2021 Monitoring reports

On 27 October we published a summary paper to assess whether prices over the review period were determined in a competitive environment. In this information paper we add the new finding that investment may have been impeded over recent years.

Prices have been high since the Pohokura outage in 2018. The purpose of this review is to assess whether prices over the review period were determined in a competitive environment.

We found that New Zealand’s largest generator is needed to meet demand over 90 percent of the time, offer prices at times appear unrelated to supply and demand conditions, New Zealand Aluminium Smelters is potentially paying below the opportunity cost for energy and its presence increases energy costs for the rest of the country, and some factors have held back investment, but this seems to be improving now.

On the evening of Monday 9 August 2021, New Zealand faced the largest electricity demand peak on record because of one of the coldest nights of the year. Approximately 34,000 customers, with over 17,000 in the Waikato region, experienced an electricity cut without warning.

This report is Phase 1 of the review, focused on assuring consumers that any problematic tools and processes used by Transpower as the system operator were urgently corrected. We make several recommendations: an annual pan-industry contingency exercise, work to resolve and formalise how priority information is to be cascaded and how affected customers and stakeholders will be notified, and an agreed communication approach to enable distributors and direct consumers to support a response to critical grid emergencies and manage localised network support pressures.