New Zealand’s electricity market has evolved significantly over the years, with consumers now having a variety of options and a range of information at their disposal when choosing a retail provider. Canstar Blue has produced a one-stop guide to the NZ energy market to help you find a better deal.
About the New Zealand energy market
In understanding the current state of the New Zealand electricity market, it is worthwhile casting a brief look back over its recent history. Tracking the market’s evolution, the 1980s had seen momentum build for change, with a number of initiatives undertaken by government at the time, looking into the Crown’s role in the electricity sector.
As described by the Electricity Authority, an Electricity Task Force in 1989 had “recommended separation of the ownership of generation and transmission assets and the development of a light-handed regulatory regime”.
The 1990s subsequently saw industry development of three self-regulating arrangements, governing operation of the market, with the Electricity Authority noting that the rules in the agreements are the foundation of today’s code, the Electricity Industry Participation Code.
The code itself “is a set of rules that govern nearly every aspect of New Zealand’s electricity industry”, which includes:
- System operation
- Security of supply
- Market arrangements
The precursor to the Electricity Authority, the Electricity Commission, was established in 2003 to regulate the market, with the Electricity Authority itself, an independent Crown entity providing regulatory oversight of the sector, established in 2010.
What is the role of the Electricity Authority?
The Electricity Authority states that its “work is focused on addressing key questions that affect the long-term benefit of consumers”:
- Are prices reasonable?
- Will the lights stay on?
- Do consumers have choices?
- Is innovation occurring?
In carrying out its functions, it outlines its objective as “to promote competition in, reliable supply by, and the efficient operation of, the electricity industry in New Zealand for the long-term benefit of consumers”.
Working to ensure healthy competition, reliable supply and efficient market operation, and looking to the future health of the market, the Electricity Authority seeks to ensure that:
- Consumers have a variety of suppliers and products to choose from within a highly innovative and competitive retail sector.
- The electricity market efficiently meets the country’s future electricity needs – the incentives to invest in generation and manage electricity consumption reliably deal with dry spells and other supply shortages.
- Prices for electricity are consistent with workable competition at all locations and all times.
- Its engagement and communication with all stakeholders is clear and consistent, enabling greater understanding of the market and its development.
- The electricity market has a high level of credibility – both nationally and internationally – giving stakeholders confidence.
- Market arrangements support innovation and investment.
Electricity retailers in NZ
There are many electricity retailers, both large and small, operating in various regions of the New Zealand market, offering a range of services catering to different types of consumers and different patterns of usage.
The Electricity Authority’s market share snapshot for November 2016 shows that the following five companies (in order) commanded the largest share of the market (measured by installation control point number, identifying each individual network connection):
- Genesis Energy: Diversified energy company Genesis, New Zealand’s largest electricity and gas retailer, supplies energy through its retail brands, Genesis Energy and Energy Online.
- Contact Energy: Energy generator and retailer Contact provides electricity, natural gas and LPG for its customers, stating that it is “one of the country’s largest listed companies and the only electricity and natural gas supplier that rewards our residential customers with Fly Buys”.
- Mercury: Mercury states that 100 per cent of its generation comes from renewable sources, hydro and geothermal, while it sells electricity through multiple retail brands, including GLOBUG, Tiny Mighty and Bosco.
- Meridian Energy: Meridian generates power only from renewable sources, like wind and water, stating that it is “committed to meeting future energy needs with renewable energy”.
- Trustpower: Electricity generator and retailer Trustpower also provides gas and telecommunications services as part of its multi-product retail business.
In addition to these retailers, there are many other retailers servicing various regions in the New Zealand market, including:
- Powershop: Backed by Meridian, Powershop has “focused on making shopping for electricity easy and enjoyable, and created the tools people need to understand how much power they use, giving them the control to lower their bills”.
- Energy Online: Energy Online is focused on delivering “brilliantly simple energy solutions”, stating it has “great electricity prices and natural gas prices, and we don’t tie you in to those pesky contracts”.
- Nova Energy: Nova is a New Zealand-owned and operated company, which states: “we treat our customers the way you’d expect of a genuine Kiwi organisation”.
Electricity plans: What to look for
Across the above and other electricity retailers operating in the New Zealand market, a variety of plans, catering to various consumer requirements, are on offer.
In selecting a plan, consumers should consider their individual household requirements, taking into account when the bulk of their electricity usage occurs. Factors that consumers may take into account when selecting a plan include:
- Fixed and variable rate charges: The fixed charge is a daily rate charge, while the variable charge is determined by how much power is used.
- Time-of-use: What different rates are available for different times of use? For instance, customers using the majority of their electricity at night should search for plans catering to this particular type of usage.
- Fixed-term or flexible contract: Are you willing to lock in to a long-term plan, or are you looking for greater flexibility?
- Discounts: Are pay-on-time and direct debit, or other types of discounts, offered?
- Solar requirements: What sort of solar options are on offer?
- Support: What sort of support services are retailers offering? For instance, online and app account support.
- Additional perks: What other perks and discounts are retailers offering?
Which electricity retailers are rated highest?
To find out which electricity retailers are rated highest by New Zealand consumers, Canstar Blue produces an annual nationwide survey, asking bill-payers to score their retailer based on a number of factors, including:
- Bill clarity
- Customer service
- Value for money
You can see these ratings via the link below. You never really know how good or bad an energy company is until you are a customer, but these ratings offer an helpful insight.