Editing New Zealand electricity market (section)

== History of reform ==
Regulation of the electricity market started in a light-handed fashion but there has been an increasing trend towards more heavy-handed regulation.  Light-handed regulation is based on the threat of regulation providing an incentive on companies with [[market power]] to exercise self-regulation. The normal regulatory legislation such as the Companies Act, Electricity Act, [[Resource Management Act 1991]], [[Commerce Act 1986]], and [[Fair Trading Act 1986]] provide the framework for regulating normal commercial and environmental transactions.

The Forth National Government increased the extent of intervention through the Electricity Industry Reform Act 1998, which forced power companies to divest either their energy or their lines business. The Electricity Amendment Act 2001 led to another round of industry reform concentrating on achieving better [[governance]] of the electricity market and tighter control of monopoly functions.  The "threat of regulation" was extended to the production of a set of regulations that would be brought into effect if the industry's self-regulation did not meet the government's criteria.

On 16 May 2003 the result of a [[referendum]] by industry participants and [[customer representative]]s on a proposed set of self-regulating rules was announced:

* consumers voted 4.4% for the proposal
* traders voted 66.2% for the proposal (traders comprise generating companies and retailers)
* transporters voted 47.4% for the proposal (transporters comprise distributors and Transpower)

As there was not a substantial majority of all classes in favour of the proposal it was not implemented.

The result put paid to the prospect of a multilateral agreement on the governance and operational arrangements for the electricity market.  The New Zealand government invoked the regulations already prepared to meet this contingency.  The "threat of regulation" had been insufficient to stave off regulation.

On 2 July 2003 a draft set of Electricity Governance Regulations and Rules was issued on behalf of the Minister of Energy by the Electricity Commission Establishment Unit (ECEU).  This set was for consultation purposes and after submissions were received and reviewed, a set of regulations and rules was recommended to the Governor-General.

In September 2003 a revised set of draft rules and regulations was issued by the ECEU for submissions by the end of October.  The set did not include proposed transmission regulations, which were still being drafted. Also in September the Minister of Energy announced the chair and members of the Electricity Commission.  Roy Hemmingway, whose most recent position was chairperson of the [[Oregon]] [[Public Utility Commission]] in the US, took on the role as chairperson of the commission.

The final set of Electricity Governance Regulations and Rules (excluding rules for transmission) became effective on 1 March 2004. The final chapter of the Electricity Governance Rules, on transmission, was gazetted on 28 April to become effective on 28 May 2004.

A Ministerial Review of Electricity Market Performance was initiated on 1 April 2009 and led by an independent Electricity Technical Advisory Group, appointed by the Minister for Energy and Resources, with assistance from officials from the [[Ministry of Economic Development (New Zealand)|Ministry of Economic Development]].<ref name=performance>{{cite web |url= http://www.med.govt.nz/templates/StandardSummary____41689.aspx  |title= Ministerial Review of Electricity Market Performance 2009, Ministry of Economic Development |accessdate= 2011-10-15}}</ref> There were 29 recommendations arising from the review.<ref>{{cite web |url= http://www.med.govt.nz/upload/70927/summary-of-decisions.pdf |title= Summary of Main Decisions - Ministerial Review into Electricity Market Performance |publisher= [[Ministry of Economic Development (New Zealand)|Ministry of Economic Development]] | date=2009-12-07 |accessdate= 2011-10-15}}</ref>

One of the key recommendations approved by Cabinet was the transfer of ownership and operation of some power stations between [[Genesis Energy Limited|Genesis Energy]] and [[Meridian Energy]] in order to increase retailer competition in both islands and to give Genesis a South Island generating base. It was decided that Genesis would receive the Tekapo A and Tekapo B hydroelectric power stations from Meridian, and Meridian would receive the [[Whirinaki Power Station]] from the government (although Meridian eventually declined to accept). The transfer of Tekapo A and B was completed on 1 June 2011.<ref>{{cite web |url= https://nzx.com/companies/GPL/announcements/209751|title= Genesis Energy takes ownership of Tekapo Power Stations |publisher= [[New Zealand Exchange|New Zealand Stock Exchange]] | date=1 June 2011 |accessdate= 2011-10-15}}</ref>

On 1 November 2010, the Electricity Authority commenced operations, taking over from the Electricity Commission.<ref name=authority>{{cite web |url= http://www.beehive.govt.nz/release/new-era-electricity-sector |title= New era for the electricity sector |publisher= New Zealand Government | date=1 November 2010 |accessdate= 2011-10-15}}</ref>

In April 2013, the [[Labour Party of New Zealand|Labour Party]] and the [[Green Party of New Zealand|Green Party]] said if they were to win the 2014 election, they would introduce a [[Monopsony|single buyer]] for electricity, in order to cut retail costs.<ref>{{cite news| url= http://www.3news.co.nz/Labours-power-plan-political-posturing--Govt/tabid/1607/articleID/294364/Default.aspx| work= 3 News NZ| title= Labour's power plan 'political posturing'| date= 18 April 2013| access-date= 19 April 2013| archive-url= https://web.archive.org/web/20140106174630/http://www.3news.co.nz/Labours-power-plan-political-posturing--Govt/tabid/1607/articleID/294364/Default.aspx| archive-date= 6 January 2014| url-status= dead}}</ref> The government responded by calling it "economic vandalism", comparing it to the [[Soviet Union]],<ref>{{cite news| url= http://www.3news.co.nz/Opposition-trying-to-disrupt-share-sales/tabid/1607/articleID/294821/Default.aspx| work= 3 News NZ| title= Opposition 'trying to disrupt share sales'| date= 19 April 2013| access-date= 19 April 2013| archive-url= https://web.archive.org/web/20130419214036/http://www.3news.co.nz/Opposition-trying-to-disrupt-share-sales/tabid/1607/articleID/294821/Default.aspx| archive-date= 19 April 2013| url-status= dead}}</ref> but Greens co-leader [[Russel Norman]] said it would boost the economy and create jobs.<ref>{{cite news| url= http://www.3news.co.nz/Norman-Power-plan-will-boost-economy/tabid/1607/articleID/294847/Default.aspx| work= 3 News NZ| title= Norman: Power plan will boost economy| date= 19 April 2013| access-date= 19 April 2013| archive-url= https://web.archive.org/web/20130419204115/http://www.3news.co.nz/Norman-Power-plan-will-boost-economy/tabid/1607/articleID/294847/Default.aspx| archive-date= 19 April 2013| url-status= dead}}</ref> By the following day, shares in privately owned power company Contact Energy had fallen by more than 10 percent.<ref>{{cite news| url= http://www.3news.co.nz/Contact-shares-continue-to-plummet/tabid/421/articleID/294876/Default.aspx| work= 3 News NZ| title= Norman: Contact shares continue to plummet| date= 19 April 2013| access-date= 19 April 2013| archive-url= https://web.archive.org/web/20130419204101/http://www.3news.co.nz/Contact-shares-continue-to-plummet/tabid/421/articleID/294876/Default.aspx| archive-date= 19 April 2013| url-status= dead}}</ref> The [[2014 New Zealand general election|general election]] held on 20 September 2014 was won by the [[New Zealand National Party|National Party]].  Share prices of listed electricity companies rose significantly when the share market opened on the Monday following the election.<ref>{{cite web |url= http://tvnz.co.nz/business-news/power-companies-soar-after-national-s-victory-6088662|title=Power companies soar after National's victory|publisher=Television New Zealand |accessdate= 28 September 2014}}</ref>

===Milestones in the reform process===
*Prior to 1987, the New Zealand Electricity Department (NZED), a government department, controlled and operated almost all electricity generation and operated the [[electric power transmission|electricity transmission grid]].
*April 1987 – The New Zealand Government [[Corporatization|corporatised]] the NZED and formed a [[state-owned enterprise]] – the [[Electricity Corporation of New Zealand]] (ECNZ).
*April 1993 – Electricity Market Company (later called M-co) established as a joint venture by New Zealand electricity industry players to act as a focal point for the design of a wholesale electricity market.
** The Metering and Reconciliation Information Agreement (MARIA) was set up as a multilateral arrangement to allow for retail competition for customers with half-hour interval meters.
**Former local electricity supply authorities established as energy companies.
*April 1994 – Transpower separated from ECNZ and established as a stand-alone state-owned enterprise.
*July 1994 – NZEM commences trading as a secondary market for ECNZ hedges. An independent [[market surveillance]] committee was formed.
*June 1995 – After an exhaustive policy debate, the government announced significant reform of the electricity industry including a framework for buying and selling electricity through a wholesale pool.
*February 1996 – An interim wholesale market is put in place allowing ECNZ and Contact to begin competing.
*April 1996 – Contact Energy commenced operations.
*October 1996 – The reformed wholesale electricity market (NZEM) begins trading.
*April 1998 – Government announced the Electricity Industry Reform Act 1998<ref>{{Cite web
|author = Ministry of Economic Development
|title = Investment in Electricity Generation by Lines Companies
|year = 2006
|version = Discussion Paper
|accessdate = 2009-05-13
|url = http://www.med.govt.nz/upload/34734/discussion.pdf
|url-status=dead 
|archive-url=https://web.archive.org/web/20081016104255/http://www.med.govt.nz/upload/34734/discussion.pdf
|archive-date=16 October 2008
}}</ref> which included:
**Privatising [[Contact Energy]].
**Splitting ECNZ into three competing state-owned enterprises.
**Instructions to all energy companies to split their retail and lines businesses and sell one or other within a set time period
*April 1999 – [[Electricity Corporation of New Zealand]] (ECNZ) disbanded, establishment of three separate competing spin-off generation companies in the form of Mighty River Power, Genesis and Meridian Energy. A low-cost system for [[customer switching]] established allowing every consumer to choose their electricity [[electricity retailing|retailer]].
*May 1999 – Contact Energy shares listed for trading on the New Zealand and Australian Stock Exchanges from 11 May 1999.<ref>Contact Energy Half Year Report for Period to 31 March 1999</ref>
*February 2000 – The Ministerial Inquiry into the electricity industry begins.<ref>{{cite web |url= http://www.med.govt.nz/templates/StandardSummary____16316.aspx  |title= Ministerial Inquiry into the Electricity Industry 2000, Ministry of Economic Development |accessdate= 2011-10-15}}</ref>
*June 2000 – The report of the Ministerial Inquiry is published.
*November 2000 – Electricity Governance Establishment Project set up as a result of the government's review of the report of the Ministerial Inquiry.
*December 2000 – Government Policy Statement published.<ref>{{cite web |url= http://www.med.govt.nz/templates/MultipageDocumentPage____12408.aspx?&MSHiC=65001&L=0&W=Government+Policy+Statement+&Pre=%3cb%3e&Post=%3c%2fb%3e  |title= Government Policy Statement: Further Development of New Zealand's Electricity Industry [December 2000], Ministry of Economic Development |accessdate= 2011-10-15}}</ref>
*April 2003 – An industry referendum on the outcomes of the Electricity Governance Establishment Project (EGEP).
*May 2003 – The rules developed by EGEP fail to gain sufficient support in the referendum to avoid government regulation.
*July 2003 – A draft set of regulations and rules was issued for consultation.
*September 2003 – As a result of submissions received, revised rules and regulations were issued for further consultation.  A revised Government Policy Statement was issued for submissions and the Electricity Commission was appointed.
*1 March 2004 – The Electricity Commission took over control of the New Zealand electricity market from the self-regulating bodies, the MARIA Governance Board (MGB) and the Rules Committee of the NZEM.
*October 2004 – The Electricity Act was amended to increase the powers of the Electricity Commission.
*April 2009 – Ministerial review of Electricity Market Performance commences.<ref name=performance />
*9 December 2009 – Minister announces outcomes of market review, including 29 new measures.<ref name=performance />
*1 November 2010 – [[Electricity Authority (New Zealand)|Electricity Authority]] takes over from [[Electricity Commission (New Zealand)|Electricity Commission]], and the Electricity Industry Participation Code comes into effect.<ref name=authority /><ref>{{cite web |url= http://www.med.govt.nz/templates/ContentTopicSummary____43215.aspx |title= Initial Electricity Industry Participation Code, Ministry of Economic Development |accessdate= 2011-10-15}}</ref>