The
New ZealandNew Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses , and numerous smaller islands, most notably Stewart Island/Rakiura and the Chatham Islands. The indigenous Māori named New Zealand Aotearoa, commonly translated as The Land of the Long White Cloud...
electricity marketIn economic terms, electricity is a commodity capable of being bought, sold and traded. An electricity market is a system for effecting purchases, through bids to buy; sales, through offers to sell; and short-term trades, generally in the form of financial or obligation swaps. Bids and offers use...
is the
marketA market is any one of a variety of different systems, institutions, procedures, social relations and infrastructures whereby persons trade, and goods and services are exchanged, forming part of the economy. It is an arrangement that allows buyers and sellers to exchange things...
for wholesale trading of
electricityElectricity is a general term that encompasses a variety of phenomena resulting from the presence and flow of electric charge...
in New Zealand. It is administered by the
Electricity CommissionThe New Zealand Electricity Commission is a government authority set up in 2003 to regulate the Electricity sector in New Zealand.The Commission is established under the Electricity Act and regulates the operation of the electricity industry and markets in accordance government energy policy...
. Market participants include state-owned enterprises, trust owned companies and public companies.
Until 1987, New Zealand had a centrally run system of providers of
generationElectricity generation is the process of creating electricity from other forms of energy.The fundamental principles of electricity generation were discovered during the 1820s and early 1830s by the British scientist Michael Faraday...
,
transmissionElectric power transmission is the bulk transfer of electrical energy, a process in the delivery of electricity to consumers. A power transmission network typically connects power plants to multiple substations near a populated area...
,
distributionFile:Electricity grid simple- North America.svg|thumb|380px|right|Simplified diagram of AC electricity distribution from generation stations to consumersrect 2 243 235 438 Power stationrect 276 317 412 556 Transformer...
, and
retailingElectricity retailing is the final process in the delivery of electricity from generation to the consumer. The other main processes are transmission and distribution.- Beginnings :...
. Since then, a step-by-step process of industry reform has led to the separation of the monopoly elements from the contestable elements to create competitive markets in energy generation and electricity retailing, while imposing regulation on the natural monopolies of transmission and distribution.
Currently the market is split into the following areas: administration and market clearing, regulation, generation, transmission, distribution, and retailing.
The wholesale market for electricity operates under the formal Electricity Rules and Regulations, and is overseen by the market regulator, the
Electricity CommissionThe New Zealand Electricity Commission is a government authority set up in 2003 to regulate the Electricity sector in New Zealand.The Commission is established under the Electricity Act and regulates the operation of the electricity industry and markets in accordance government energy policy...
.
The
New ZealandNew Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses , and numerous smaller islands, most notably Stewart Island/Rakiura and the Chatham Islands. The indigenous Māori named New Zealand Aotearoa, commonly translated as The Land of the Long White Cloud...
electricity marketIn economic terms, electricity is a commodity capable of being bought, sold and traded. An electricity market is a system for effecting purchases, through bids to buy; sales, through offers to sell; and short-term trades, generally in the form of financial or obligation swaps. Bids and offers use...
is the
marketA market is any one of a variety of different systems, institutions, procedures, social relations and infrastructures whereby persons trade, and goods and services are exchanged, forming part of the economy. It is an arrangement that allows buyers and sellers to exchange things...
for wholesale trading of
electricityElectricity is a general term that encompasses a variety of phenomena resulting from the presence and flow of electric charge...
in New Zealand. It is administered by the
Electricity CommissionThe New Zealand Electricity Commission is a government authority set up in 2003 to regulate the Electricity sector in New Zealand.The Commission is established under the Electricity Act and regulates the operation of the electricity industry and markets in accordance government energy policy...
. Market participants include state-owned enterprises, trust owned companies and public companies.
Overview
Until 1987, New Zealand had a centrally run system of providers of
generationElectricity generation is the process of creating electricity from other forms of energy.The fundamental principles of electricity generation were discovered during the 1820s and early 1830s by the British scientist Michael Faraday...
,
transmissionElectric power transmission is the bulk transfer of electrical energy, a process in the delivery of electricity to consumers. A power transmission network typically connects power plants to multiple substations near a populated area...
,
distributionFile:Electricity grid simple- North America.svg|thumb|380px|right|Simplified diagram of AC electricity distribution from generation stations to consumersrect 2 243 235 438 Power stationrect 276 317 412 556 Transformer...
, and
retailingElectricity retailing is the final process in the delivery of electricity from generation to the consumer. The other main processes are transmission and distribution.- Beginnings :...
. Since then, a step-by-step process of industry reform has led to the separation of the monopoly elements from the contestable elements to create competitive markets in energy generation and electricity retailing, while imposing regulation on the natural monopolies of transmission and distribution.
Currently the market is split into the following areas: administration and market clearing, regulation, generation, transmission, distribution, and retailing.
The wholesale market for electricity operates under the formal Electricity Rules and Regulations, and is overseen by the market regulator, the
Electricity CommissionThe New Zealand Electricity Commission is a government authority set up in 2003 to regulate the Electricity sector in New Zealand.The Commission is established under the Electricity Act and regulates the operation of the electricity industry and markets in accordance government energy policy...
. Trade takes place at each of 220 pricing nodes across New Zealand. Generators can make offers to supply electricity at grid injection points, while retailers and some major industrial users make bids to withdraw "offtake" electricity at grid exit points. The market uses a locational marginal pricing auction which takes generators’ offers and retailers’ bids, and computes final prices and quantities at each node. The auction is re-run every half hour.
The Commission contracts out the services required to run the electricity market. The Reconciliation Manager, who reconciles all metered quantities, Pricing Manager, who determines the final prices at each node, and Clearing and Settlement Manager, who pays generators for their generation at the market clearing price and invoices all retailers for their offtake, are all contracted to
M-co, a private company. The grid operator is
TranspowerTranspower New Zealand Limited is the state-owned enterprise responsible for electric power transmission in New Zealand. Transpower performs two major functions in the New Zealand Electricity Market. As the National Grid owner it provides a platform for competition among electricity generation...
, a state-owned enterprise responsible for ensuring electricity supply security and quality. Transpower also takes on the roles of scheduler, predicting likely demand to help generators make bids, and dispatcher, in charge of matching demand and supply in real time.
Distribution of electricity from the grid exit points to the end consumers' premises is the responsibility of 28 distributors who have monopoly control of the lines services on their networks. Ownership of distributors, also known as lines companies, is through trust-owned companies and public companies. Some major industrial users are directly connected to the grid, such as New Zealand Steel and the Tiwai Point Aluminium Smelter.
As of October 2009, there are five major generators in New Zealand: Meridian, Genesis, Mighty River Power, Contact, and TrustPower. These five together produce about 95% of New Zealand’s electricity. The first three are state-owned enterprises; the others publicly traded companies. An important feature of the New Zealand market is that all the major generators also own retailing arms. The companies are thus commonly known as "gentailers". Retailers purchase electricity from the wholesale market, and on-sell it to consumers. There are currently twelve retailers:
Bay of Plenty ElectricityBay of Plenty Electricity Limited is an electricity generation and distribution company in New Zealand. BoPE also retails natural gas and is based in Whakatane....
, Bosco Connect,
Contact EnergyContact Energy, a New Zealand energy company, generates electricity and sells electricity, natural gas and LPG.The company generates 24% of New Zealand's electricity and has the largest market-share of the country's electricity-retailers...
, Energy Direct NZ,
Genesis EnergyGenesis Power Limited is a New Zealand electricity generation and electricity, natural gas and LPG retailing company, and trades as Genesis Energy...
, King Country Energy,
Mercury EnergyMercury Energy is the retail operating division of Mighty River Power, a New Zealand State-owned enterprise. It retails electricity and gas to customers, primarily in the North Island of New Zealand...
, Meridian Energy, Nova Energy, Powershop, Simply Energy, and
TrustPowerTrustPower is a New Zealand electricity generation and electricity retailing company, listed on the New Zealand stock exchange.TrustPower is New Zealand's fifth largest electricity generator and the fourth largest electricity retailer , serving 260,000 customers throughout New Zealand...
. Mercury Energy is owned by the generator Mighty River Power. Not all retailers supply to all locations, for instance Bosco Connect only supplies to Auckland inner-city apartments. Competition for retail customers varies across the country but since 1999, when full retail competition was introduced, customers have switched at a rate between 9% and 14% per annum..
Current Design
The New Zealand electricity market is an energy only market exchange with prices set through a process similar to a
uniform price auctionA uniform price auction is a multiunit auction in which a fixed number of identical units of a commodity are sold for the same price. Each bidder in the auction bids a price and a quantity. The price bid is considered the maximum price they are willing to pay per item, and the quantity is the...
. Locational pricing is another key feature of the market design. It has the virtue of being relatively simple and transparent. All electricity is required to be traded through a central pool, with the exception of small generating stations of less than 10MW. Bilateral and other hedge arrangements are possible, but function as separate financial contracts. Trading develops by bids (purchaser/demand) and offers (generator/supply) for 48 half hour periods over 220 pricing nodes on the national grid.
Bids and offers start 36 hours before the actual real-time consumption or `trading period'. Up to 4 hours (pre-dispatch) before the `trading period' starts a new `forecast price' is calculated to guide participants in the market. From four hours to the start of the trading period every half hour a `dispatch price' is calculated and communicated. Two hours before the start of the `trading period' bids and offers can no longer be revised (with some exceptions) and the new prices reflect Transpower's adjustments in load forecasts and system availability.
During each half hour period Transpower publishes a new real-time price every five minutes, and a time-weighted 30-minute average price. The real-time prices are used by some large direct-connect consumers to adapt demand. The above prices are all guiding only as the `final prices' are calculated ex-post (normally noon the following day, unless there are irregularities or disputes) using the offer prices as established two hours before the `trading period' and volumes as established during the `trading period'. Differences between forecast, dispatch, real-time and final prices can be significant.
History of reform
Regulation of the electricity market started in a light-handed fashion but there has been an increasing trend towards more heavy-handed regulation. Light-handed regulation is based on the threat of regulation providing an incentive on companies with
market powerIn economics, market power is the ability of a firm to alter the market price of a good or service. A firm with market power can raise prices without losing all customers to competitors.When a firm has market power it faces a downward-sloping demand curve....
to exercise self-regulation. The normal regulatory legislation such as the Companies Act, Electricity Act, Resource Management Act 1991, the Commerce Act 1986, and the Fair Trading Act 1986 provide the framework for regulating normal commercial and environmental transactions.
The government has increased the extent of intervention through the Electricity Industry Reform Act 1998, which forced power companies to divest either their energy or their lines business, and the Electricity Amendment Act 2001. The latter led to another round of industry reform concentrating on achieving better
governanceGovernance relates to decisions that define expectations, grant power, or verify performance. It consists either of a separate process or of a specific part of management or leadership processes...
of the electricity market and tighter control of monopoly functions. The "threat of regulation" was extended to the production of a set of regulations that would be brought into effect if the industry's self-regulation did not meet the Government's criteria.
On May 16 2003 the result of a
referendumA referendum , ballot question, or plebiscite is a direct vote in which an entire electorate is asked to either accept or reject a particular proposal...
by industry participants and customer representatives on a proposed set of self-regulating rules was announced:
- Consumers voted 4.4% for the proposal
- Traders voted 66.2% for the proposal (traders = generating companies and retailers)
- Transporters voted 47.4% for the proposal (transporters = distributors and Transpower)
As there was not a substantial majority of all classes in favour of the proposal it was not implemented.
The result put paid to the prospect of a multilateral agreement on the governance and operational arrangements for the electricity market. The New Zealand government invoked the regulations already prepared to meet this contingency. The "threat of regulation" had been insufficient to stave off regulation.
On 2 July 2003 a draft set of Electricity Governance Regulations and Rules was issued on behalf of the Minister of Energy by the Electricity Commission Establishment Unit (ECEU). This set was for consultation purposes and after submissions were received and reviewed, a set of regulations and rules was recommended to the Governor-General.
In September 2003 a revised set of draft rules and regulations was issued by the ECEU for submissions by the end of October. The set did not include proposed transmission regulations, which were still being drafted. Also in September the Minister of Energy announced the chair and members of the Electricity Commission. Roy Hemmingway, whose most recent position was chairperson of the
OregonOregon is a state in the Pacific Northwest region of the United States. It is located on the Pacific coast, with Washington to the north, California to the south, Nevada on the southeast and Idaho to the east. The Columbia and Snake rivers delineate much of Oregon's northern and eastern...
Public Utility Commission in the USA, took on the role as chairperson of the Commission.
The final set of Electricity Governance Regulations and Rules (excluding rules for transmission) became effective on 1 March 2004. The final chapter of the Electricity Governance Rules, on transmission, was gazetted on April 28 to become effective on 28 May 2004.
The major milestones in the reform process in New Zealand between 1993 and 2004 were:
- October 2004 - The Electricity Act was amended to increase the powers of the Electricity Commission.
- March 1st 2004 - The Electricity Commission took over control of the New Zealand electricity market from the self regulating bodies, the MARIA Governance Board (MGB) and the Rules Committee of the NZEM.
- September 2003 - As a result of submissions received, revised rules and regulations were issued for further consultation. A revised Government Policy Statement was issued for submissions and the Electricity Commission was appointed
- July 2003 - A draft set of regulations and rules was issued for consultation.
- May 2003 - The rules developed by EGEP fail to gain sufficient support in the referendum to avoid government regulation.
- April 2003 - An industry referendum on the outcomes of the Electricity Governance Establishment Project (EGEP).
- December 2000 - Government Policy Statement published.
- November 2000 - Electricity Governance Establishment Project set up as a result of the government's review of the report of the Ministerial Inquiry.
- June 2000 - The report of the Ministerial Inquiry is published
- February 2000 - The Ministerial Inquiry into the electricity industry begins
- May 1999 - Contact Energy
Contact Energy, a New Zealand energy company, generates electricity and sells electricity, natural gas and LPG.The company generates 24% of New Zealand's electricity and has the largest market-share of the country's electricity-retailers...
shares listed for trading on the New Zealand and Australian Stock Exchanges from 11 May 1999.
- April 1999
- Electricity Corporation of New Zealand
The Electricity Corporation of New Zealand Ltd is a New Zealand state-owned enterprise formed on April 1, 1987, as a transition entity in the process ofderegulating the New Zealand electricity market...
(ECNZ) disbanded, establishment of 3 separate competing spin-off generating companies ie Mighty River Power LimitedMighty River Power Limited is a New Zealand electricity generation and electricity retailing company. It was formed from the breakup of the Electricity Corporation of New Zealand in 1999 as a result one of the reforms of the New Zealand Electricity Market and corporatised to become a...
, Genesis Power LimitedGenesis Power Limited is a New Zealand electricity generation and electricity, natural gas and LPG retailing company, and trades as Genesis Energy...
and Meridian Energy Limited.
- Low-cost system for customer switching established allowing every consumer to choose their electricity retailer
Electricity retailing is the final process in the delivery of electricity from generation to the consumer. The other main processes are transmission and distribution.- Beginnings :...
.
- April 1998 - Government announced the Electricity Industry Reform Act, which included:
- Privatising Contact Energy
Contact Energy, a New Zealand energy company, generates electricity and sells electricity, natural gas and LPG.The company generates 24% of New Zealand's electricity and has the largest market-share of the country's electricity-retailers...
- Splitting ECNZ into three competing state-owned enterprises
- Instructions to all energy companies to split their retail and lines businesses and sell one or other within a set time period
- October 1996 - The reformed wholesale electricity market (NZEM) began trading
- April 1996 - Contact Energy commenced operations
- February 1996 - An interim wholesale market is put in place allowing ECNZ and Contact to begin competing.
- June 1995 - After an exhaustive policy debate, the Government announced significant reform of the electricity industry including a framework for buying and selling electricity through a wholesale pool
- July 1994 - NZEM commences trading as a secondary market for ECNZ hedges. An independent market surveillance committee was formed.
- April 1994 - Transpower separated from ECNZ and established as a stand-alone state - owned enterprise.
- April 1993
- Electricity Market Company (now M-co) established as a joint venture by New Zealand electricity industry players to act as a focal point for the design of a wholesale electricity market.
- The Metering and Reconciliation Information Agreement (MARIA) was set up as a multilateral arrangement to allow for retail competition for customers with half-hour interval meters.
- Former local electricity supply authorities established as energy companies
- April 1987 - The New Zealand Government corporatised
Corporatization refers to the transformation of state assets or agencies into state-owned corporations in order to introduce corporate management techniques to their administration...
the NZED and formed the state-owned enterprise– The Electricity Corporation of New ZealandThe Electricity Corporation of New Zealand Ltd is a New Zealand state-owned enterprise formed on April 1, 1987, as a transition entity in the process ofderegulating the New Zealand electricity market...
(ECNZ)
- Prior to 1987, a government department – the New Zealand Electricity Department (NZED) controlled and operated almost all New Zealand electricity generation and operated the New Zealand electricity transmission grid
Electric power transmission is the bulk transfer of electrical energy, a process in the delivery of electricity to consumers. A power transmission network typically connects power plants to multiple substations near a populated area...
Current structure
As mentioned above, the New Zealand electricity market is split into the following areas: administration and market clearing (M-co),
regulationRegulation is "controlling human or societal behaviour by rules or restrictions." Regulation can take many forms: legal restrictions promulgated by a government authority, self-regulation, social regulation , co-regulation and market regulation. One can consider regulation as actions of conduct...
, generation, transmission, distribution and retailing.
The current legislation (Electricity Industry Reform Act) prevents the ownership of cross-sector, that is energy and lines functions, investment. This means a generation company cannot own or have an interest in a distribution company and a distribution company cannot retail electricity or deal in electricity hedges. There are two exceptions to the regulations: generation companies can own the lines required to transport electricity from their power stations to the grid or local distribution network; and distribution companies can own a small amount of conventional generation capacity within their network but are not limited in the level of renewable generation capacity. There is no barrier to vertical integration from generation to retail. The overall arrangement of the industry creates some very interesting market behaviour amongst the players.
First of all, generation is dominated by five companies: Meridian,
ContactContact Energy, a New Zealand energy company, generates electricity and sells electricity, natural gas and LPG.The company generates 24% of New Zealand's electricity and has the largest market-share of the country's electricity-retailers...
,
GenesisGenesis Power Limited is a New Zealand electricity generation and electricity, natural gas and LPG retailing company, and trades as Genesis Energy...
,
Mighty RiverMighty River Power Limited is a New Zealand electricity generation and electricity retailing company. It was formed from the breakup of the Electricity Corporation of New Zealand in 1999 as a result one of the reforms of the New Zealand Electricity Market and corporatised to become a...
, and TrustPower (see below).
Retail companies
The electricity retailers in New Zealand are
Bay of Plenty ElectricityBay of Plenty Electricity Limited is an electricity generation and distribution company in New Zealand. BoPE also retails natural gas and is based in Whakatane....
, Bosco Connect,
Contact EnergyContact Energy, a New Zealand energy company, generates electricity and sells electricity, natural gas and LPG.The company generates 24% of New Zealand's electricity and has the largest market-share of the country's electricity-retailers...
,
Energy DirectEnergy Direct is a retailer of electricity and gas in New Zealand.EDNZ is a trading division of the Wanganui Gas Company Limited, which in turn is wholly owned by the Wanganui District Council.- External links :*...
,
Genesis EnergyGenesis Power Limited is a New Zealand electricity generation and electricity, natural gas and LPG retailing company, and trades as Genesis Energy...
, King Country Energy,
Mercury EnergyMercury Energy is the retail operating division of Mighty River Power, a New Zealand State-owned enterprise. It retails electricity and gas to customers, primarily in the North Island of New Zealand...
, Meridian Energy,
PowershopPowershop is a New Zealand state-owned online electricity retailer. Powershop claims to be the first electricity company in the world where consumers can choose between different brands of electrical power listed on the website and switch between them with the click of a button. Different brands of...
,
Todd EnergyTodd Energy is a diversified energy company operating in New Zealand. Todd Energy employs over 200 people and is part of the Todd Corporation.- Electricity :Todd Energy generates and retails electricity in New Zealand...
, Simply Energy, and
TrustPowerTrustPower is a New Zealand electricity generation and electricity retailing company, listed on the New Zealand stock exchange.TrustPower is New Zealand's fifth largest electricity generator and the fourth largest electricity retailer , serving 260,000 customers throughout New Zealand...
.
Of the electricity retailers, Contact Energy has the largest market share.
Generation companies
The
electricity sector in New ZealandThe electricity sector in New Zealand uses mainly renewable energy sources such as hydropower, geothermal power and increasingly wind energy. The 70% share of renewable energy sources makes New Zealand one of the most sustainable countries in terms of electricity generation. Electricity demand is...
is dominated by five companies, which are Meridian Energy,
Contact EnergyContact Energy, a New Zealand energy company, generates electricity and sells electricity, natural gas and LPG.The company generates 24% of New Zealand's electricity and has the largest market-share of the country's electricity-retailers...
,
Genesis EnergyGenesis Power Limited is a New Zealand electricity generation and electricity, natural gas and LPG retailing company, and trades as Genesis Energy...
,
Mighty River PowerMighty River Power Limited is a New Zealand electricity generation and electricity retailing company. It was formed from the breakup of the Electricity Corporation of New Zealand in 1999 as a result one of the reforms of the New Zealand Electricity Market and corporatised to become a...
and
TrustPowerTrustPower is a New Zealand electricity generation and electricity retailing company, listed on the New Zealand stock exchange.TrustPower is New Zealand's fifth largest electricity generator and the fourth largest electricity retailer , serving 260,000 customers throughout New Zealand...
. These are all active in generation, the wholesale market and retail sales of electricity. These five companies combined produce or control more than 95% of NZ's total electricity generation.
New Zealand Generating Companies
| Company | Capacity MW | Generation GWh | Revenue | Employees | Customers | Ownership |
|---|
Contact EnergyContact Energy, a New Zealand energy company, generates electricity and sells electricity, natural gas and LPG.The company generates 24% of New Zealand's electricity and has the largest market-share of the country's electricity-retailers...
|
2,070 |
11,035 |
2,756m |
1,000 |
650,000 |
public ownership |
Genesis EnergyGenesis Power Limited is a New Zealand electricity generation and electricity, natural gas and LPG retailing company, and trades as Genesis Energy...
|
1,977 |
9,126 |
2,482m |
|
700,000 |
state-owned enterprise State-owned enterprises in New Zealand are registered companies listed under Schedules 1 and 2 of the State-Owned Enterprises Act 1986...
|
| Meridian Energy |
2,601 |
11,914 |
2,604m |
|
183,000 |
state-owned enterprise State-owned enterprises in New Zealand are registered companies listed under Schedules 1 and 2 of the State-Owned Enterprises Act 1986...
|
| Mighty River Power Mighty River Power Limited is a New Zealand electricity generation and electricity retailing company. It was formed from the breakup of the Electricity Corporation of New Zealand in 1999 as a result one of the reforms of the New Zealand Electricity Market and corporatised to become a...
|
1,369 |
5,954 |
1,172m |
752 |
391,000 |
state-owned enterprise State-owned enterprises in New Zealand are registered companies listed under Schedules 1 and 2 of the State-Owned Enterprises Act 1986...
|
| TrustPower TrustPower is a New Zealand electricity generation and electricity retailing company, listed on the New Zealand stock exchange.TrustPower is New Zealand's fifth largest electricity generator and the fourth largest electricity retailer , serving 260,000 customers throughout New Zealand...
|
594 |
2,018 |
681m |
340 |
222,000 |
public ownership |
There are a number of smaller companies in the electricity generation industry including WEL Networks, NZ Windfarms,
Todd EnergyTodd Energy is a diversified energy company operating in New Zealand. Todd Energy employs over 200 people and is part of the Todd Corporation.- Electricity :Todd Energy generates and retails electricity in New Zealand...
,
NZ EnergyNew Zealand Energy is a New Zealand company, operating small hydroelectric power stations in Haast, Fox, Opunake and Raetihi.NZ Energy proposes to build a 4.6 MW hydroelectric scheme at Lake Matiri near Murchison, Nelson....
, MainPower and Top Energy.
The retail space is dominated by these five generating companies (Mighty River Power's retail arm is better known as
Mercury EnergyMercury Energy is the retail operating division of Mighty River Power, a New Zealand State-owned enterprise. It retails electricity and gas to customers, primarily in the North Island of New Zealand...
). The generation and retail companies use this vertical integration as a natural
hedgeIn finance, a hedge is a position established in one market in an attempt to offset exposure to price fluctuations in some opposite position in another market with the goal of minimizing one's exposure to unwanted risk...
to manage risks associated with volatility of the spot market. For example, during a dry year, the high prices in the wholesale market price benefit the generation arm but hurts the retailers who buy at wholesale prices and sell electricity to consumers at fixed prices; when prices are low, the loss of profits in the generation side is offset by the profits in the retail business. These five companies have now extended their risk management strategy further by aligning their retail and generation businesses to the same geographic locations. For example, the majority of Meridian Energy's generation assets are in the South Island, and that's where their retail strongholds are. Mighty River Power's generation assets are exclusively in the North Island, and Mercury Energy's customer base is also exclusively in the North Island.
See also
- Electricity sector in New Zealand
The electricity sector in New Zealand uses mainly renewable energy sources such as hydropower, geothermal power and increasingly wind energy. The 70% share of renewable energy sources makes New Zealand one of the most sustainable countries in terms of electricity generation. Electricity demand is...
- List of power stations in New Zealand
- Electricity Commission (NZ)
The New Zealand Electricity Commission is a government authority set up in 2003 to regulate the Electricity sector in New Zealand.The Commission is established under the Electricity Act and regulates the operation of the electricity industry and markets in accordance government energy policy...
- Ministry of Economic Development (New Zealand)
External links