Monitoring, compliance and enforcement
Review of wholesale market competition
A review into competition in the wholesale electricity market after sustained high electricity prices.
There were two phases to our review of competition in the wholesale market:
- Phase 1 – A review of competition in the wholesale market between January 2019 to June 2021 – completed October 2021.
- Phase 2 – A forward-looking assessment of what changes may be required to market settings to promote competition for the long-term benefit of consumers – completed May 2023.
Inefficient price discrimination
During Phase 1, we identified one clear and pressing issue. It was the potential for distortions in the wholesale market from large contracts for the supply of electricity at prices that might be inefficient. We quickly published an issues paper to gather stakeholder feedback to help understand how to best address this issue.
Following our consultation, we made an urgent amendment to the Code in August 2022 to prohibit generators from giving effect to contracts of net 150 MW or more, unless certain conditions are met. This urgent Code amendment remains in place until the permanent Code amendment is effective from 19 May 2023.
We have completed Phase 2 of this project. At the end of 2022, we consulted on how to promote competition in the wholesale market. We shared our findings and decision in May 2023.
8 June 2023Decision —
Meridian clearance application
19 May 2023Code amendment —
Permanent Code amendment effective (to address inefficient price discrimination)
12 May 2023Decision —
Actions to promote competition in the wholesale electricity market
12 May 2023Calculation —
12 October - 14 December 2022Consultation —Promoting competition in the wholesale electricity market in the 100% renewable electricity transitionView consultation
18 August - 31 October 2022Consultation —Inefficient price discrimination in very large electricity contractsView consultation
17 August 2022Urgent Code amendment —
Restrictions on materially large contracts
July 2022Survey —
New generation investment intentions survey to inform our issues paper
27 October - 22 December 2021Consultation —Inefficient price discrimination in the wholesale electricity market - issues and optionsView consultation
27 October - 22 December 2021Consultation —Review of structure conduct and performance in the wholesale electricity marketView consultation
27 October 2021Event —
30 June 2021New trading conduct provisions —
To ensure that participants’ offers reflect a competitive market
March 2021Announcement —
Wholesale market competition review
In a competitive market, the wholesale electricity price largely reflects underlying supply and demand conditions. For example the:
- quantity of water in hydro lakes (including stored water) for hydro generation
- quantity of electricity consumed
- availability of gas
- cost of fuel, including the price of carbon emissions.
These factors help determine the price that generators offer, and in doing so, it signals the cost of electricity in New Zealand at any one time.
There was a sustained period of elevated electricity prices after an unplanned outage at the Pohokura gas facility in Spring 2018. In January 2021, there was an announcement to extend the operation of the New Zealand Aluminium Smelter at Tiwai by four more years.
In March 2021, we decided to start a review into competition in the wholesale electricity market after sustained high electricity prices since Spring 2018.
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Under-frequency event determinations
Determining the causers of under-frequency events to allocate event charges.
System operation documents
The system operator regularly reviews their plans, strategies, and policy.