Update to Electricity Industry Participation Code will add non-discrimination obligations

Under the new rules announced by the Electricity Authority, the gentailers should:

• Treat independent retailers the same as they treat their own retail arms when supplying hedge contracts, except if there is an objective reason to do otherwise 
• Provide the Electricity Authority with annual plans explaining how they will comply with the NDOs and certifying their compliance 
• Submit retail price consistency assessments every six months to show that their retail prices reflect electricity’s actual expected cost, such that equally efficient retailers can compete 

The government intends to pass legislation increasing the penalties for serious breaches from $2m maximum to whichever is the greatest among $10m maximum, three times the commercial gain, or 10 percent of the company’s turnover. The government expects to effect the raised penalties by 2027. 

Goals of new rules

Brown shared that the Electricity Authority’s new rules seek to help the government: 

• Level the playing field in the electricity market 
• Prevent New Zealand’s four largest electricity generators from forcing out smaller competitors with their market power 
• Promote fairness within the market 
• Supplement prior efforts to deliver secure and affordable energy for the country’s households and businesses 

Erik Westergaard, the Electricity Authority’s acting chair, explained that the new NDOs aim to: 

• Spur competition and confidence within the electricity market 
• Promote transparency 
• Provide the Electricity Authority with information for monitoring and enforcement 

“A level playing field will encourage more competition, more investment and more innovation in the electricity sector,” Brown said in the government’s news release. “That means better prices and more choice for Kiwis.” 

Commerce Commission’s reaction

Dr John Small, chair of the Commerce Commission, called the Electricity Authority’s decision to introduce NDOs “a significant milestone.” 

Small noted that the NDO decision concludes the first tranche of the Energy Competition Task Force’s work, which has spanned eight initiatives. 

“The NDOs sit alongside wider recommendations, including strengthening hedge contract trading designed to address super peak demand periods, reviewing market making to ensure price transparency, and improving monitoring of over-the-counter trading,” Small said in the commission’s news release. 

According to Small, the Commerce Commission is eager to advance its “joint work with the Electricity Authority into 2026 to further strengthen the electricity market.”