Editing New Zealand electricity market (section)

==Overview==
Until 1987, New Zealand had a centrally run system of providers of [[electricity generation|generation]], [[electric power transmission|transmission]], [[Electric power distribution|distribution]], and [[electricity retailing|retailing]]. Reform has since led to the separation of the monopoly elements from the contestable elements to create competitive markets in energy retailing and generation.  Regulation has also been imposed on the [[natural monopoly|natural monopolies]] of transmission and distribution.<ref>{{cite book
|title=Alternating Currents or Counter-Revolution?
|url=http://www.iscr.org.nz/f310,8474/8474_Alternating_Currents_e-book.pdf
|last1=Evans
|first1=Lewis
|last2=Meade
|first2=Richard
|publisher=[[Victoria University Press]]
|isbn=0-86473-525-1
|page=138
|year=2005}}</ref> 

Since about 2000, the market is split as follows: regulation, administration, generation, market clearing, transmission, distribution, metering and retail.<ref name="ministry-of-business-innovation-and-employment-2015"/>

The wholesale market for electricity operates under the Electricity Industry Participation Code (EIPC),<ref>{{cite web| url=http://www.ea.govt.nz/act-code-regs/code-regs/the-code| title=The Code| publisher=Electricity Authority| accessdate=25 July 2013| url-status=dead| archiveurl=https://web.archive.org/web/20130822100243/http://www.ea.govt.nz/act-code-regs/code-regs/the-code| archivedate=22 August 2013}}</ref> and is overseen by the market regulator, the [[Electricity Authority (New Zealand)|Electricity Authority]].  Trade takes place at more than 200 pricing nodes across New Zealand.<ref>{{cite web
|title=Connecting and Dispatching New Generation in New Zealand
|url=http://www.systemoperator.co.nz/f1684,1999807/1999807_connecting-dispatching-new-generation-nz.pdf
|accessdate=2009-05-04
|publisher=Transpower
}}</ref> Generators can make offers to supply electricity at grid injection points, while retailers and some major industrial users make bids to withdraw "offtake" electricity at grid exit points.  The market uses a [[locational marginal pricing]] auction which takes generators' offers and retailers' bids, and computes final prices and quantities at each node.  These auctions are held every half-hour for a total of 48 trading periods each day.

In addition to the core wholesale spot market there are two associated markets. A [[hedge (finance)|hedge]] market for CFD financial contracts is operated by the ASX Australian Stock Exchange, and an FTR market for Financial Transmission Rights is operated by Energy Market Services, a business unit of Transpower. These markets are linked to wholesale market prices at select locations, allowing market participants to manage their basis risk.

The Electricity Authority contracts out the services required to run the electricity market.  The Reconciliation Manager who reconciles all metered quantities, the Pricing Manager who determines the final prices at each node and Clearing and Settlement Manager who pays generators for their generation at the market clearing price and invoices all retailers for their offtake, are all contracted to [[New Zealand Exchange]] (NZX), who acquired the previous service provider M-co in June 2009.

The owner of the [[National Grid (New Zealand)|national transmission grid]] is [[Transpower New Zealand|Transpower]], a state-owned enterprise.  Transpower is also the System Operator, responsible for ensuring real time electricity supply security and quality.  Transpower is the market scheduler, predicting demand to help generators make offers, as well as the dispatcher, in charge of matching demand and supply in real time.<ref>{{cite book
|title=Alternating Currents or Counter-Revolution?
|last1=Evans
|first1=Lewis
|last2=Meade
|first2=Richard
|publisher=[[Victoria University Press]]
|isbn=0-86473-525-1
|pages=73–4
|year=2005
}}</ref>

Distribution of electricity from the grid exit points to the end consumers' premises is the responsibility of about 30 [[electricity sector in New Zealand#Distribution|distributors, also known as lines companies]], who have monopoly control of the lines services on their networks.  Ownership of distributors is through trust-owned companies, such as [[Auckland Energy Consumer Trust]], and public companies.  Some major industrial users are directly connected to the grid, such as [[New Zealand Steel]] and the [[Tiwai Point]] Aluminium Smelter.

[[File:Icp-switch.svg|thumb|Numbers of electricity consumers changing electricity supplier per month]]
There are four major generators: [[Contact Energy]], [[Genesis Energy Limited|Genesis Energy]], [[Mercury Energy]], [[Meridian Energy]].  These four together produce about 90% of New Zealand's electricity. Meridian Energy, Genesis Energy and Mercury Energy are 51% majority owned by the New Zealand government, while Contact is a 100% publicly traded company.  An important feature of the New Zealand market is that all the major generators also own retailing arms. The companies are thus commonly known as "gentailers" (generator–retailers.) Proceeding 2021 [[Manawa Energy|TrustPower]] was also a gentailer until selling their retail arm to Mercury under the TrustPower brand and re-branding the remaining generation business as [[Manawa Energy|Manawa]] Energy. Manawa is now NZ's largest independent electricity generator, representing around 5% of the New Zealand generation capacity.

Retailers purchase electricity from the wholesale market, and on-sell it to consumers. Competition for retail customers varies across the country but since 1999, when full retail competition was introduced, customers have switched at a rate between 9% and 14% per annum.<ref>{{cite web
 |title       = Retail Market Statistics
 |author      = New Zealand Electricity Commission
 |url         = http://www.electricitycommission.govt.nz/opdev/retail/regstats/index.html
 |year        = 2009
 |url-status     = dead
 |archiveurl  = https://web.archive.org/web/20090727194742/http://www.electricitycommission.govt.nz/opdev/retail/regstats/index.html
 |archivedate = 27 July 2009}}</ref> [[Consumer NZ]], with support from the [[Ministry of Consumer Affairs (New Zealand)|Ministry of Consumer Affairs]], provides a website called [https://www.powerswitch.org.nz/powerswitch Powerswitch] that enables consumers to compare electricity and gas prices from different retailers and to switch suppliers.<ref>{{cite web |url=https://www.ea.govt.nz/consumer/powerswitch/ |title=Powerswitch |date=22 October 2010 |publisher=Electricity Authority |accessdate=15 March 2014 |url-status=dead |archiveurl=https://web.archive.org/web/20140315071128/https://www.ea.govt.nz/consumer/powerswitch/ |archivedate=15 March 2014}}</ref>

[[Ministry of Business, Innovation and Employment|MBIE]] published a useful chronology of reforms up to 2015.<ref name="ministry-of-business-innovation-and-employment-2015">
{{cite report
 | author = Anon
 | title = Chronology of New Zealand electricity reform — MBIE-MAKO-3727675
 | date = August 2015
 | publisher = Energy Markets Policy, Energy and Resources Branch, Ministry of Business, Innovation and Employment (MBIE)
 | location = Wellington, New Zealand
 | url = https://www.mbie.govt.nz/assets/2ba6419674/chronology-of-nz-electricity-reform.pdf
 | access-date = 2022-04-19
}}  Marked "This document outlines the main developments in New Zealand's electricity reforms since the mid-1980s."
</ref>