Electricity in New Zealand

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Consumers 2 Retail 6 Wholesale 10 Transmission and system operation 14 Generation 18 Distribution 24

The Electricity Industry Act 2010

changed the shape and structure of

the New Zealand electricity sector.

Under the Act, the government is seeking to improve competition, reliable supply and efficient operation of the electricity sector for the long-term benefit of New Zealand electricity consumers. The statutory objective of the Electricity Authority reflects this goal. The market reforms undertaken by the government in pursuit of this objective include the establishment of the Electricity Authority as an independent Crown entity, to provide greater certainty and predictability about how the market will be governed and operated, as well as reducing risks of intervention, and

improving investor perceptions about market risk. Besides sharpening the focus on improving

competition, reliability and efficiency, the Act requires the Authority to undertake specific functions to enhance market performance. These include proactive market monitoring, greater stakeholder involvement in developing the Electricity Industry Participation Code and market facilitation measures under which the market operates, and increased information and educational activity.

Electricity in New Zealand is part of a range of communication initiatives that the Authority is undertaking to help develop a shared sense of the nature, needs and achievements of the country’s electricity sector. It is intended for a general readership.

The publication provides an overview of New Zealand’s electricity system in the new era ushered in by the Electricity Industry Act 2010. It outlines core market components and physical assets, and the inter-relationships between them. These features will change dynamically as the Authority pushes ahead with the priority issues, such as customer switching and market

development, with which it is tasked under the Act, and as technology and the environment in which the electricity system must operate evolve. Those seeking an understanding of the recent performance of the market should consult the Authority’s publication Electricitymarket performance 2010–2011 in review. Those wanting more

specialised industry information with which to evaluate opportunities, or to assist in decision-making in this evolving environment, are referred to the Authority’s website, www.ea.govt.nz.

Dr Brent Layton Chair

Electricity Authority – Te Mana Hiko

Front cover: Providing the power

More than half New Zealand’s electricity is generated by hydro power stations. Construction of Benmore, the country’s largest earth dam created New Zealand’s largest manmade lake. Today, Benmore is the second-largest hydro power station, after Manapouri, and the South Island terminal for the high voltage direct current HVDC link with the North Island.

Foreword

Contact information Electricity Authority Te Mana Hiko Level 7 ASB Bank Tower 2 Hunter Street PO Box 10041 Wellington 6143 New Zealand TEL+ 64 4 460 8860 FAX+ 64 4 460 8879 www.ea.govt.nz

Electricity in New Zealand

Originally published December 2011 EA ENZ 06/13

The Electricity Industry Act 2010

changed the shape and structure of

the New Zealand electricity sector.

Foreword

Contact information Electricity Authority Te Mana Hiko Level 7 ASB Bank Tower 2 Hunter Street PO Box 10041 Wellington 6143 New Zealand TEL+ 64 4 460 8860 FAX+ 64 4 460 8879 www.ea.govt.nz

Electricity in New Zealand

Originally published December 2011 EA ENZ 06/13

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The Electricity Industry Act 2010

changed the shape and structure of

the New Zealand electricity sector.

Foreword

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www.mbie.govt.nz www.consumeraffairs.govt.nz www.eeca.govt.nz www.egcomplaints.co.nz www.ea.govt.nz commercial consumers

industrial consumers

agriculture, forestry

and ﬁ shing consumers

residential consumers

165,000

70,000

40,000

1.7 million

$

6 billion

on electricity by

Almost

a year is

spent

20 retail brands

commonly

buying

through

7 competing in the

market operated by

service providers

Consumer Affairs (consumer policy) Ministry of Business, Innovation

and Employment (energy policy) Energy Efﬁ ciency and Conservation Authority (demand reduction) Electricity and Gas Complaints Commission (consumer issues) Electricity Authority (market design and performance)

System operator Metering equipment owners Metering standards Hedge and FTR markets Data management Clearing Information Registry Market admin-istration Recon-ciliation Pricing

What is electricity?

Electricity is energy produced in the form of electrons flowing in a conducting material, such as copper or aluminium as used in power lines. It is a secondary energy source produced from other forms of energy. Commonly in New Zealand, this is the kinetic energy of falling water. The force of the falling water from dams drives turbine blades to spin huge magnets inside massive coils of conducting wire, and the moving energy, or electricity, that is produced flows into the national transmission network.

Wind turbines create electricity in a similar way by extracting kinetic energy stored in the wind. The chemical energy stored in gas, coal or oil can be released in the form of heat by burning and used to produce steam that, under pressure, drives turbines and generators

to produce electricity.

The force applied to electrons to make them flow is known as voltage, and the rate of flow is known as current. An analogy can be made with water through a pipe. Voltage equates to the pressure applied to make the water flow, and current is the rate at which it flows through the pipe.

Power is the rate at which electrical energy is produced or used and is measured in watts (W), kilowatts (kW) or megawatts (MW). Kilowatt hours (kWh) are used to measure household electricity use over time. For example, using a 1kW bar heater for an hour will consume 1kWh of electricity. Average New Zealand household use is about 8,000kWh per year. In contrast, larger electricity users’ annual consumption is measured in megawatt hours (MWh – 000kWh) or gigawatt hours (GWh – 000,000kWh).

Action under lights in the New Zealand round of the International Rugby Board’s Sevens World Series in Wellington.

Other information

More specialised information for industry planners and investors is available in the biennial Statement of Opportunities (SOO) most recently released by the Electricity Commission in September 2010. The SOO presents detailed forecasts of electricity demand and supply through to the year 2040, modelled on five prospective scenarios.

In addition, the Authority’s Market Performance Group provides a range of other industry information. Electricity market performance is an annual review of sector activity. The 2010–2011 edition was published in December 2011. The Centralised Dataset is a compilation of half-hourly meter data covering HVDC flows, active and reactive power by GXP and generation by GIP, along with pricing data, including bids and offers, reserves and final prices. It also provides weekly hydro-inflow and daily lake-level data, as well as transmission network information, such as load-flow models, line diagrams, asset outages, generation assets and GXP characteristics.

External interests can also access a range of the Authority’s analytical tools and the information they impart. EMI, the electricity market information interface, allows a range of users to access the Authority’s mathematical programming models and other data visualisation tools. The initial release of EMI includes the vectorised scheduling, pricing and dispatch model (vSPD), which replicates the scheduling, pricing and dispatch software used by the industry. EMI allows users to easily navigate through the large volume of data that underpins the model and undertake a wide range of ‘what if?’ experiments to better understand market outcomes.

EMI also acts as a front end for the Generation Expansion Model (GEM), a model of the New Zealand generation sector. GEM projects the construction of new generation over coming decades and simulates outcomes in terms of dispatch, costs and emissions. It can be used to assist decisions regarding investments in transmission, or to assess implications of factors such as technology change, carbon pricing or developments in market policy.

A data warehouse being developed for use by participants and other interested parties houses disparate datasets covering long time periods. It is intended that this will allow publication and downloading of data and web-based graphical reporting of non-confidential data to market participants and other interested parties. At present, the data warehouse houses registry monthly reporting, final pricing data and the centralised dataset (metering). Future functionality will include registry switching, hedge market, clearing manager and hydrology data.

Websites

Along with the Authority’s website www.ea.govt.nz, the following sites provide further information on the New Zealand electricity sector:

Consumer Affairs – www.consumeraffairs.govt.nz

Ministry of Business, Innovation and Employment – www.mbie.govt.nz Powerswitch (Consumer NZ) – www.consumer.org.nz/powerswitch Rightlight (EECA) – www.rightlight.govt.nz

Statistics New Zealand – www.stats.govt.nz Transpower – www.transpower.co.nz

What’s My Number – www.whatsmynumber.org.nz

1 grid

owner

Most purchases are

met by generation

dispatched on the

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www.egcomplaints.co.nz www.ea.govt.nz

20 retail brands

commonly

buying

through

7 competing in the

market operated by

service providers

Electricity and Gas Complaints

Commission (consumer issues) Electricity Authority (market design and performance)

System operator Metering equipment owners Metering standards Hedge and FTR markets Data management Clearing Information Registry Market administration Recon- ciliation Pricing

1 Most purchases are

met by generation

dispatched on the

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1 grid

owner

Key dates

1886 The first high-voltage electricity transmission line is built, running between Skippers Canyon in Central Otago and a mining company 6 kilometres away.

1888 Reefton is the first town in the southern hemisphere to have a public electricity supply.

1903 The Water Act empowers the Crown to use water for generating electricity.

1911 The Hydro-Electric Branch of the Public Works Department is established.

1914 The first major state hydro scheme at Coleridge begins generating power.

1923 Government calls tenders for Arapuni, which is commissioned 6 years later, initiating hydro development on the Waikato River.

1949 Commencement of Roxburgh dam construction starts the development of the Clutha River hydro system.

1958 The State Hydro-Electric Department becomes the New Zealand Electricity Department (NZED).

Wairakei power station, the second geothermal generating plant in the world, is commissioned.

1965 The North and South Islands are linked by seafloor electricity cables across Cook Strait.

1987 NZED is corporatised as the Electricity Corporation of New Zealand (ECNZ), which trades for a time as Electricorp.

1994 ECNZ’s transmission business is split off as Transpower.

The electricity industry establishes the Metering and Reconciliation Information Agreement (MARIA) to facilitate the bilateral trading of electricity between buyers and sellers.

1996 ECNZ is split again, with a new generation business, Contact Energy, being formed.

A wholesale spot electricity market, the New Zealand Electricity Market (NZEM), is established. Like MARIA, the NZEM is industry self-governed.

1999 Contact Energy is privatised.

The remainder of ECNZ is split, with the major assets divided between Mighty River Power, Genesis and Meridian Energy, and the minor assets sold off.

2003 The Electricity Commission is established to manage the New Zealand electricity market.

2010 The Electricity Commission is replaced by the Electricity Authority, tasked with governing the electricity market under the new Electricity Industry Act 2010.

2011 The Authority reports completion of priority matters specified in the Act: compensation to consumers and a floor on spot prices during electricity shortages; a mechanism to help manage price risk caused by transmission constraints; facilitating active responses by large users to wholesale market conditions; more standardisation of distribution tariff structures and terms; and improving electricity hedge market liquidity.

29 distribution

companies

and 105

embedded networks

www.comcom.govt.nz

from

supplied to

consumers by

5 major and

8 smaller,

grid-connected

generators and, along

with local distributed

generation,

www.comcom.govt.nz

Commerce Commission (regulating lines charges) Commerce Commission

(grid investment approval) Ministry for the Environment (resource consent process)

www.mfe.govt.nz

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Essentially electrical: cooking, lighting, refrigeration, entertainment and more – everyday life relies on electricity

165,000

70,000

40,000

Rio Tinto’s smelter at Tiwai Point accounts for around

14 %

of New Zealand’s annual electricity demand

region for year ended July 2011

34.5% Other North Island 28% Auckland and Northland 37.4% South Island

1.7 million

commercial consumers industrial consumers agriculture,

forestry and fishing

consumers

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Consumers

0 60,000 80,000 70,000 40,000 50,000 30,000 20,000 10,000 1980 1990 2000 2010 2020 2030 2040 2050 GWh

Figure 2 Historical and forecast total national energy demand

Historical demand

2008 Statement of Opportunities forecast 2010 Statement of Opportunities forecast

otal electricity consumption in New Zealand is near to 40,000 gigawatt hours (GWh) per annum.

Electricity demand has increased at approximately 2.5 percent a year since the 1970s. That trend is strongly related to economic growth and population size, and, based on Statistics New Zealand projections, demand is forecast to continue growing at a rate of around 1.5 percent a year through to 2050 as shown in Figure 2.

As demand for electricity varies from moment to moment, supply must change almost instantly. Consumption follows strong daily and seasonal patterns. At low demand times such as a summer night, total demand may be as low as 2,737 megawatts (MW), whereas at peak times (winter evenings), it can exceed 6,330MW. Although electricity use has been highest historically on cold winter evenings, some regions now have summertime peak demand as a result of increasing use of farm irrigation

and domestic airconditioning. Figure 1 shows annual electricity demand by region for the year ended July 2011 Electricity consumption by sector is shown in Figure 3. Commercial, agricultural and industrial users, as shown in Figure 4, make up 15 percent of customer numbers but, through higher average consumption per customer, account for two-thirds of total demand.

T

Ministry of Business,

Innovation and

Employment

The Ministry of Business, Innovation and Employment (MBIE) provides the government with policy advice on energy issues, including supply and demand, efficiency and conservation, and renewable energy strategy.

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Consumers

Figure 3 Estimated electricity consumption by sector (GWh) (38,423,798MWh total in year ended March 2010)

Source: MED Energy Data File, 2011

Figure 4 Consumer ICPs by sector

(total of 1,925,911 customers in year ended March 2010)

Source: MED Energy Data File, 2011

Source: EECA Energywise™

35% Residential

5% Agriculture, forestry, fishing

36% Industrial

24% Commercial

Figure 5 Average family household energy usage 30% Water heating 3%Other appliances 7%Cooking 11%Refrigeration 8%Lighting 12%Electronics and other uses

29% Space heating

Consumer Affairs

Consumer Affairs is tasked with developing consumer policy, including consumer protection, and administers a range of consumer legislation. It also provides information, education and advice for consumers and businesses. www.consumeraffairs.govt.nz 86% Residential 9% Commercial 2% Industrial 4% Agriculture, forestry, fishing

For example, the single largest user (Rio Tinto Aluminium – the smelter at Tiwai Point in Southland) accounts for just on 14 percent of New Zealand’s total electricity demand.

A further six electricity consumers have single sites that consume at least 10,000 times as much electricity as the average domestic household. These six very large industrial electricity consumers are Carter Holt Harvey (Kinleith pulp and paper mill), Norske Skog Tasman (Kawerau pulp and paper mill), New Zealand Steel

(Glenbrook steel mill), Pacific Steel (Otahuhu steel mill), Pan Pac (Whirinaki pulp mill) and Winstone Pulp International (Karioi pulp mill, near Ohakune).

Residential users account for about one-third of total consumption, with most residential demand being for water heating, space heating and refrigeration as shown in Figure 5.

Technological progress has an impact on electricity consumption as well as generation. There has been growth in electricity-using technologies over time, such as computers and airconditioning, but there have also been improvements in electricity efficiency. For example, modern electric lighting, heating appliances and motors are significantly more efficient than their predecessors.

Electricity efficiency

As demand for electricity continues to rise, as shown in Figure 2, in a generation-constrained environment, improved electricity efficiency will play an increasingly important role in future security of supply and achieving sustainability objectives.

There is significant untapped potential to use electricity more efficiently and at lower cost than building new power stations. The KEMA New Zealand Electric Energy-Efficiency Potential Study concluded that, by investing in economic efficiency measures, New Zealand can save around 15 percent of projected electricity use by 2016.

Lighting is a good example of where cost-effective savings are readily available. Compact fluorescent lamps (CFLs) make it possible to light homes and businesses at around 20 percent of the electricity cost of traditional incandescent bulbs.

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Electrification of sections of the North Island main trunk railway line greatly increased productivity, cutting transit times and increasing payloads by 50 percent.

Electricity efficiency: everyone saves – lower power bills and reduced construction of power stations.

If every household used efficient lighting, New Zealand could reduce its annual energy consumption by as much as 1,200GWh, which is equivalent to the annual electricity usage of Waitakere and North Shore cities or more than $278 million a year in residential power bills. The New Zealand Energy Efficiency and Conservation Strategy 2011–2016 sets the Government’s strategic direction for the promotion of energy efficiency, energy conservation and renewable energy. It is a companion document to the longer-term New Zealand Energy Strategy, the goal of which is for New Zealand to make the most of its abundant energy potential through the environmentally responsible development and efficient use of the country’s diverse energy resources.

With respect to electricity, areas in which the Energy Efficiency and Conservation Authority (EECA) has identified significant savings potential include;

• motorised systems in industry; • lighting, heating and airconditioning

in commercial buildings; and • lighting generally, including streets. Programmes to explain opportunities for improved efficiency and to assist consumers to make savings include: • funding assistance (such as financial

contributions for efficiency projects in commercial buildings) to help get investment in more energy-efficient products or systems ‘over the line’ in a cost-constrained economy; • training (such as courses for

commercial building managers) to increase knowledge and astute decision-making on energy management;

• information to assist awareness and choice – such as the website www.rightlight.govt.nz, which promotes the savings opportunities available to consumers from more efficient lighting;

• setting and monitoring minimum energy performance standards and ratings; and • research and monitoring of electricity

efficiency opportunities and uptake.

Energy Efficiency and

Conservation Authority

The Energy Efficiency and Conservation Authority (EECA) promotes and supports energy efficiency, energy conservation and the use of renewable sources of energy in New Zealand, including in the electricity sector.

www.eeca.govt.nz.

Residential consumers living in average-sized homes can save up to $170 a year by replacing their existing lighting with energy-efficient options.

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Guess how much

you could save by

switching power

companies?

Find out at

Whats

My

Number

.org.nz

20 retail brands,

including

smart meters installed in New Zealand, with

expected to be installed by 2013 There are currently over

670,000

1 million

Bay of Plenty Energy Bosco Connect Contact Energy Empower Energy Direct NZ Energy Online Genesis Energy Hunet Energy Just Energy

King Country Energy Mercury Energy Meridian Energy Nova Energy Opunake Hydro Powershop NZ Prime Energy Pulse Energy Simply Energy Tiny Mighty Power TrustPower

Customer

Compensation Scheme

On 1 April 2011, the Authority announced a Customer Compensation Scheme as a key means of avoiding electricity supply shortage. Under the scheme, retailers will pay qualifying customers $10.50 per week during any future public conservation campaign, and also have the option of offering their own compensation schemes potentially linked to individual customers’ conservation efforts.

Increased retail competition, due to more electricity consumers shopping around for the best deal, reduced retail electricity prices in the September 2011 quarter, following the launch of the What’s My Number campaign.

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Guess how much

you could save by

switching power

companies?

Whats

My

Number

.org.nz

Retail

Electricity Authority

The Electricity Authority is an independent Crown entity

established to promote competition, efficiency and reliability of supply for the long-term benefit of consumers, through market design, overseeing market operations and monitoring and enforcing compliance with market rules. www.ea.govt.nz Powershop NZ Prime Energy Pulse Energy Simply Energy Tiny Mighty Power TrustPower

A

part from purchases on the wholesale market by major industrial users (page 4), most New Zealand consumers buy their power from 20 retail brands. Other communities are supplied by small, dedicated

generator-retailer-distributors, as in the case of Kaingaroa Energy Supply Incorporated, which supplies a very small, isolated community on the Chatham Islands.

Genesis Energy, with a 23.64 percent market share, is the largest retail brand, followed by Contact Energy with 23.09 percent. The approximate market shares of larger retail brands are shown in Figure 7.

Market evolution

New Zealand’s competitive electricity market is a relatively recent development. In 1985, local electricity distribution and supply to consumers were the responsibility of 61 electricity supply authorities (ESAs), which were statutory monopolies (while electricity generation and transmission were amongst the responsibilities of the then Ministry of Energy).

In 1986, the government announced its decision to reform the electricity industry. In September 1989, an Electricity Task Force set up by the government issued a report making a number of key recommendations for the restructure of the electricity industry. These recommendations included the corporatisation and privatisation of ESAs, separate ownership of generation and transmission, and the possible creation of a wholesale electricity market. During 1993 and 1994 statutory monopolies in the distribution and retailing of electricity were removed. However, the industry rules in place to ensure an individual consumer’s electricity consumption was metered accurately meant it was only cost-effective for large electricity consumers to switch electricity suppliers.

This changed in April 1999. The industry rules were amended to enable an individual consumer’s electricity consumption to be ‘profiled’ using a set of relatively low-cost arrangements. This development enabled all consumers to switch electricity suppliers if they wished. The electricity market was self-regulating until 2004, when it began operating under the Electricity Governance Rules and the Electricity Governance Regulations, overseen by the Electricity Commission. A ministerial review in 2009 tightened the focus on market performance and, through the Electricity Industry Act 2010 (Act), provided for the electricity market to be governed by the Electricity Industry Participation Code (Code), overseen by the Electricity Authority, from 1 November 2010. The Authority’s statutory objective is “to promote competition in, reliable supply by, and the efficient operation of, the electricity industry for the long-term benefit of consumers”.

Competition

The Code promotes retail competition by specifying efficient switching processes and by allowing any party to be an electricity retailer provided minimum standards are met.

Although the extent of retail competition varies across the country, almost all electricity consumers have a choice of retail brands. In some parts of New Zealand, there are nine or more competing brands.

To help strengthen competition in the retail sector, the Act provided for the establishment of a 3.5 year Consumer Switching Fund. The first initiative using this fund is the What’s My Number campaign, a programme to promote to consumers the benefits of comparing and switching retailers.

Launched by the Authority at the end of May 2011 in partnership with the Ministry of Consumer Affairs and Consumer NZ, the campaign aims to increase consumers’ readiness to switch suppliers and, as a result, permanently lock in pressure on retailers to produce innovative pricing plans and service offerings.

By improving the flow of information through the system, switching has become faster, as Figure 6 shows, and now generally can be done conveniently by a phone call to the new retail brand. During the first 3 months of the campaign, 390,927 people visited the website and 128,000 switches took place. On average, switching rates increased by 44 percent as consumers found deals that better suited their needs.

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Retail

25

retail invoices are issued every year Almost

million

In the year to October 2011, some

349,000

consumer ICPs switched retailers

Certification for conventional residential meters expires in 2015. Many retailers see this as an opportunity to update to smart meters rather than have existing meters recertified.

Metering is a critical part of retail market operations. The Code specifies requirements for meter performance and maintenance, including meter suppliers’ responsibilities and standards for accreditation of metering test houses. Twenty test houses are currently approved by the Authority to certify that metering systems are operating accurately, and all test houses are audited periodically.

The roll-out of advanced metering in New Zealand is a significant technological advance being led by retailers. Although key technical aspects, such as data-exchange protocols, are standardised, the roll- out is unregulated, voluntary and currently at no additional direct cost to consumers. Since 2005 when the first advanced meters were installed by Meridian Energy in Central Hawke’s Bay, the number of advanced meters has increased to 670,000. It is projected that about 1 million will be installed by 2013, with some estimates suggesting some 1.55 million could be in use by 2015.

Advanced metering can give electricity consumers the opportunity to analyse expenditure and control costs by running appliances at least-cost times of day and will play an important part in the uptake of smart appliances and electric vehicles. It also enables distributors and retailers to manage their portfolios more cost-effectively and to share infrastructure, spreading the cost of automating with other utilities such as gas and water. Ultimately, the ability across the system to better manage electricity demand eases pressure for investment in new generation, transmission and distribution assets.

Complementing smart meters on site, the advent of smart-grid technology will enable intelligence to be built into distribution networks, for example, allowing deferment of capital by facilitating improvements in the management, reliability, availability, security and efficiency of electricity supply.

Market administration

The Authority contracts out the services required to operate the retail and wholesale electricity markets, apart from the market administration function, which it performs itself.

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60 50 40 30 20 10 0

Figure 6 Average business days for consumers to switch between traders

A

verage days to switch

Jan 06 Apr 06 Jul 06 Oct 06 Jan 07 Apr 07 Jul 07 Oct 07 Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Jan 10 Apr 10 Jul 10 Oct 10 Jan 11 Apr 11 Jul 11 Oct 11

The market administrator role encompasses a range of background, but important, operational obligations. These functions are of an oversight nature, rather than active processing of market data or provision of real-time market services as performed by contracted service providers. Market administration includes, for example, appointing auditors of metering test houses and metering installations, collating various reports from contracted service providers and specifying back-up procedures for use in the event of a failure of market systems.

In the retail market, at present, the key services of registry and reconciliation are contracted to Jade Software Corporation Ltd (Jade) and the New Zealand Stock Exchange (NZX) respectively.

Registry

The registry is managed by Jade in accordance with Part 11 of the Code. This is a national database containing information on nearly two million points of connection at which electricity is supplied to a site. Referred to as installation control points (ICPs), each ICP has a unique identifier, which is used in managing customer switching and reconciliation processes.

Reconciliation

Ensuring industry participants are allocated their correct share of electricity generation or consumption is essential to operating an efficient market. To facilitate this as specified in Part 15 of the Code, the contracted reconciliation manager, NZX, receives and processes about 50 million metering data points on a monthly basis, reconciles them against a register of contracts and passes the data to industry participants. The process involves a considerable amount of detailed analysis to process and correct data for inaccuracies. Reconciliation information is used in the electricity market settlement function performed by the clearing manager (page 12).

Data management

Retailers, generators and those consumers directly connected to the national grid are responsible for managing the data generated by 3 million conventional and advanced meter registers – covering 99 percent of New Zealanders and their businesses. In some cases, external service providers are engaged to perform this function.

Across the New Zealand electricity market, more than 1.1 billion data points are settled annually.

Figure 7 Retailer market share by active ICPs – October 2011

1. Nova Energy is a subsidiary of Todd Energy.

2. Bosco Connect is a subsidiary of Mighty River Power and includes the Tiny Mighty retail brand. 3. Pulse Utilities includes the Just Energy and Pulse Energy retail brands.

4. Bay of Plenty Energy is a subsidiary of Todd Energy. 5. Powershop NZ is a subsidiary of Meridian Energy. 6. Energy Online is a subsidiary of Genesis Energy.

7. Meridian Energy customer numbers include Rio Tinto, which accounts for about 14% of national electricity demand, and Energy Direct’s ICPs.

8. Mercury Energy is a subsidiary of generator Mighty River Power. 9. Contact Energy includes the Empower retail brand.

Electricity and Gas Complaints

Commission

The Electricity and Gas Complaints Commission (EGCC) provides a free, independent dispute resolution service for consumers having difficulties with their electricity and gas suppliers.

EGCC can look into most complaints, including billing, disconnections, damaged property, property access issues and difficulties in switching companies. www.egcomplaints.co.nz

Percent of market share

Retailer

0 5 10 15 20 25

Nova Energy1

King Country Energy Bosco Connect2

Pulse Utilities3

Bay of Plenty Energy4

Powershop NZ5 Energy Online6 TrustPower Meridian Energy7 Mercury Energy8 Contact Energy9 Genesis Energy

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7

Electricity Authority Jade Direct

New Zealand Stock Exchange (4 services) Transpower

Electricity purchased by retailers and major users on the wholesale market in the year to July 2011

$

2.1 billion

Ready access to market information is crucial for investment and innovation. Developing tools such as EMI, the user interface to the Authority’s mathematical programming models and visualisation tools, is part of a focus on more open access to information.

service providers

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Wholesale

etailers and a small number of customers, typically large industrial users, buy electricity directly from the spot market. These parties will typically also enter into financial contracts, often called hedges, which smooth out some or all of the volatility in spot prices. Jointly, the spot and hedge markets are the major components of the wholesale electricity market, which also includes the ancillary services markets.

Generators that are bigger than 10MW or are grid connected compete in the electricity spot market for the right to generate electricity to satisfy demand, subject to transmission capacity. They do this by submitting offers through the wholesale information and trading system (WITS). Each offer covers a future half-hour period (called a trading period) and is an offer to generate a specified quantity at that time in return for a nominated price.

The system operator (Transpower) uses a scheduling, pricing and dispatch system to rank offers, submitted through WITS,

R

in order of price and selects the

lowest-cost combination of resources to satisfy demand. The highest-priced generator actually required for a given half-hour is the key determinant of the spot price for that trading period, although prices can, on occasion, be many times higher than the highest cleared offer. Electricity spot prices can vary significantly across trading periods, reflecting factors such as changing demand (eg lower prices in summer when demand is subdued) and supply (eg higher prices when hydro lakes and inflows are below average).

Spot prices can also vary significantly across locations, reflecting electrical losses and constraints on the transmission system (eg higher prices in locations further from generating stations).

Trades take place at approximately 248 nodes – grid injection points and grid exit points – across New Zealand every half-hour. Generators make offers to supply electricity at 52 grid injection points (GIPs) at power stations, while retailers and major users make bids to buy electricity at 196 grid exit points (GXPs) on the national grid.

Final prices at each node, taking account of grid losses and constraints, are processed and confirmed on an interim basis the following day and confirmed as final prices the day after.

The Authority is responsible for the effective day-to-day operation of the electricity market in accordance with the Code, and has governance and compliance responsibilities, including market development, performance monitoring and breach investigation. The Authority undertakes the function of market administrator and, as with the registry and reconciliation functions (page 9), contracts service providers to perform the core wholesale market and system operation services.

In addition to reconciliation (page 9), NZX is contracted to provide three services: pricing manager, clearing manager and WITS.

From late 2012, a contracted financial transmission rights (FTR) market operation service provider will begin operation of an interisland FTR market in New Zealand.

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Wholesale

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2004 2005 2006 2007 2008 2009 2010 2011

Figure 8 Wholesale market payments ($ million) – dry-year impact 2008 is clearly evident

Pricing

Changing demand and supply over the course of a day results in price differences each half-hour trading period. Prices also vary by location, reflecting the costs of getting electricity from source (generators) to destination (consumers).

As pricing manager, NZX is responsible for calculating and publishing the spot prices at which electricity market transactions are settled. These are referred to as ‘final prices’ in the Code. Prices are derived using the same model the system operator uses to dispatch generation. The model calculates prices at each node, in accordance with Part 13 of the Code, for each trading period based on generator offer prices and quantities, demand and system conditions. These final prices are provided to the clearing manager to use in the clearing and settlement processes. The pricing manager calculates approximately 12,000 final prices every day, which are published to market participants through WITS.

Clearing

In its role as clearing manager, NZX is contracted to ensure that wholesale market participants are paid or pay the correct amount for the electricity they generated or consumed during the previous month, in accordance with Part 14 of the Code.

This involves a number of tasks, the primary one being invoicing participants for the sale and purchase of electricity and related services. On a monthly basis, the clearing manager does this by combining the reconciled quantity information provided by the reconciliation manager with half-hourly pricing information from the pricing manager to determine the amounts owed to and by each market participant. On average, over the last 5 years, $235 million worth of electricity passed through the clearing system per month.

The clearing manager also calculates and invoices ancillary services settlement and will do so for the new financial transmission rights (FTR) market (page 13). The clearing manager also plays an important part in maintaining market confidence, and under the Code, it has the role of administering prudential requirements in the form of acceptable credit ratings or securities for the purpose of ensuring purchasers of electricity or ancillary services can meet their payment obligations.

Rulings Panel

As with other matters, such as breaches and disputes between participants, prudential security decisions made under the Code may be appealed to an independent Rulings Panel consisting of a Chair and four other members. The Panel is appointed by the Governor-General on the recommendation of the Minister of Energy, after consultation with the Authority.

The information system

The WITS manager operates the electricity market wholesale information and trading platform. It is the system used by electricity market participants to upload their bids and offers. WITS also delivers pricing, scheduling and other market data to participants and other parties. Operation of the system as required by Part 13 of the Code, is contracted out to NZX.

WITS also offers a free-to-air service providing price, demand and hydrology information for general interest (www.electricityinfo.co.nz).

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System operator (Transpower) Metering equipment owners Metering standards (test houses) Data management (traders) Recon-ciliation (NZX Energy) Clearing (NZX Energy) Wholesale information (NZX Energy) Registry (Jade) Market admin-istration (Electricity Authority) Pricing (NZX Energy) Hedge and FTR markets direct consumers

The market administrator

In October 2004 when the existing market administrator service provider agreement expired, rather than contract this function out again, the Electricity Commission assumed the role itself.

As the market administrator today, the Authority provides several operational and administrative services, mostly in regard to the retail market as discussed on pages 8–9.

The hedge market

In order to manage the risk of price movements in the spot market, generators and purchasers can enter into hedge contracts to insulate them from variations in the spot price of electricity. This improves their ability to manage tight supply situations and assists retail competition. Traditionally, the hedge market in New Zealand has operated through over-the-counter (OTC) contracts, where buyers negotiate directly with sellers to agree on a price. These contracts can be customised and offer flexibility for both parties.

As an alternative to OTC contracts, recently, buyers and sellers of electricity have been able to contract on the futures market operated by the Australian Stock Exchange (ASX). ASX provides a market in which participants can buy or sell standard 1MW contracts covering quarterly or annual strips (1MW is the amount of electricity required to continuously supply 1,000 single bar heaters).

A key advantage of futures trading is the publication of contracts with full transparency of prices, allowing other participants to more readily observe the forward price of electricity. Forward prices for long-term contracts provide valuable information to generation and demand-side investors, and prices for short-term contracts assist with short-short-term generation and demand decisions. In late 2011, new market-maker

arrangements for New Zealand electricity futures trading were adopted by the ASX and the large generators. These arrangements sharply reduced the bid-ask spreads for futures contracts

and substantially boosted trading volumes, providing the foundation for an increasingly active hedge market, which other parties, such as financial institutions, are expected to enter over time.

Financial transmission rights

FTRs are a type of hedge contract initially allowing parties to cover their price risk between two nodes on the national grid. Over time, this will extend to more nodes. FTRs protect wholesale market participants from half-hourly variations in spot-market prices at one location versus another. An FTR market is expected to be operating in New Zealand by October 2012. It should significantly enhance competition in the retail and hedge markets by reducing barriers to generator-retailers competing for retail and hedge customers on a nationwide basis as opposed to focusing primarily in regions close to where they own generation assets.

Generation 11–16kV Transmission typically 110 or 220kV Distribution 11, 33 or 66kV

Grid injection points Grid exit points

Consumers

230 volts for residential and business

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Transmission and system operation

poles carry

of transmission lines in the national grid

towers and

16,450

12,000

km

Source: Transpower Asset Management Plan, 2010

1

grid

owner

Transpower

Capital investment in the national grid has ramped up in recent years, nearing $700 million in the year to June 2011, compared to an average of around $100 million a year for the past 2 decades.

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Transmission and system operation

he national grid is owned and operated by Transpower, a

State-owned enterprise.

Subject to review and approval of investment proposals by the Commerce Commission, Transpower builds new grid investments and is responsible for all transmission development processes, such as obtaining resource consents, arranging access and undertaking construction. Under the Act, Transpower is also contracted to act as system operator, in accordance with Part 7 and Part 8 of the Code, and is required to coordinate supply and demand resources to maintain real-time security. Ensuring real-time security requires the system operator to schedule and dispatch electricity so that a balance between electricity supply and demand is continuously maintained.

T

The system operator’s scheduling,

pricing and dispatch (SPD) software is a cornerstone of the market system. It enables competitive bids (a bid from a purchaser to purchase a quantity of electricity) and offers (an offer from a generator to generate a quantity of electricity at a price) to be compared and ranked in order of price. It also optimises generation schedules, while accounting for factors such as instantaneous reserve, transmission system losses and constraints. In addition to real-time dispatch, the system operator’s responsibilities also involve significant investigating and planning activity over periods ranging from years to minutes ahead of real time. Examples of this are coordination of generation and transmission outages, facilitating commissioning of new generating plants and procurement of essential ancillary services through contracts with generators, retailers and distributors.

Ancillary services

There are five ancillary services. Frequency-keeping is carried out by generators that can quickly change output to match load fluctuations in consumer demand. System frequency must be kept within limits so that equipment, such as manufacturing plant, is not tripped.

Instantaneous reserve is interruptible load or spare generating capacity that is used to cover the largest potential event, such as the loss of a large generation plant or the HVDC link between the North and South Islands.

Over-frequency reserve is a service that automatically reduces the level of generation injected into the grid to stop an unplanned rise in frequency.

Voltage support is the service that injects reactive power into the system to increase or decrease voltage at the point of injection.

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Transmission

and system

operation

substations,

174 1,000

2,300

over and transformers converting low voltage electricity to high voltage for transmission on the national grid and back to low voltage for end use

circuit breakers protecting circuits from damage caused by overload or short circuit

Source: Transpower Asset Management Plan, 2010

One of New Zealand’s largest transmission projects in half a century involves building new substations and some 200km of transmission lines and underground cables between Whakamaru and Auckland at an estimated cost of $824 million, for scheduled completion in 2012.

Black start is provided by certain generators with the capacity to restart their generation plant with no electrical input if the system has blacked out. Generators without this capability require power from the grid to restart their generating plant.

Frequency-keeping and instantaneous reserve operate on market-based procurement, with offers of quantity and price used to select the respective providers in each half-hour trading period. The other three ancillary services are procured bilaterally by the system operator, generally on an availability payment basis, with the exception of voltage support, which operates on both availability and event payment contracts.

Security of supply

As part of its responsibility for monitoring security of supply, the system operator is required to assess the supply outlook over the next decade, and evaluate factors such as planned generation, transmission constraints, forecast growth in demand, and fuel stockpiles.

The system operator is also involved in routinely monitoring short-term security (up to 18 months ahead) and providing the industry and consumers with information on factors, such as risks to hydro-lake storage and changes in electricity consumption patterns. Under the Act, the system operator has operational responsibility for emergency management.

Reflecting the national importance of assured power supply, the Act required the formation of a Security and Reliability Council to provide independent advice to the Authority on the performance of the electricity system and of the system operator on reliability-of-supply issues. Members of the Council are appointed by the Authority from publicly nominated sector specialists.

Commerce Commission

The Commerce Commission is responsible for evaluating and approving capital expenditure proposals prepared by Transpower for investment in the national grid and for overseeing efficiency, quality and pricing of electricity lines services. www.comcom.govt.nz

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Source: Electricity Authority 2011

Transmission network

350kV (HVDC) 110kV 220kV 50kV, 66kV Line capacity Substation Benmore Haywards Bunnythorpe Islington Kikiwa Stratford Huntly Otahuhu Whakamaru Tiwai

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5

of electricity generation from renewables

90 %

2025

Government energy policy targets

by 7.3% Geothermal 1.8% Diesel 0.6% Other 15.9% Gas 10% Coal 6.1% Wind 3.9% Cogeneration 54.4%Hydro

Figure 10 Generating capacity as at June 2011

1 Contact Energy

2 Genesis Energy

3 Meridian Energy

4 Mighty River Power

5 Trustpower

1 Alinta Energy

2 Bay of Plenty Energy – NGC JV

3 Bay of Plenty Energy – Vector JV

4 King Country Energy – Todd Energy JV

5 Norske Skog Tasman

6 NZ Windfarms

7 Tauhara North No 2 Trust – Mighty River Power JV

8 Tuaropaki Power Company

major and 8 smaller, grid-connected

generators, along with local supply from distributed generation

16.6% Mighty River Power

32.64% Meridian Energy

3.08% Other independents and on-site generators

23.26% Contact Energy

7.4% TrustPower

17.01% Genesis Energy

Figure 9 Percentage of generation (GWh) by generation company

Exploiting strong westerly winds that blow unhindered across the Tasman Sea, wind generation capacity has continued to increase in recent years. Current capacity is sufficient to supply 180,000 homes each year. 18

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Generation

ew Zealand’s five major

generation companies produce

almost 97 percent of the country’s electricity.

Two of these, Contact Energy and TrustPower, are publicly listed companies, Contact Energy having been created through the first split of ECNZ in 1996. The other three, Genesis Energy, Meridian Energy and Mighty River Power, are State-owned enterprises created from the second split of ECNZ in 1998. Jointly, these major generators own 98 power stations. In addition, they operate 81 power stations on behalf of other owners.

Other hydro, cogeneration, geothermal and wind generators operate a further 35 plants.

Of these 214 power stations, 52 are grid-connected, 6 provide grid-connected cogeneration, 14 provide a combination of grid-connected and partially embedded capacity and 142 are embedded, connecting into local distribution networks or providing onsite supply.

N

Some of these embedded generators

are relatively large. Te Uku, which supplies electricity to the WEL distribution network in the Waikato, for example, has a capacity of 64.4MW and is the 39th largest plant in New Zealand. White Hill in Southland has a capacity of 58MW, and Te Rapa Cogen has a capacity of 44MW. The map on page 21 shows the location of grid-connected generating stations over 10MW in size, and Table 1 (page 22) provides details on these plants.

More than half of New Zealand’s electricity is generated from hydro-electric stations. With the addition of other renewable sources of energy – geothermal, biomass, solar and wind – some 77 percent of New Zealand’s electricity generation output came from renewable energy resources in 2011. The government’s Energy Strategy aims to lift this to 90 percent by 2025. Other fuel types in the generation mix are coal, diesel and gas. In addition, some industrial sites produce heat

and electricity for industrial purposes, in a process known as cogeneration. Often, excess cogenerated electricity is exported into distribution networks or to the national grid.

Because New Zealand’s hydro storage lakes can only hold enough water for a few weeks of winter energy demand, hydro generation is sensitive to the level of inflows from rainfall and snowmelt. For this reason, when inflows are low for a sustained period, alternatives such as coal must fill the place of reduced hydro generation. At the end of June 2011, 54.4 percent of electricity capacity was produced at hydro stations, 15.9 percent by gas-fired power stations, 10 percent by coal-fired stations, 7.3 percent geothermal, 6.1 percent wind power, 3.9 percent cogeneration, 1.8% diesel and less than 0.6 percent from other sources. Hydro generation has ranged between 52 percent and 57 percent of total annual generation over the last 5 years. Figure 11 shows how generation by fuel type has changed over time.

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Generation

The greatest capacity

is provided by Huntly 1– 6

10,000

1,448

Total generating capacity of the New Zealand electricity system is about

MW

Cogeneration delivers energy efficiency benefits by using heat produced in the process of generating electricity, commonly by steam turbines, for industrial purposes such as drying kilns.

New Zealand pioneered geothermal electricity generation in the 1950s with the aim of providing cover for hydro generation in dry years and avoiding dependence on imported fuel. Today, geothermal energy is the source of 10 percent of the country’s electricity.

Changing technology

Wind power in New Zealand generates a small but rapidly growing proportion of the country’s electricity. At the moment, wind supplies around 3 percent of New Zealand’s electricity needs, although the proportion of wind generation is expected to rise significantly as important wind-farm developments in the South Island come on line.

Some projections see wind’s share of New Zealand’s total annual electricity generation reaching 11 percent in 2030. An upper limit of 20 percent is generally considered likely as the uneven strength of wind and its intermittent nature mean output needs to be balanced by availability of other generation. There are a number of new generation technologies under development in New Zealand and internationally. Solar, tidal and wave power are examples of emergent technologies that might become commercially viable in the future. Tidal power uses the predictable movement of tides to generate electricity, whereas wave power uses the energy of ocean surface waves.

Because of the different characteristics of generation types, as summarised in Table 2 (page 23), a mix of plant types rather than reliance on one fuel source, location or technology is desirable.

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Ministry for the Environment

The Ministry for the Environment (MfE) oversees the framework of the Resource Management Act 1991 (RMA), which governs resource consents for construction projects and other developments. MfE is also involved in renewable generation and electricity transmission policy development. www.mfe.govt.nz Clyde Roxburgh Waipori Teviot Waitaki Aviemore Ohau C Coleridge Highbank Cobb Mangahao Te Apiti Tararua Kapuni Stratford Peaker Whareroa Patea Southdown Ngawha Otahuhu Glenbrook Huntly Ohau B Ohau A Tekapo B Tekapo A Manapouri Mahinerangi Whitehill Taranaki CC See Inset Whirinaki Tuai Kaitawa Matahina Ohaaki

Nga Awa Purua

Wheao and Flaxy Arapuni Karapiro Te Rapa Kaimai Scheme Kawerau Rotokawa Kinleith Waipapa Maraetai Whakamaru Poihipi Aratiatia Mokai Wairakei Ohakuri Atiamuri _Aniwhenua Rangipo Tokaanu Kawerau Benmore West Wind

Location of electricity

generators in New Zealand

Type of generation Hydro Gas Coal Diesel Wind Other (biomass/waste heat) Geothermal Cogeneration Piripaua Te Rere Hau Te Uku Te Uku Tuai Kaitawa Matahina Ohaaki Nga Awa Purua

Wheao and Flaxy Arapuni Karapiro Te Rapa Kaimai Scheme Kawerau Rotokawa Kinleith Waipapa Maraetai Whakamaru Poihipi Aratiatia Mokai Wairakei Ohakuri Atiamuri Aniwhenua Rangipo Tokaanu Kawerau Piripaua

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Table 1 Information on current grid-connected generating plants (10MW or greater)

Generation type Station name Owner Capacity (MW)

Cogeneration Glenbrook Alinta Energy 112 Kapuni Bay of Plenty Energy 25 Kawerau – TPP Norske Skog Tasman 37 Kinleith Genesis Energy 28 Kiwi Dairy, Hawera (Whareroa) Todd Energy 69.6

Geothermal Kawerau Geothermal Mighty River Power 100 Mokai I, II & III Tuaropaki Power Company 112 Nga Awa Purua Mighty River Power 140 Ohaaki Contact Energy 70 Poihipi Rd Contact Energy 55 Wairakei Contact Energy 161

Hydro Arapuni Mighty River Power 196.7 Aratiatia Mighty River Power 78 Atiamuri Mighty River Power 84 Aviemore Meridian Energy 220 Benmore Meridian Energy 540 Clyde Contact Energy 432

Cobb TrustPower 32

Coleridge TrustPower 45 Kaitawa Genesis Energy 36 Karapiro Mighty River Power 90 Manapouri Meridian Energy 850 Mangahao King Country Energy – Todd Energy JV 42 Maraetai Mighty River Power 360 Matahina TrustPower 72 Ohakuri Mighty River Power 112 Ohau A Meridian Energy 264 Ohau B Meridian Energy 212 Ohau C Meridian Energy 212 Patea TrustPower 30.7 Piripaua Genesis Energy 42 Rangipo Genesis Energy 120 Roxburgh Contact Energy 320 Tekapo A Genesis Energy 25 Tekapo B Genesis Energy 160 Tokaanu Genesis Energy 240 Tuai Genesis Energy 60 Waipapa Mighty River Power 51 Waipori TrustPower 84 Waitaki Meridian Energy 90 Whakamaru Mighty River Power 100 Wheao and Flaxy Scheme TrustPower 24

Thermal (diesel) Whirinaki Contact Energy 155

Thermal (coal) Huntly Units 1–4 Genesis Energy 1,000

Thermal (gas) Huntly e3p Genesis Energy 400 Huntly p40 Genesis Energy 48 Otahuhu B Contact Energy 380 Southdown Mighty River Power 175 Stratford Peaker Contact Energy 200 TCC – Taranaki Combined Cycle Contact Energy 385

Wind Tararua Stage 3 TrustPower 93 Te Apiti Meridian Energy 90.75 West Wind Meridian Energy 143

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Table 2 Generator types

Type of plant Energy source Characteristics

Hydro Water pressure drives a turbine connected to an electricity generator.

• Expensive to build, but low running cost

• Generation affected by inflows from rainfall/snowmelt

• Some environmental impact due to construction and/or operation, but no greenhouse gas emissions from operation

• Location dictated by hydro resource availability

Geothermal

(eg Wairakei) Steam from deep underground is piped to the surface to drive a turbine connected to an electricity generator.

• Relatively high upfront cost but modest running cost

• All New Zealand geothermal sources produce some greenhouse gases • Must be located near source of underground heat or steam

Wind Wind turns a large rotor, which is coupled to an electricity generator.

• Expensive to build but low running cost

• Difficult to forecast output accurately and output may vary from minute to minute • Construction and operation have some environmental impact

• No greenhouse gas emissions during operation

Gas- or coal-fired steam plant (eg Huntly)

A boiler heated by burning fossil fuel creates steam, which drives a turbine connected to an electricity generator.

• Lower upfront cost than renewables, but more costly to run due to ongoing fuel bill • Less vulnerable to ‘forces of nature’ in short term – provided fuel supply is secure • Less efficient in fuel conversion than newer combined cycle technology • Emits greenhouse gases/other pollutants

Combined cycle gas turbine (CCGT) (eg Otahuhu CC)

Burning of gas is used to drive a turbine, which is connected to an electricity generator. Heat from turbine exhaust is used to create steam, which is also coupled to a generator to produce electricity.

• Upfront cost lower than renewables and most steam plant • Higher fuel conversion efficiency than steam plant

• Less vulnerable to forces of nature in short term – provided fuel supply is secure • Relatively small footprint provides locational flexibility

• Emits greenhouse gases

Open cycle turbine

(eg Whirinaki) Burning of gas/distillate is used to drive a turbine, which is connected to an electricity generator.

• Relatively low upfront cost

• Relatively low fuel conversion efficiency resulting in higher variable operating cost • Flexible to operate – can respond to system changes at short notice

• Small footprint provides locational flexibility • Emits greenhouse gases

Biomass

(eg Kinleith) Burning of waste such as bark/sawdust is used to create steam, which drives a turbine connected to an electricity generator.

• Relatively expensive to build

• Relatively low fuel cost if utilising low-value waste – but can require supplementation from gas/coal etc

• Location influenced by availability of fuel source (transport cost can be significant for waste products)

• Modest greenhouse gas emissions – if main fuel source is renewable

Source:New Zealand Energy Data File, 2011

45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 GWh

Figure 11 Annual electricity generation by fuel type (10MW or greater)

Hydro Gas Coal Wind Geothermal Bioenergy Other thermal 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

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150,000

29%

km of distribution network lines linking consumers into the national grid

of New Zealanders’ annual expenditure on electricity

Over

On average, gross distribution network costs account for about

29 distribution companies

Alpine Energy Aurora Energy Buller Electricity Centralines Counties Power Eastland Network Electra Electricity Ashburton Electricity Invercargill Horizon Energy Distribution

Mainpower New Zealand Marlborough Lines Nelson Electricity Network Tasman Network Waitaki Northpower Orion New Zealand OtagoNet JV Powerco Scanpower

The Lines Company The Power Company Top Energy Unison Networks Vector Lines Waipa Networks WEL Networks Wellington Electricity Westpower

As limited opportunities exist for investment in competing infrastructure, local electricity distribution networks are owned either by trusts that return profits to their consumers, or companies under Commerce Commission price control.

Electricity in New Zealand

Contents

The Electricity Industry Act 2010

changed the shape and structure of

the New Zealand electricity sector.

Foreword

Electricity in New Zealand

Contents

The Electricity Industry Act 2010

changed the shape and structure of

the New Zealand electricity sector.

Foreword

Electricity in New Zealand

Contents

The Electricity Industry Act 2010

changed the shape and structure of

the New Zealand electricity sector.

Foreword

165,000

70,000

40,000

1.7

million

$

6

billion

on electricity by

Almost

a year is

spent

20

retail brands

commonly

buying

through

7

competing in the

market operated by

service providers

What is electricity?

Other information

Websites

1

grid

owner

Most purchases are

met by generation

dispatched on the

20

retail brands

commonly

buying

through

7

competing in the

market operated by

service providers

1

Most purchases are

met by generation

dispatched on the

1

grid

owner

Key dates

29

distribution

companies

and 105

embedded networks

from

supplied to

consumers by

5

major and

8

smaller,

grid-connected

generators and, along

with local distributed