Enabling investment and innovation
Risk management review
Reviewing risk management options for electricity retailers.
Overview
An important enabler of retail competition is the availability of efficient risk management options for electricity retailers, especially for those retailers focused on domestic consumers and small business customers.
Effective competition in the retail electricity market is in the long-term interests of consumers, as it puts downward pressure on retail prices and encourages a greater variety of products and services.
We have carried out a review of risk management options for electricity retailers. This work focused particularly on over-the-counter (OTC) risk management contracts, following on from the development of the voluntary OTC Code of Conduct.
The review considered whether the current approach to pricing OTC contracts (including availability, shape and price), and other risk management options, is effectively creating a barrier to entry or expansion in the retail electricity market for retailers, and therefore harming competition.
Review findings: We have released an update paper on our risk management review, responding to submissions and confirming our findings. The risk management review findings form an important evidence base for the Level playing field measures – Options paper (released on 27 February 2025).
At a glance: Risk management review info sheet
Modelling: Code and underlying data in the issues paper
Timeline
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27 February 2025
Update —Review findings
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7 November - 20 December
Consultation —Risk management options for electricity retailersView consultation -
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November
Post-implementation review — -
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20 March 2024
Information requests — -
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Project background
Effective competition in the retail electricity market is in the long-term interests of consumers, as it puts downward pressure on retail prices and encourages a greater variety of products and services. This review focuses on the availability of efficient risk management options as an important enabler of retail market competition.
We are working to increase our understanding and the transparency of risk management options for electricity retailers. This review focuses on over-the-counter (OTC) risk management contracts, following on from the development of the voluntary OTC Code of Conduct. It considers whether the current approach to pricing OTC contracts (including availability, shape and price), and other risk management options, is effectively creating a barrier to entry or expansion in the retail electricity market for retailers, and therefore harming competition.
We are engaging with the Commerce Commission on this review, including drawing on their competition economics and investigation expertise.
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