Contact, Genesis, Meridian and Mercury would have to make hedge products available to all industry participants on the same terms available to their retail businesses. Photo: RNZ / Robin Martin
The big four electricity generator-retailers (gentailers) will not be allowed to give preferential treatment to their retail arms through hedge contracts, under proposed new rules.
The Commerce Commission and Electricity Authority's Competition Task Force aimed to improve competition and give new players and investors confidence to enter the market by giving all participants equal access to electricity hedge contracts.
The gentailers - Contact, Genesis, Meridian and Mercury - would have to make hedge products available to all industry participants on the same terms available to their retail businesses, providing greater transparency about prices and volumes.
Hedge contracts helped to smooth out price spikes, which can occur during peak consumer demand periods.
"The proposal, it actually represents the biggest change in the market in several decades, but it essentially requires fair treatment for everyone to help boost competition and security of supply," chair of the Electricity Authority Anna Kominik said.
"Smaller renewable energy producers need to have the same opportunities as the big traditional power companies ... and start building for that future where we've got 70 percent more energy needed by 2050."
Kominik said the Authority could take action if monitoring showed evidence of unfair treatment, with options to introduce more prescriptive ways to level the playing field, if required.
"We're really trying to make sure that we're getting more competition ... as (the) status quo is not necessarily going to get us to where we need to get to for consumers."
Retailer Octopus Energy said the current market structure had created a barrier to competition and investment in new generation.
"Poor competition is leading to hefty bill increases and poor security of supply," Octopus Energy chief operating office Margaret Cooney said, adding the proposed changes would be the change the industry needed.
"It's the start of action that is needed to get competition working more effectively and bring investment in generation and smart retailing, driving down the cost of electricity for households and businesses," Cooney said.
The task force is inviting comment on the proposal over the next eight weeks.
Sign up for Ngā Pitopito Kōrero, a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
