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Energy Competition Task Force

Investigating actions to strengthen the performance of the electricity market in the short- to medium-term, for the benefit of all consumers.

  • Consumers
  • Wholesale

    • Open consultation

    1B: Regulating the standardised super-peak hedge contract

    Submissions due by 30 September 2025

    View consultation

    Overview

    The Electricity Authority and Commerce Commission have jointly established the Energy Competition Task Force (Task Force) to investigate ways to improve the performance of the electricity market.

    The Task Force was established in response to the fuel shortage and period of sustained high wholesale prices in August 2024, in addition to the immediate steps we, and others, took to manage security of supply and bring prices down.

    The Task Force’s work programme focuses on two overarching outcomes:

    • enabling new generators and independent retailers to enter, and better compete in, the market
    • providing more options for consumers.

    These outcomes will encourage more and faster investment in new electricity generation, boost competition, enable homes, businesses and industrials to better manage their own electricity use and costs, and put downward pressure on prices.

    The Task Force is considering both new initiatives and some that are already underway but can be accelerated so New Zealanders can benefit from a better performing electricity system sooner.

    Representatives from the Ministry of Business, Innovation and Employment will participate on the Task Force as observers.

    The Task Force’s recommendations will go to the Authority Board for final decisions. Any options that change market settings or regulations will follow the normal consultation processes.

    The Task Force expects its work programme will flex as evidence emerges on the potential impacts of different options, including through engagement. The eight options described below may be modified or augmented with other measures as the work progresses to ensure the best outcomes for consumers.

    Decisions

    After considering the Task Force’s recommendations, the Authority Board decides on options that change market settings or regulations. Following the consultation processes, the Authority Board then confirms final changes to regulation to achieve the Task Force objectives.

    Decisions on changes to give consumers more choices for how they use, buy and sell electricity – and lower their power bills (Initiatives 2A, B and C)

    We have confirmed new rules requiring large retailers (those with five per cent or more market share) now have to offer a pricing plan that gives consumers cheaper rates for off-peak electricity. This means we expect ‘time-of-use’ plans will be available to most New Zealanders by 1 July 2026.

    We have also confirmed changes that will reward those households who supply power to the network from small-scale generation systems (such as rooftop solar and batteries) at times when it’s needed most to keep the country powered up. This means we expect plans that offer fair rates for power sold into the network at peak times will be available by 1 July 2026.

    Read the decision papers

    Work programme

    Energy Competition Task Force work programme

    Energy Competition Task Force work programme
    Pro-competition policy reform roadmap

    Pro-competition policy reform roadmap

    Package one

    Enable new generators and independent retailers to enter, and better compete in, the market.

    This will encourage more and faster investment in new generation, which puts more energy into the system, strengthens resilience against future shortages and puts downward pressure on prices.

    1A. Consider requiring gentailers to offer firming for Power Purchase Agreements

    This option supports the development of new intermittent generation, such as wind and solar. Access to firming (from flexible generation that can run at any time, such as hydro or gas peakers) enables developers to enter into power purchase agreements (PPAs) with large users and retailers that match their supply of electricity to their customers’ demand profile, and manage the risks of variable generation volume (eg, when the wind does not blow or the sun does not shine).

    The Electricity Authority considered requiring gentailers to offer a minimum volume of flexible electricity in the form of long-duration contracts that could be used to firm new generators’ PPAs (an “allocation” approach). Based on feedback from a wide range of stakeholders we now believe that:

    • While access to firming is a key issue affecting investment in new power generation projects
    • An allocation approach is not the best way to address this issue, because it distorts market signals and incentives.

    We instead believe it is more effective to consider improved access to firming via the work on standardised flexibility products, the proposed level playing field measures (particularly the non-discrimination obligations) and complementary initiatives to encourage PPAs which will enable new investment without the risks associated with allocating firming volumes.

    View update paper

    1B. Introduce standardised flexibility products

    Standardised flexibility products enable retailers to offer stable prices to consumers while managing their exposure to volatile morning and evening peak wholesale prices.

    This increases competition in the market, brings more power into the system, provides more choice for consumers, and puts downward pressure on retail prices.

    These products are becoming increasingly important as the electricity system becomes more reliant on renewable generation and spot market pricing becomes more volatile.

    In 2024 we established an industry co-design group to develop a new standardised flexibility product. The group recommended a super peak product which will provide buyers with protection against high prices in morning and evening peaks.

    See the product specification sheet for details.

    Voluntary trading in the super-peak product began in January 2025.

    Aotearoa Energy is facilitating voluntary trading in the products by running fortnightly trading events.

    The Electricity Authority is actively monitoring trading and publishing auction results.

    Our flexibility hedge products dashboard shows prices and traded volumes of key types of flexibility products to help industry make operational and investment decisions.

    While voluntary trading of the new super-peak product has already improved availability and pricing, the market remains shallow, with limited seller diversity and low trading volumes.

    To address this, we are proposing to set clear expectations for robust participation in voluntary trading by the gentailers. The gentailers own over 95% of flexible generation, which backs shaped hedge contracts.

    Regulation may follow if trading does not improve, and we are ready to intervene with urgent regulation if there is a sudden material reduction in the supply of shaped hedges.

    We are now seeking feedback on options for regulation to apply if voluntary trading fails to deliver sufficient competition. This includes seeking feedback on market making on the over the counter (OTC) market as our preferred approach.

    Feedback closes at 5pm, Tuesday 30 September 2025.

    View the consultation: Regulating the standardised super-peak hedge product

    1C. Prepare for virtual disaggregation of the flexible generation base

    This option would design rules to require gentailers to offer a minimum volume of their flexible generation base to buyers in the form of risk management contracts. This option will be considered as a backstop if previous measures aimed at increasing the supply of firming contracts in the market don’t produce the intended uplift in competition. This is consistent with the Market Development Advisory Group’s recommendation 13. Although this is a backstop measure, designing the rules now will advance the work so it can be implemented quickly if needed.

    1D. Investigate level playing field measures such as non-discrimination rules as a regulatory backstop

    The Task Force considered the pros and cons of various measures to ensure a level playing field between gentailers and independent retailers.

    We consulted on a proposal to introduce a new electricity industry rule called ‘mandatory non-discrimination obligations’ that the four large gentailers - Genesis, Contact, Meridian and Mercury – would have to follow.

    This new rule would prevent the gentailers from giving preferential treatment to their retail arms for hedge contracts. Instead, they would have to make these contracts available to all industry participants on effectively the same terms as they use when trading internally. This would ‘level the playing field’ so independent retailers and generators can better compete with the gentailers.

    We are now progressing to consultation on Code changes necessary to introduce mandatory non-discrimination obligations.

    We will consult on draft Code changes in October 2025.

    View level playing field measures (February 2025) consultation

    Package two

    Provide more options for consumers. Initiatives 2A, 2B and 2C, as described below, have been updated to reflect recent decisions. Package Two initiatives are:

    2A. Requiring distributors to pay a rebate when consumers supply electricity at peak times

    We have decided that distribution pricing methodologies must include negative charges for consumer-supplied electricity at peak times.

    Currently, most distribution price signals only apply to consumers using electricity, not to those supplying it back to the network. We are now requiring distributors to introduce ‘negative charges’ for electricity supplied by mass-market customers2 at peak times. We consider that this will help achieve two important objectives:

    1. encouraging consumers to supply power to the network when it’s needed; and
    2. fairly rewarding them when the power they supply benefits the network.

    These changes will support New Zealanders making decisions about buying rooftop solar systems with batteries (or other forms of flexible generation). They will also encourage those with such systems to use them in ways that support our energy system.

    We want to encourage people to supply surplus energy to the network when it’s needed, because this benefits our electricity system and, over time, lowers the lines costs that we all pay through our power bills.

    View decision

    2B. Requiring more retailers to offer time-of-use pricing

    We have confirmed new rules that large retailers (those with five per cent or more market share) now have to offer a pricing plan that gives consumers cheaper rates for off-peak electricity. This means we expect ‘time-of-use’ plans will be available to most New Zealanders by 1 July 2026.

    View decision

    2C. Requiring large retailers to better reward consumers for supplying power

    We have confirmed changes that will reward those households who supply power to the network from small-scale generation systems (such as rooftop solar and batteries) at times when it’s needed most to keep the country powered up. This means plans that offer fair rates for power sold into the network at peak times will be available by 1 July 2026.

    View decision

    2D. Reward industrial consumers for providing short-term demand flexibility

    One of the ways to help manage our electricity supply is to lower demand at peak times. Industrial consumers can make a meaningful contribution to this by using less electricity when it’s scarce and expensive.

    The Task Force is considering measures that would enable industrials to be appropriately rewarded for the benefit their flexibility brings to the system, reducing the need for more expensive electricity generation to manage peaks and ensuring that supply continues to meet demand.

    In June 2025, the Electricity Authority sought feedback on a vision for industrial demand flexibility and a five-year roadmap of 11 actions to better incentivise short-term flexibility by industrials in the electricity market.

    View rewarding industrial demand flexibility consultation

    In August 2025, we sought feedback on our proposed rationale for an Emergency Reserve Scheme and on our proposed high-level scheme design options.

    We proposed to allow a wide range of power consumers to participate in the scheme, including large industrials and groups of smaller business consumers. Broad participation would help businesses grow their capability and invest in new equipment.

    If we decide to proceed, we will consult further on the required changes to the Electricity Industry Participation Code for implementation.

    View establishing an Emergency Reserve Scheme consultation

    Timeline

    Coming up

    • November 2025

      Consultation —

      Consult on a review of market making (Electricity Authority initiative)

    • October 2025

      Consultation —

      1D: Consultation on draft Code changes to introduce mandatory non-discrimination obligations for the gentailers

    Past activity

    FAQs

    Question?

    Read our frequently asked questions or get in touch!

    Project background

    New Zealand experienced a fuel shortage in August 2024 due to unexpected lower gas reserves, low hydro storage and rainfall, and low wind. The shortage led to very high wholesale prices, which affected those industrial business whose electricity costs were tied to the wholesale spot price.

    Regulators, the Government and industry took action to manage security of supply and help bring wholesale prices down. Households were generally not affected by the price spike as they pay retail prices set by their electricity retailer.

    The interventions and increased hydro storage caused wholesale prices to drop significantly by the end of the month. Although the event was rare, it highlighted the need to improve the electricity market’s performance and better bolster security of supply.

    The Authority is now working with the Commerce Commission to investigate ways to adjust regulatory settings to strengthen the electricity market.

    The Energy Competition Task Force, co-led by the Authority’s Chair Anna Kominik and the Commission’s Chair Dr John Small, brings together a number of sector and regulatory experts from both regulators. Representatives from the Ministry of Business, Innovation and Employment attend as observers.

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