geothermal, solar and wind so that the hydro capacity can be sufficient to fill the gaps

by nigelh | 17th Jul 25, 4:37pm 1752727068

I'm still skeptical of the Onslow scheme (the battery project). I haven't checked the "final" report before it was cancelled but it seemed to be a consultants/civil contractors gravy train before even a sod had been turned. Only three capable people on the technical reference group, others questionable and the rest political appointees.

The political appointees on the technical reference group.

At the top of my useless list is.

Isla Day

Founding member of School Strike 4 Climate Aotearoa (now School Strike 4 Climate NZ).

Involved in youth-led climate activism at a national level; she was included in the group for her strong environmental credentials and youth perspective [Otago Daily Times Online News]

Given the position to keep her quiet for a few years no doubt.

running a close second if not a tie

Amanda Larsson

Lead Climate & Energy Campaigner at Greenpeace New Zealand. Experience in climate advocacy, campaigning and environmental policy engagement [Otago Daily Times Online News]

The obligitory Maori representative.

Hoani Langsbury

Ngāi Tahu Te Rūnanga o Ōtākou representative, and Department of Conservation Te Roopu Kaitiaki member.

Holds expertise in iwi governance and environmental stewardship [Otago Daily Times Online News]

by mfd | 17th Jul 25, 5:04pm 1752728684

The Onslow Scheme and the Battery project are two different things, and you can read up on the Onslow scheme without having to consider the makeup of the NZ battery project group. Then you will be able to make up your own informed opinion.

The purpose of the NZ Battery project was to assess Onslow as well as a variety of other alternatives to deal with the dry year project. That would have given us an interesting list of pros and cons and the ability to make a proper decision rather than de facto leaving it up to those with an interest in keeping electricity prices high.

by nigelh | 17th Jul 25, 6:48pm 1752734925

Yes you are correct but the Onslow project dwarfed the others and could be considered the master hydro battery storage scheme with other options likely to have fallen by the wayside. Comments about technical reference group still stands.

by mfd | 17th Jul 25, 6:56pm 1752735407

It wasn't just about hydro. Other options (some pushed by and in some cases still being explored by the gentailers) include a hydrogen plant with variable output, biomass rather than coal/gas for emergency thermal generation and geothermal with variable output rather than baseline generation. And as you suggest, other smaller pumped hydro schemes would have been considered.

What we actually ended up with is virtually all of the spending on the NZ battery project, including to the group you have issues with, but no final report to actually make a decision from. Worst of both worlds.

by powerdownkiwi | 17th Jul 25, 8:12pm 1752739920

Hydrogen is - and always was - a bollocks.

And local hydro schemes - while they are the best of all the options, resilience-wise - won't support BAU. Not even in the same ballpark. Most folk make the mistake of assuming BAU can remain AU - but it can't. So asking what can support it, is asking the wrong question. Asking what can be maintained? is the valid query.

by Keynes | 18th Jul 25, 11:26am 1752794788

Hey it's a real party - don't stop it now!

Between 2014 and 2021, the four companies collectively paid out approximately NZ $8.7 billion in dividends to shareholders—even though their combined net profit over that period was around NZ $5.35 billion. This means they paid out about $3.7 billion more than they earned in profits