<\/p>\n
\nEnergy Minister Simon Watts.
\nPhoto: Alex Burton\n<\/p>\n
The government is poised to announce its response to a review into New Zealand’s electricity market performance.<\/p>\n
The review was announced last winter, after shortages pushed up wholesale power prices.<\/p>\n
It led to increased pressure on the country’s major industry users, with a number of pulp, paper, and timber mills shutting down.<\/p>\n
The review, led by British firm Frontier Economics, kicked into action earlier this year, and looked into the impacts the market’s structure, design, and rules had on its performance.<\/p>\n
The roles and responsibilities of the regulator and system operator were also reviewed, as was the market monitoring and compliance enforcement system.<\/p>\n
Energy Minister Simon Watts would present the government’s response later on Wednesday morning.<\/p>\n
Two other groups – British company NERA Ltd and a team of four international experts – were asked to do peer reviews.<\/p>\n
Frontier was aided by New Zealand-based Concept Consulting to ensure it had an awareness and understanding of the New Zealand context.<\/p>\n
The review was expected to address areas like investment and access to capital, market rules and competition, and market performance monitoring.<\/p>\n
In regards to investment, reviewers were to look at how business ownership, structure, or market design affected incentives or opportunities to invest in generation, storage, transmission, and distribution.<\/p>\n
Reviewers also looked at the impact of market design and rules on competition, market entry, and expansion, and whether market participants had enough information and products to manage risks.<\/p>\n
The ban on offshore oil and gas exploration, since overturned, was also in scope, in particular whether it affected the availability of hedge contracts.<\/p>\n
Since the review was announced, calls for reform have grown louder.<\/p>\n
A Curia poll, conducted on behalf of the Auckland Business Chamber and Octopus Energy, showed 62 percent of respondents wanted the government to underwrite the cost of new electricity generation.<\/p>\n
The business chamber’s chief executive Simon Bridges, himself a former energy minister, said last week the reforms would need to be significant<\/a>.<\/p>\n The government currently owned 51 percent of Genesis, Meridian and Mercury.<\/p>\n Associate Energy Minister Shane Jones has floated the idea of re-nationalising the gentailers<\/a>, something the Council of Trade Unions (CTU) has also called for.<\/p>\n The CTU wants the government to reinvest the dividends it receives from the gentailers into buying back the shares it does not already own<\/a>.<\/p>\n The government has already taken some steps while waiting for the review, such as passing legislation to re-open offshore oil and gas exploration.<\/p>\n Earlier this week, the Prime Minister wrote to Labour leader Chris Hipkins<\/a> asking him to commit to supporting exploration for at least ten years, a move which Hipkins has called “desperate” and not a serious attempt to get any bipartisan agreement on energy strategy.<\/p>\n Hipkins told RNZ he had only read the letter after it had already been sent to media.<\/p>\n The Commerce Commission was also prepared to approve the big-four power companies to build up a coal stockpile<\/a> to use at Huntly station, to reduce the risks of future electricity shortages during a dry winter.<\/p>\n The Electricity Authority has also told the country’s gentailers to offer the same deals to independent competitors as their own retail arms, to level the playing field and put downward pressure on power prices.<\/p>\n