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Electricity Market Regulatory Reform and Competition – Case Study of the New Zealand Electricity Market

In: Energy Market Integration in East Asia: Theories, Electricity Sector and Subsidies

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  • Daisy Shen
  • Qing Yang

Abstract

All around the world, electricity market reforms involve various forms of unbundling previously vertically integrated state-owned or privately owned electricity monopolies. New Zealand is the only country in the developed world that has implemented forced ownership unbundling of electricity distribution and transmission activities from the rest of the electricity network. The Electricity Industry Reform Act 1998 (EIRA) strictly prohibited distribution businesses from being involved in either generation or retailing activities. However, the strictownership separation between distribution and generation was relaxed not long after the enactment of this legislation. In 2010, the New Zealand government enacted the Electricity Industry Act 2010 (EIA), which revised the strict ownership separation between distribution and retail by allowing distribution back into retailing, and relaxed further the separation between distribution and generation by raising the threshold further for ownership separation between distribution and generation. This study will review the New Zealand reform experience, examine the market structures resulting from ownership unbundling, and evaluate the impacts of ownership unbundling on the performance of the electricity sector. It will also explore the rationale underlying recent reforms that allow re-integration, and to gauge the impact of the recent reforms.

Suggested Citation

  • Daisy Shen & Qing Yang, . "Electricity Market Regulatory Reform and Competition – Case Study of the New Zealand Electricity Market," Chapters, in: Yanrui Wu & Xunpeng Shi & Fukunari Kimura (ed.), Energy Market Integration in East Asia: Theories, Electricity Sector and Subsidies, chapter 6, pages 103-140, Economic Research Institute for ASEAN and East Asia (ERIA).
    • Handle: RePEc:era:chaptr:2011-rpr-17-06
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    Cited by:

    1. Filippini, M. & Greene, W. & Masiero, G., 2018. "Persistent and transient productive inefficiency in a regulated industry: electricity distribution," Energy Economics, Elsevier, vol. 69(C), pages 325-334.
    2. Paul Nillesen and Michael Pollitt, 2021. "Ownership Unbundling of Electricity Distribution Networks," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 1).
    3. Fotouhi Ghazvini, Mohammad Ali & Ramos, Sergio & Soares, João & Castro, Rui & Vale, Zita, 2019. "Liberalization and customer behavior in the Portuguese residential retail electricity market," Utilities Policy, Elsevier, vol. 59(C), pages 1-1.
    4. Filippini, Massimo & Wetzel, Heike, 2014. "The impact of ownership unbundling on cost efficiency: Empirical evidence from the New Zealand electricity distribution sector," Energy Economics, Elsevier, vol. 45(C), pages 412-418.
    5. Ljerka Cerovic & Dario Maradin & Sa a Cegar, 2014. "From the Restructuring of the Power Sector to Diversification of Renewable Energy Sources: Preconditions for Efficient and Sustainable Electricity Market," International Journal of Energy Economics and Policy, Econjournals, vol. 4(4), pages 599-609.

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