Our compliance strategy, framework and policies

Our approach to compliance

We work with industry participants and industry bodies to improve their awareness of obligations and support their understanding of the electricity market and how it benefits consumers. We publish case studies to improve practice and industry guidelines to guide participants on technical compliance obligations.

Our compliance team helps educate and improve the industry more generally, as lessons learned support our ongoing education of industry participants and help us to identify and resolve ongoing or systemic issues.

Industry participants are obliged to report breaches, but we also investigate issues and trends to identify breaches and their causes. See investigations and rulings.

Our compliance strategy

Our compliance strategy guides our compliance work to help us focus on the most serious and highest priority risks. The strategy sets out our compliance objectives, approach and the following guiding principles:

• Our decision making is transparent, evidence-based and understood
• We continuously improve our performance and impact
• We deliver better outcomes through clear and proportionate actions
• We are delivering benefits to consumers in the short and long term
• Our actions proactively enable change
• Our actions are informed by market signals, risks and opportunities.

The compliance strategy was updated in December 2025 and will be revised to remain current with our organisational priorities, legislative changes, and regulatory best practice.

Our compliance monitoring framework

Our compliance monitoring framework sets out how we monitor, investigate and enforce industry participants’ compliance with the Act, its Regulations and the Code.

We use a risk-based framework to help us decide where to focus our monitoring efforts and how to effectively allocate resources. The framework allows us to prioritise the areas we monitor based on the level of harm from non-compliance and the likelihood of undetected non-compliance occurring.

The high-priority areas for proactive compliance monitoring are:

• Trading conduct - conduct in relation to generators’ offers and ancillary service agents’ reserve offers
• Reasonable and prudent System Operator - System Operator must carry out obligations to reasonable and prudent standard
• AUFLS readiness - North Island connected asset owners must ensure AUFLS readiness and systems in place; South Island grid owner must ensure AUFLS readiness; asset owners must test AUFLS systems
• Wholesale market information disclosure - wholesale market information disclosure; disclosure of misleading, deceptive, or incorrect information; requirement to provide complete and accurate information
• Restrictions on materially large contracts - prohibits generators from giving effect to materially large contracts unless the net value from the contract to the generator is positive relative to the generator’s best alternative, or the buyer can on-sell unused megawatt quantities under the materially large contracts without the buyer being subject to any worse terms than if they had consumed the electricity themselves
• Risk management contract information disclosure - parties to risk management contracts required to submit information and must annually certify that information submitted was correct
• Revisions of submission information for reconciliation - participants to deliver revised submission information for reconciliation
• Grid emergency planning - participants must plan for a grid emergency.

Consumer Care Obligations compliance monitoring framework

We have developed a separate framework for how we monitor the effectiveness of the Consumer Care Obligations in the Code and our specific priorities areas for the next two years. These are set out in the framework and may change depending on the information and data we receive.

Our enforcement and prosecution policy

Our enforcement and prosecution policy sets out how we approach breaches of the Code by industry participants and the Electricity Authority. It outlines our enforcement options, and the factors we take into account when deciding which enforcement option to use.

It also sets out how we will exercise our discretion in relation to monitoring, investigating and enforcing compliance with the Act and its Regulations.

The policy is subject to, and must be read in conjunction with the Solicitor-General’s prosecution guidelines.

Our information gathering powers

We have the power to require certain information from industry participants as part of our monitoring, investigation and enforcement functions. We can conduct interviews and, in some situations under a warrant, may conduct a search.

Force majeure events

In a force majeure event, market operation service providers and ancillary service agents are exempt from obligations under the Code and Electricity Industry (Enforcement) Regulations 2010. Other industry participants do not have the benefit of the force majeure exemption. This is consistent with the position of force majeure in relation to the general law.

The following guidelines explain how we will consider breaches in a force majeure event.