Second Emissions Reduction Plan Shows Need For Greater Electricity Competition

The second ERP released today shows that in order for the Government to meet its emission reduction ambitions there needs to be meaningful change to make the electricity market more competitive and enable new entrants to invest and scale up the sector.

Enabling more renewable energy projects through the government’s Electrify NZ policy is critical. At the moment it is focused on RMA reform which is important, but this needs to be coupled with competition reform as more robust competition in the electricity market is needed to ensure adequate investment in generation.

“Around the world entrant generation developers are scaling electricity supply, New Zealand is currently missing out because the market settings favour the incumbent gentailers. Leveling the playing field for new entrants will spur building of new generation at a faster pace. Smarter retailing will also help us make use of energy more efficiently. This will drive electricity prices down and catalyse electrification and productivity growth which would be a win for meeting our emissions reduction targets and economic prosperity,” says Octopus Energy Chief Operating Officer Margaret Cooney.

“Last week, an OECD report encouraged the Government to use upcoming reviews to consider splitting out the generation and retail arms of the gentailers to spur more competition in the market. But it’s not just the OECD who think that.

“There is broad consensus now across international experts, business, and consumer advocates that something needs to be done about the state of our energy sector.

“The current settings mean gentailers are able to manage their pricing between their generation and retail arms, often selling energy to themselves for less than they sell to independent retailers.

“Until the rules are changed, we will continue to not attract the adequate generation needed to meet demand, especially as we move towards a more electrified economy. There is currently a large barrier to entry for new electricity generators because there are so few independent retailers to sell to.

“The Government should use the upcoming reviews to take worthwhile action to ensure an innovative and competitive electricity industry that encourages new generation, supports electrification of the economy, helps us meet our emissions targets, and brings prices under control for NZ households,” says Margaret Cooney.

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