Distributed generation pricing principles reform

Reforming distributed generation pricing to promote efficient investment

Upcoming Open Closed Decision
View cross-submissions Cross-submissions closed 3 June 2026
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Consultation

This consultation is the next stage of our work to review and update the network pricing rules for solar and other forms of distributed generation and storage – big and small.

The proposals in this consultation paper aim to support growth in generation connecting to distribution networks and keeping costs as low as possible for everyone in the long run.

Following feedback to our 2025 issues paper and other targeted engagements, we are proposing changes to the pricing rules to address four key issues:

  • address the under-allocation of some costs created by distributed generators that are paid by everyone else on the network
  • clarify the types of costs lines companies can allocate to distributed generators and the benefits they should be rewarded for
  • address situations where distributed generators pay more than others to connect if their connection triggers the need to extend the network, which can be a barrier to new generation wanting to connect
  • ensure pricing does not favour a lines company’s own distributed generation.

We also sought feedback on possible areas to address in the next stage of distribution pricing reform.

We expect these proposals would unlock more capacity on networks for distributed generation and encourage more efficient use of the electricity it supplies.

They would also help new distributed generation to be built in places where it brings the greatest benefit. This is important, because under the current rules, once capacity on the network is used up, the next generator to connect has to pay the full costs of the network upgrade. These high costs can deter the distributed generation from connecting altogether and stall future developments.

Overall, getting the pricing rules right leads to more efficient investment in distributed generation, more efficient use of networks and keeps costs as low as possible for New Zealanders in the long run.

We received 45 submissions, and nine cross-submissions. These are published below.

Correction and supporting analysis

On 21 April 2026, we updated the consultation paper to correct two tables in Appendix A. The tables included two types of transmission charges – benefit-based charges and connection charges. However, under the proposed changes, only the benefit-based charges component could typically be reallocated to distributed generators.

Transmission connection charges would not typically be reallocated to distributed generators under the proposals. For the purpose of this analysis, it is not practical to determine the specific cases where they could be reallocated or to estimate the level of such reallocation.

So, in the corrected analysis, the benefit-based charges are reallocated, but transmission connection charges are not.

To support understanding of the consumer impact analysis in Appendix A of the consultation paper, we have published a spreadsheet that details the underlying data and calculations.

The impact analysis provides an indication of how some distribution and transmission costs could be reallocated to injection connections under the proposal, and the impact this could have on reducing charges for non-injecting connections.

This analysis is indicative only as the distribution and transmission costs that could be allocated to injection connections are likely to grow over time as the level of distributed generation grows.

Consultation paper

Reforming network pricing for distributed generation - Consultation paper (updated 21 April 2026)

Reforming network pricing for distributed generation - Consultation paper (updated 21 April 2026)

Webinar

We held a webinar on 2 April 2026 to talk through the proposals and answer questions. You can watch the webinar below, read the presentation slides or Q&As.

Related work

This work follows the new rule, we announced in July 2025, that requires lines companies to pay a rebate when households and certain business consumers inject electricity to networks at peak times. The new rule came into effect on 1 April 2026.

Submissions

Download all submissions (.zip)

Cross-submissions

Download all cross-submissions (.zip)