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Consumers pay between $5 billion and $6 billion per year for electricity.  Approximately two thirds of the annual costs are for wholesale and retail market costs.  The balance of costs are for regulated electricity line service monopolies.

In the wholesale and retail markets continuous improvement is needed to enhance competition, reliability and efficiency.  Changes are developed by innovative individual suppliers, the sector collectively through market led initiatives and by changes to the Electricity Industry Participation Code administered by the Electricity Authority.  Very large users’ of electricity have always played an important role in the evolution of the rules of the wholesale market.  With emerging economic technologies such as smart metering, photovoltaic’s, battery storage and electric vehicles, electricity markets will need to evolve to cater for all classes of consumer having more flexible demand and their own sources of supply.

Future regulated line charges are expected in the near term to increase faster than energy prices.  There are many policy issues affecting line charges being considered including transmission and distribution pricing overseen by the Electricity Authority.  The overall level of line charges is derived from various building blocks determined by the Commerce Commission including regulated asset base and cost of capital.  All of those are to be reviewed over the next 18 months against a backdrop of changes driven by the same issues that will transform the wholesale and retail markets.

MEUG is a trade association working across all regulatory regimes and working with parties in the supply chain and all consumers to improve New Zealand’s electricity sector.