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\nLast year, the Electricity Authority began consulting the industry on potential changes.
\nPhoto: RNZ \/ Cole Eastham-Farrelly\n<\/p>\n
From July, the country’s big four energy companies, or gentailers, will have to comply with new regulations aimed at ensuring there is a level playing field for future hedging contracts.<\/p>\n
Last year, the Electricity Authority began consulting the industry on changes to regulations around transparency and the use of supply risk management contracts, or hedges.<\/p>\n
Hedging, or fixed-price future contracts, is a tool retailers can use to protect themselves from spikes in the electricity spot price market during generation shortages.<\/p>\n
The consultation followed claims from smaller independent energy retailers that they had not been able to compete fairly with gentailers, which have both generation and retail arms.<\/p>\n
The gentailers denied claims they had acted anti-competitively.<\/p>\n
The Electricity Authority has now confirmed that it is planning to amend the Electricity Industry Participation Code 2010 and introduce non-discrimination obligations (NDOs).<\/p>\n
The Authority said this would require the four large gentailers – Contact Energy, Genesis Energy, Mercury NZ and Meridian Energy – to supply risk management contracts, or hedges, on an even-handed basis to all buyers, meaning they cannot favour their own retail arms on price or non-price terms.<\/p>\n
Electricity Authority Acting Chair Erik Westergaard said the move would strengthen competition, increase transparency and provide information the Authority could use for monitoring and enforcement.<\/p>\n
He said the move would not be overly disruptive.<\/p>\n
“The NDOs can be enacted quickly and will not materially increase costs for gentailers. They should not be used as a reason to increase prices. He said.<\/p>\n