Distribution companies provide and maintain the power lines that carry electricity from the grid to homes and businesses across New Zealand.
On this page —
Distributors have two Government regulators that look at what they charge consumers:
- Electricity Authority - is responsible for overseeing distributors' interactions with other industry participants and ensuring they comply with the requirements of the Code.
- Commerce Commission - sets and enforces information disclosure requirements for all distributors and maximum allowable revenue and network reliability for 17 distributors.
Improving distribution pricing
We're committed to improving distribution pricing to help deliver better outcomes for consumers. On average, distribution accounts for around 27 percent of an average household electricity bill, so it’s important that the costs of distributors’ networks are carefully managed.
Distribution pricing has wide impact - it affects how consumers use electricity, how distributors and others manage load. Also, the timing, level and location of distributors' investments in infrastructure (poles or wires) and new technology (distributed energy resources or demand management).
Getting distribution pricing right will support New Zealand's transition to net zero emissions. For example, it will help make sure that investment in new technology happens in the right place on the network.
How distribution pricing works
We want distribution pricing to send the right signals about the cost of electricity for consumers. When these signals are correct, we should see better use of the electricity network.
Our pricing reform expectations
In September 2022, we sent a letter to distributors setting out our expectations for pricing reform. This letter sets out the following five focus areas for distributors:
- planning for future congestion
- avoiding first mover disadvantage for new/expanded connections
- transmission pricing pass-through
- increased use of fixed charges
- not applying use-based charges (eg, AMD) to recover fixed costs.
These focus areas are consistent with our Distribution Pricing Practice Note. They outline our expectations for our 2023/24 assessment of distributors' pricing methodologies, after which we will publish distribution pricing scorecards on our distribution pricing page.
We appreciate the time and effort that distributors put into engaging with us on our pricing reform work. In 2023, our work will focus on:
- assessing and addressing any distribution pricing issues, such as first mover disadvantage for new and expanded connections
- supporting distributors with pass-through of new transmission pricing to distribution pricing
- progressing analysis of possible regulatory options to drive faster reform, including listening to distributors thoughts and ideas on how reform should be progressed.