6. Security of Supply
The New Zealand generation system is dependent on hydro generation and as such will, for the foreseeable future, have underlying risks to security of supply in a dry year.
However, ERTU considers that with greater competition arising from the split, there will be more robust and diverse analysis of the risks faced by market participants and accordingly better investment decisions.
A more diverse range of generators will have commercial incentives to manage hydro storage prudently and, with retail competition creating real choice for consumers, the incentives on generators generally to meet customers' needs will increase.
The current oversupply of generation will provide a favourable environment for the transition to fully market-based customer driven security arrangements.
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