Why a well-regulated electricity sector matters to New Zealand

Electricity is an essential enabler. It helps make our modern lives possible and our businesses run.

It powers the alarm clock that starts our day, the heating that warms our homes in winter, the ovens that cook our meals and the devices that connect us with family, friends and work. It powers schools, hospitals, farms, factories and businesses of every size. It helps drive economic growth, supports thriving communities and will play an even greater role as New Zealand continues its transition to a more electrified future.

Because electricity is so fundamental to our daily lives and to New Zealand's future prosperity, it is vital that New Zealanders can have confidence in the systems and markets that deliver it. That is why regulation matters.

A well-regulated electricity sector creates the conditions for a system that is reliable, efficient and innovative. It provides certainty for investors to build and maintain infrastructure. It encourages competition that delivers value for consumers. It supports innovation and new technologies. And importantly, it helps ensure consumers can have confidence that the market is working in their long-term interests.

As the new Chair of the Electricity Authority Te Mana Hiko, one of my priorities is restoring and strengthening confidence in the electricity market. Confidence matters because it underpins every decision made across the system, from investment in new generation and infrastructure to the choices households and businesses make about how they use electricity.

Of course, when people talk about electricity, reliability is only part of the conversation. Affordability matters too.

Over the past year, data showed electricity prices for households and small businesses increased by an average of 6.8%. While that was lower than the roughly 8% increase seen the previous year, we know the combined impact of these increases means many New Zealanders are feeling significant pressure. Around a quarter of households reported struggling to pay their power bills last year.

That is something we take seriously.

Electricity is not a luxury. It is an essential service that enables people to participate fully in modern life. When households are finding it difficult to meet the cost of something so fundamental, it is impossible not to be concerned.

The Electricity Authority Te Mana Hiko does not regulate electricity prices.

That does not mean we are powerless to act.

Our role is to use the levers available to us to improve the outcomes the market delivers for consumers. We do that by strengthening competition, increasing transparency, improving consumer choice, creating efficiencies across the electricity system and ensuring consumers are better informed and protected. Over time, these measures help place downward pressure on costs and improve the value consumers receive.

We all know there are no quick fixes. Structural improvements to competition and market performance take time to flow through to households and businesses.

We know that offers little immediate relief to families who are struggling to pay their bills today.

That is why we are also working to strengthen consumer protections, particularly for domestic and small business consumers and those who are most vulnerable. While our long-term focus is on ensuring an efficient, competitive and reliable electricity sector, we are equally conscious of the real-world impact electricity costs have on New Zealanders right now.

For confidence to grow, people need to know that the market settings are fit for purpose, that participants are operating efficiently, and that the regulatory framework is keeping pace with a changing sector. Regulation cannot stand still. As technology evolves and New Zealand's electricity needs grow, we must be proactive in ensuring the market continues to deliver for consumers both today and into the future.

The Electricity Authority Te Mana Hiko has a clear purpose under the Electricity Industry Act. Our primary objective is:

"To promote competition in, reliable supply by, and the efficient operation of, the electricity industry for the long-term benefit of consumers."

We also have an important additional objective:

"To protect the interests of domestic consumers and small business consumers in relation to the supply of electricity to those consumers."

These objectives recognise an important truth: electricity markets exist to serve people.

Our vision is simple: reliable electricity at the lowest cost over time for New Zealand consumers.

Achieving that vision is not about pursuing the cheapest possible outcome today. A system focused only on minimising short-term costs risks underinvestment and poorer outcomes in the future. Instead, our focus is on long-term efficiency, making sure New Zealand has an electricity system that remains reliable, resilient and capable of supporting future generations.

When regulation works well, most people will not notice it. Their lights turn on. Their homes stay warm. Their businesses keep operating and thrive. The system simply works.

That is exactly as it should be.

Behind that reliability sits a complex and carefully balanced framework designed to ensure electricity continues to serve New Zealanders today, while supporting the country's ambitions for tomorrow.

As Chair, I see our responsibility as helping ensure that framework is trusted, responsive and fit for the future. By promoting competition, reliability and efficiency, and by protecting the interests of consumers, we can help build a stronger electricity sector that supports a stronger New Zealand.

Because when electricity works well, everything else has a better chance to thrive.