Part 2: Competitive markets
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Chapter 6: Workably competitive electricity markets
Chapter 6: workably competitive electricity markets
Approximately 40 submissions were received on issues discussed in Chapter 6. Separately, a number of submitters made competition-related points in their submissions on Chapter 2 (accelerating the supply of renewables), which are discussed above.
Submitters saw a risk of increasing market concentration among hydro-resourced gentailers
As discussed in the comments above on Chapter 2, most submitters agreed that the expected decline in thermal generation could increase market concentration in the flexible segment of the wholesale market, lessening competition.
Some submitters thought market concentration was already happening and required intervention
Some (for example, independent retails and major energy users) thought this scenario was already playing out and said the Electricity Authority’s wholesale competition investigation in 2021 provided evidence of that. These submissions generally favoured immediate interventions to address the problem, although some considered more analysis was warranted to determine the extent of the problem.
Other submitters saw increased market concentration as only theoretical and opposed intervention
Some submitters (most gentailers) considered that the prospect of increasing market concentration was merely a theoretical possibility. They suggested no interventions to address a potential problem should be considered unless or until there is clear evidence there really is a problem that can be remedied. They generally agreed with the conclusions and actions taken by the Electricity Authority following its wholesale competition review.
Some submitters opposed interventions until there was proof of market power abuse
Some submissions noted that a degree of market power will always exist in any electricity market, no matter what changes might be made to the market structure. They suggested that market power is not a problem unless it is abused, and the best policy is to monitor market conduct and take remedial action only if there is clear evidence of abuse, and if the cost of remedy is lower than the cost of any abuse.