12. Retail
132. The Government considers that competition between electricity retailers should, over time, help ensure that retailing costs are minimised, service quality is improved and downward pressure is placed on generation costs. Most consumers, especially in larger centres, have a choice of retailers, and the processes for consumers to change suppliers have steadily improved. The Government considers, however, that retail competition is not as vigorous as it could be, and looks to the Commission to promote and facilitate retail competition, and to make recommendations to the Minister of Energy on any steps the Government should take, including regulating, to facilitate such competition.
133. The Electricity Act 1992 provides a number of regulation-making powers relating to retail competition.
The Reconciliation of, and Payment for, Distribution Line Losses
134. Current methods for calculating, reconciling and arranging payment for distribution line losses by competing retailers are often raised as a concern by retailers. The Commission should develop model approaches to improve distribution loss factor calculation and should investigate and make recommendations for the management, minimisation and allocation of distribution losses. The Commission should recommend regulations if it considers that this is a material issue and that rules and regulations would facilitate more efficient outcomes and remove impediments to the effective functioning of the market.
Terms and Conditions for Access to Electricity Meters by Retailers
135. Retailers must have ready and efficiently-priced access to end-use electricity meters in order to provide retail services. This is especially the case when retailers enter new market areas and/or customers wish to change retailers. By and large, access to meters does not appear to constitute a pervasive barrier to retail competition. Where access has proven difficult and contentious however, the Commission is invited to consider whether regulations should be made to facilitate retail competition.
Arrangements to Enable Consumers to Switch Retail Suppliers
136. The Electricity Governance Rules 2003 include detailed processes and procedures to ensure that consumers are able to switch retailers with a minimum of inconvenience and cost. These rules are currently in operation, but the Commission should keep them under review and make recommendations for improvement if required.
Availability of Hedges
137. Independent retailers cite difficulties in obtaining hedges at reasonable prices from vertically integrated generator/retailers, who are their competitors, as a barrier to retail competition. The Electricity Act 1992 provides the Commission with a range of powers relating to hedge markets as described above. The Commission should exercise these powers if necessary to facilitate retail competition.
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