Energy Minister Simeon Brown promises new generator rules will put 'downward pressure' on power bills
New Zealand Energy Minister Simeon Brown unveiled mandatory energy reserve and transparency rules for the four largest generators that have hydroelectric capacity but no retail contract. The regulation is meant to limit the pass-through to consumers of sharp swings in wholesale electricity prices in winter. The Electricity Authority said the rules will take effect within the next three months.
According to RNZ Business, in remarks in Wellington Brown said the regulation will cover Mercury Energy, Genesis, Meridian and Contact Energy and impose mandatory reporting on minimum water levels in storage lakes for the generators. In response to industry concerns about whether the rules will add costs, the ministry stressed that "transparency will prevent unjustified price spikes." Consumer Council chair Aaron Bhatnagar said the new rules "are in the right direction" but "do not solve the medium-term transmission capacity issue."
The Electricity Authority spokesperson said the reporting requirement will reduce the risk of manipulation in the daily balancing market and that reserve capacity will be shared in real time through the Wholesale Electricity Information System, WITS. Forsyth Barr analyst Andrew Harvey-Green said share-price effects are expected to be limited, noting his comments are not investment advice. On the NZX, Meridian closed down 0.9 per cent and Contact down 0.4 per cent.
Meanwhile, Labour energy spokesperson Megan Woods said the regulation could reopen the debate over "separation of ownership in the sector." Brown said the government has no medium-term plan for a structural reform such as generation-retail separation but added that the authority will assess the new powers. New Zealand's Official Consumer Price Index, NDX, showed last month that the energy component contributed 0.4 percentage points to annual inflation.
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