Trading and Electricity markets

What is the New Zealand Electricity Market?

The New Zealand Electricity Market was opened in 1996 after the split of the Electricity Corporation of New Zealand (ECNZ) into two main generators, ECNZ and Contact Energy. In 1999 the remainder of ECNZ was split into Genesis Energy, Meridian Energy, and Mighty River Power, whilst Contact Energy was fully privatised.

Generators compete to generate by offering generation at different prices. The generator with the lowest priced offer gets priority to generate over more expensive offers from other generators. The market operates 24 hours a day, 7 days a week, with each offer being valid for one trading period (or half an hour).

The market is designed to reflect the most efficient means of generating at least cost to the consumer. In the short term, price signals are intended to give indications to generators and consumers as to the supply situation. When supply is tight, prices rise, but when supply is plentiful prices fall. A long term increase in the spot price is a signal to generators to invest in more capacity in the market.

The New Zealand Electricity Market is split into four separate areas. This includes generators, high-voltage transmission network owners (Transpower), distribution network owners and retailers. The main generators are also retailers in the various distribution network areas (i.e. Powerco, Vector etc).

The New Zealand Electricity Market was previously a self-regulated market overseen by M-Co and the market surveillance committee; however, as of March 2004 market regulation has been conducted by the Electricity Commission. The set of rules designed by the Electricity Commission to govern the New Zealand Electricity Market is known as the Electricity Governance Rules or the EGRs.

Find out more about

Trading in the New Zealand Electricity Market.pdf