3. Reforms to Date
In 1987, ECNZ was established as an SOE. Since then, with the commercial drivers of being an SOE, ECNZ has achieved significant efficiency gains. These have led to lower overall production costs and lower wholesale electricity prices.
When it was established, ECNZ produced approximately 95% of New Zealand's electricity. In spite of operating as a commercial company, its monopoly on electricity generation and ownership of the national electricity transmission network made it difficult for competitors to ECNZ to emerge.
Consequently, a series of measures were taken to facilitate more competition in the generation sector.
- In 1991, the high voltage transmission network was placed into a separate subsidiary of ECNZ (Transpower) to enable new generators to compete on the same terms as ECNZ.
- In 1993, a task force was established by the Government to investigate whether a wholesale electricity market could be developed to facilitate a robust framework for competition between generators and efficient price signals for new investment in the electricity industry. Its report, in 1994, recommended that ECNZ should be split to create more competition.
- In 1994 Transpower, when it became an SOE, was separated completely from ECNZ.
- In 1996, some of ECNZ's power stations were separated out to create a second state owned generator, Contact Energy. ECNZ retained a dominant position with its continued ownership of power stations representing approximately 70% of the market.
- Also in 1996, a wholesale electricity market was established and for the first time in New Zealand wholesale electricity prices were set every half hour by generators competing on price with each other.
Back to Top