A group of industry bodies and independent energy retailers have launched a new campaign calling for an overhaul of the energy market.
In response, Energy Minister Simon Watts told 1News a review into the market’s affordability and reliability was underway and announcements would come “in due course”.
In a full-page open letter in Sunday newspapers, the group asserts “our energy market is broken”, claiming the existing market structure was hurting Kiwi households and businesses by suppressing competition and delaying investment in new generation.
The groups involved include the Auckland Chamber of Commerce, the NZ Manufacturing Alliance, Consumer NZ, the Major Electricity Users group, and independent retailers such as Octopus Energy and Electric Kiwi.
Appealing to the Prime Minister, they wrote in the open letter that “the competitive pressures that should attract new investors” and drive fair pricing are “severely diminished” in a market dominated by so-called “gentailers” – power companies that both generate electricity and retail it to customers.
“Investment in new generation is being delayed, sustaining high prices, and contributing to the energy supply crisis we now face,” said the group, saying this results in lower productivity and international competitiveness, and drives up the cost of living.
The four electricity “gentailers” were 51% owned by the Government.
Karen Boyes, executive director of the Major Electricity Users Group, outlined her concerns in an interview with Q+A.
She said if reforms were not made, New Zealand faced a “risk of deindustrialisation”, citing closures of several industrial factories and sawmills during the 2024 winter that was partially attributable to rapid spike in electricity prices.
In a worst case scenario, “some businesses will struggle, particularly those who rely on both electricity and gas — things are getting twice as hard and it’s getting very hard to get gas”.
“I think you’ll see some struggle, hopefully we won’t see more leave, but we did see last winter Winstone Pulp and Oji [Fibre Solutions] closed some of their facilities, which is really going to hurt those local regions who rely on them.”
Boyes also highlighted the opportunity cost currently facing New Zealand if more generation wasn’t brought online.
“We’ll lose opportunities as well. We’ve got some great opportunities with data centres who could come here and make the most of our abundant energy — if we can get it abundant — who can set us up to compete internationally and grow the economy.”
Market performance review ongoing, announcements ‘in due course’ — Watts
Energy Minister Simon Watts told 1News ensuring the security and affordability of the country’s energy system was his “bottom line”.
New Zealand had both an energy shortage, with a low wind generation and faster than expected falls in gas production, and an electricity market “not functioning as well as it should”, he said.
“New Zealanders need to have confidence that the electricity market is doing its part to deliver on the long-term interests of Kiwis, and that there is enough competition to deliver the affordable prices we need.”
Watts said the Government initiated a review of the market’s performance last year which looked at how it could be improved to support economic growth and accessibility of reliable and affordable electricity.
“The Government will make announcements on this work in due course.”
For the full interview and story, watch the video above
Q+A with Jack Tame is made with the support of New Zealand On Air
