- Hon Simeon Brown
- Hon Cameron Brewer
Electricity network costs are driving most of the increases in New Zealanders' power bills and the sector needs to help make power more affordable, Energy Minister Simeon Brown and Commerce and Consumer Affairs Minister Cameron Brewer say.
"The Government's goal is abundant, affordable and reliable power for all New Zealanders with the Government taking a number of actions to achieve this as part of the Government's Energy Package announced following the Frontier Review," Mr Brown says.
"With electricity distribution network costs making up about a quarter of household power bills, and responsible for around two thirds of the rise in those bills, distribution companies need to come to the affordability party.
"There are 28 Electricity Distribution Businesses (EDBs) in New Zealand, responsible for local infrastructure like power lines, poles and substations. Some EDBs are subject to price-quality regulation in which the Commerce Commission sets their maximum revenue and minimum service standards.
"Regulated revenues were last set in 2024 when interest rates had risen substantially following record inflation. Unfortunately, due to the high interest rates at that time, consumers are paying right now for that excess, on top of the cost of preparing networks for the greater electrification that is under way, and the increased demand that is coming.
"Supporting a reliable and affordable electricity system is one of this Government's top priorities, which is why we're asking for feedback on potential reforms to the regulatory framework that underpins this important sector.
"The discussion document released by MBIE today sets out options to strengthen the performance of EDBs so they can provide reliable and affordable services to consumers while supporting increased electrification and innovation.
The three key areas in which the Government is looking to take further action regarding EDBs, as outlined in the document, include:
- Collaboration and standardisation: Whether there are changes the Government could make to encourage greater collaboration between EDBs and more consistent processes, pricing approaches and customer interfaces. This is intended to help realise efficiencies of scale without requiring structural consolidation.
- More responsive economic regulation: Options to strengthen the Commerce Commission's regulatory toolkit, including improved performance monitoring and benchmarking, expanded information-gathering powers, additional regulatory tools between information disclosure and price-quality regulation, more flexible regulatory approaches, and easier pathways for applying stronger regulation where warranted.
- Stronger governance and accountability: Options to clarify EDB objectives, improve oversight of non-core investments, strengthen governance capability, and ensure ownership arrangements remain fit for purpose as investment needs and sector complexity increase.
"The cost of electricity and potential for rising bills is front of mind for New Zealand households and businesses. I expect the sector to play its part in improving affordability for Kiwis by boosting efficiency, including through greater collaboration and standardisation.
"Positive work is underway, but more change is needed to make the system more affordable for households and businesses."
Mr Brewer says the scale of investment required for New Zealand's energy transition raises questions about whether the current arrangements will continue to deliver the best outcomes for consumers in the future.
"It is vital that consumers have confidence that investment in their networks represents value for money, and that cost pressures are being actively addressed. Improved efficiency and innovation could help moderate prices and strengthen the economy more broadly," Mr Brewer says.
"That's why we are considering whether the Commerce Commission, as economic regulator, needs stronger and more modern tools to help lift efficiency across the sector."
"Ensuring the legislation is fit for purpose will put downward pressure on power bills and help unlock innovation and productivity across the economy as electricity demand grows."
Submissions can be made via the MBIE website where the discussion document is also available: https://www.mbie.govt.nz/have-your-say/consultation-on-edb.
