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NEW ZEALAND GAZETTE, No. 139

29 OCTOBER 2004

113 The Commission should seek to develop non-regulatory arrangements to achieve these
objectives, but should recommend regulations or rules if voluntary arrangements are
unsuccessful in achieving the policy outcomes the Government seeks.

Retail competition

114 The Government considers that competition between electricity retailers should, over time, help
ensure that retailing costs are minimised, service quality is improved and downward pressure is
placed on generation costs. Most consumers, especially in larger centres, have a choice of
retailers, and the processes for consumers to change suppliers have steadily improved.
However, the Government considers that retail competition is not as vigorous as it could be, and
looks to the Electricity Commission to promote and facilitate retail competition, and to make
recommendations to the Minister of Energy on any steps the Government should take, including
regulating, to facilitate retail competition.

115 The Electricity Act 1992 provides a number of regulation-making powers relating to retail
competition.

Terms and conditions for the use of lines and related services by competing retailers

116 The diversity and complexity of the terms and conditions offered by different lines companies for
use of their lines is often cited as a significant barrier to expansion of retail competition. The
Government considers that greater standardisation and simplification of tariff schedules and
contractual arrangements will facilitate market entry by retailers.

The reconciliation of, and payment for, distribution line losses

117 Current methods for calculating, reconciling and arranging payment for distribution line losses by
competing retailers are also often raised as a concern by retailers. The Commission should
recommend regulations if it considers this is a material issue such that rules and regulations
would facilitate more efficient outcomes and remove impediments to the effective functioning of
the retail market.

Terms and conditions for access to electricity meters by retailers

118 Retailers must have ready and efficiently-priced access to end-use electricity meters in order to
provide retail services. This is especially the case when retailers enter new market areas and/or
customers wish to change retailers. By and large, access to meters does not appear to
constitute a pervasive barrier to retail competition. However, there are regions where access has
proven difficult and contentious, and the Commission is invited to consider whether regulations
should be made to facilitate retail competition.

Arrangements to enable consumers to switch retail suppliers

119 The Electricity Governance Rules 2003 include detailed processes and procedures to ensure
consumers are able to switch retailers with a minimum of inconvenience and cost. These rules
are currently in operation, but the Commission should keep them under review, and make
recommendations for improvement if required.

Availability of hedges

120 Independent retailers cite difficulties in obtaining hedges at reasonable prices from vertically
integrated generator/retailers, which are their competitors, as a barrier to retail competition. The
Electricity Act 1992 provides the Commission with a range of powers relating to hedge markets
as described above. The Commission should exercise these powers if necessary to facilitate
retail competition.