Energy markets regulatory system’s fitness for purpose assessment
Learn more about the fitness-for-purpose assessment and ratings.
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Date of assessment: June 2017
Effectiveness
System has significant issues against criteria
Regulation of gas and electricity supply is considered reasonably effective. New Zealand typically ranks well in international comparisons, such as the World Energy Council’s Energy Trilemma Index (NZ ranked 10th out of 128 countries in 2019). This outcome is consistent with findings from the 2015 competition regulatory system assessment, which covered the electricity and gas regulatory sub-system.
In contrast, performance of the unregulated liquid fuels markets is more difficult to gauge with confidence due to limited availability of information. Further analysis of these markets is underway.
Efficiency
System performing well against criteria
The regulatory agencies are transparent about the costs and benefits of their activities and routinely seek feedback from stakeholders on their priorities, work plans and budgets (all regulatory activities in the system are funded by industry levies which are consulted on).
The extensive use of technical working groups and workshops promotes efficiency by leveraging stakeholders’ skills and knowledge.
The development of minimum energy performance standards benefits from a joint work programme with Australian governments.
Resilience
System has significant issues against criteria
Most parts of the system are designed to be flexible -agencies can revise their instruments and redirect their focus in response to the changing environment. However, a degree of inflexibility is inevitable, especially with matters prescribed in primary legislation (eg, definitions of electricity market activities and participants). A Council of Energy Regulators has been established to oversee the electricity and gas markets regulatory system, as a means to ensure their respective activities and processes remain aligned and coherent in the face of market developments.
The impact of emerging technologies on the electricity market subsystem is a current area of focus. We are working closely with the Electricity Authority and Commerce Commission to ensure the overall regulatory system is fit for purpose in the face of disruptive trends (eg, the falling cost and increasing performance of batteries and household-scale generation).
Fairness and accountability
System performing well against criteria
Each regulatory agency makes extensive use of stakeholder advisory groups to explore problems and develop solutions. This promotes transparency and participation in system improvement and design.
Each agency publishes guidance on its approach to compliance monitoring and enforcement. Every electricity and gas consumer has access to a free complaints service to help resolve deadlocked disputes with suppliers. According to the Government Centre for Dispute Resolution, “The Electricity and Gas Complaints Commissioner Scheme (EGCC) has used innovative service delivery and strong committed leadership to build an organisation that delivers examples and lessons in dispute resolution excellence”.
It is difficult for some consumers to participate effectively in regulatory processes despite the agencies’ best efforts to facilitate (eg, by publishing material in plain English, and ensuring advisory groups have effective consumer representatives). We will continue to monitor this issue and explore measures to improve consumer participation and engagement.