New report suggests the time is right to review the electricity sector

Wednesday 13 December 2017

​​​​​Renewable energy targets and the take-up of new technologies mean it is the right time to review the regulatory settings for the electricity sector, according to a new report by law firm Bell Gully.

A balance will need to be found so that any regulatory changes deliver a level playing field that ensures there are no structural impediments to new industry investment, but incumbents are not unfairly penalised.

"New technologies and services are changing aspects of the electricity sector," said Bell Gully partner Garry Downs, author of The Big Picture: Electricity and New Zealand's Low Carbon Future. "Regulatory settings should allow any participant who wishes to provide new technology the chance to do so without structural barriers. This industry is vital to the nation's economic health: any changes must be carefully looked at to ensure they do not disrupt its essential function."

He said a key consideration was security of supply in periods of low rainfall that affect hydro lakes. That means New Zealand must retain a backup of gas-fired peaking plants.

The report provides an analysis of the changes that lie ahead for the electricity industry. The new Labour-led Government aims to achieve 100 per cent renewable energy by 2035, in a year of normal rainfall. It will charge the to-be-formed Climate Commission with planning that transition, which builds on the country's previous target of producing at least 90 per cent of electricity from renewable sources by 2025 in a year of average rainfall, providing supply security is maintained.

Meanwhile, the industry regulator has been consulting on whether the ​current regulatory settings for the electricity industry remain fit-for-purpose and the Government intends to initiate a review of retail pricing in the sector.

Progress by the electricity industry in renewable energy use is identified as a significant factor if New Zealand is to achieve a low-carbon economy. "A well-functioning renewables-based electricity industry is not the only initiative driving New Zealand towards becoming a low carbon economy but it is an important one," said Mr Downs.

He said there was strong industry interest in the recent consultations. "The availability of a number of new and innovative offerings also show the electricity sector's readiness to step forward," he added.

Click here to view​ the full report​​.

  • David Coull

    Partner Wellington
Related areas
  • Energy
  • Climate change