Energy Competition Task Force Roadmap To Reward Industrial Demand Flexibility
Industrial demand flexibility
The Electricity Authority Te Mana Hiko (the Authority) is seeking feedback on an industrial demand flexibility issues and options paper that sets out the vision and roadmap. The paper seeks input into how best to unlock more industrial demand flexibility. This could include payments to industrial consumers to reduce demand for short periods, where this is efficient and is likely to deliver long-term benefit for consumers. The roadmap proposes 11 actions to better incentivise short-term flexibility in the electricity market from industrial consumers to support both reliability and competition.
"The need for flexibility in our electricity system is becoming increasingly important as the level of intermittent generation - such as from solar and wind - increases and thermal generation declines," says Commerce Commission Chair and Task Force member, Dr John Small.
"Currently, bigger electricity users might adjust their demand to avoid paying high costs for energy, but we believe in certain circumstances it may be appropriate to pay them to provide that flexibility. This could help these consumers to plan and invest with more certainty, while also supporting electricity supply reliability for the longer term," says Small.
Electricity Authority Te Mana Hiko Chair and Task Force member Anna Kominik says: "Industrial demand flexibility can be particularly useful during times of very high demand and tight supply, such as winter mornings and in the evenings. Its potential is expected to grow over time, including as new industrials come online, such as new industries and data centres particularly those optimised for this form of flexibility.
"We know that electricity supply is currently very tight, so we've identified two actions that could be in place ahead of winter 2026. We'll shortly seek input from stakeholders on a proposed Emergency Reserve Scheme and intend to set up an industry co-design group process to develop a standardised tradeable product for industrial demand flexibility.
"We are proposing nine further actions over the next five years to help lay the foundations for efficient use of demand flexibility across the electricity system - and we're interested to hear stakeholder views on these," said Kominik.
Power purchase agreements
The Task Force has considered submitters' feedback and determined that its initial proposal to allocate firming for PPAs is not the best way to encourage investment in new power generation projects. The Task Force has identified this option risks distortions to efficient market operations, which could negatively impact investment in new generation and lead to higher prices for consumers in the long term.
Instead, the Task Force considers access to firming is best addressed via ongoing work on standardised flexibility products and the proposed level playing field measures (particularly the non-discrimination obligations), as well as complementary initiatives to encourage PPAs. These options enable new investment without the risks associated with allocation. This new approach is set out in an update paper.
Visit the Task Force webpage for more information about both papers and details on how to have your say on the industrial demand flexibility consultation.
Notes:
About the Energy Competition Task Force
The Energy Competition Task Force was established by the Commerce Commission Te Komihana Tauhokohoko and Electricity Authority Te Mana Hiko in August 2024 to investigate ways to improve the performance of the electricity market.
The Task Force has been considering eight initiatives that will encourage more and faster investment in new electricity generation, boost competition, enable homes, businesses and industrials to better manage their own electricity use and costs, and put downward pressure on prices.
Firming
Firming refers to technology used to store and release intermittent energy, usually either hydro storage or batteries.
PPAs
PPAs are long-term contracts to support generation. They can provide a route to market for entrant generators and an alternative procurement option for electricity buyers or traders.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Scoop
2 days ago
- Scoop
Electricity Authority Investigates Business Claims About Energy Markets
The Electricity Authority Te Mana Hiko is using its powers to investigate concerns about pricing, contract availability, and business conduct in both the electricity and gas markets. These concerns were raised with the Authority by the Northern Infrastructure Forum and other organisations. "We take all concerns raised seriously, and any concerns related to consumer trust or market fairness demand attention," says Electricity Authority Chair Anna Kominik. After initial checks, the Authority believes the issue needs a closer look. The Authority has broad powers under the Electricity Industry Act 2010 to investigate and hold market participants accountable. "We have started a review under section 16 of the Act focused on business consumers' access to electricity contracts, including commercial and industrial consumers. Section 16 enables us to use formal information gathering powers to look more closely into pricing and other key terms offered to business consumers to assess if there is a deeper issue," said Kominik. The Authority is working closely with the Commerce Commission, which has launched a new whistleblowing tool to make reporting easier. The scope and timeframe of the review will be refined once more discussions have been carried out with those voicing concerns. Notes: The Electricity Authority is an independent Crown Entity with the main statutory objective to promote competition in, reliable supply by, and the efficient operation of, the electricity industry for the long-term benefit of consumers. The additional objective of the Authority is to protect the interests of domestic consumers and small business consumers in relation to the supply of electricity to those consumers. The Authority has the power under the Act to initiate and undertake a review exercising its function under section 16(1)(g) to undertake industry and market monitoring, and carry out and make publicly available reviews, studies and inquiries into any matter relating to the electricity industry.
Scoop
06-08-2025
- Scoop
A Poser For Labour Party: Tax Wealth Or Tax Capital Gains
Veteran political journalist Vernon Small's latest regular paywalled column in Stuff's Sunday Star Times (3 August) has brought to life a subject that by its very nature can put many people to sleep – tax wealth or tax capital gains: A choice Labour may come to regret. Small was previously an advisor to the former Labour government. Both taxes seek to address tax avoidance. Avoidance involves exploiting or dodging (if there is a difference) the taxation system in order to reduce the amount of tax one might otherwise have to pay. Tax avoidance can be ethically grey This is in contrast to tax evasion which involves concealing income or other relevant information. The latter is illegal and punishable. Wealth taxes involve annually taxing valuable assets such as land, shares, art works, or other valuable collectables. Some prominent economists, such as France's Thomas Piketty, argue that wealth taxes are both necessary and practicable. Drawing upon empirical research Piketty has a particular focus on inherited wealth (think Donald Trump for example). Interestingly Labour leader Chris Hipkins cites Piketty among his reading material. Capital gains taxes (CGT) also tax wealth. However, they tax the gain in value of an asset. Consequently they apply when the asset is sold. CGT is therefore usually paid only once per asset gain unlike an annual wealth tax. Shifting the dial on tax avoidance Former Labour MP and cabinet minister David Parker has for many years been a strong advocate of achieving taxation fairness by addressing tax avoidance. In his recent valedictory speech to Parliament he described his advocacy as 'shifting the dial' over this issue as his most significant achievement. On 26 April 2023, as Minister of Revenue, Parker gave a major speech advocating a wealth tax: David Parker's wealth tax. His proposed wealth tax, supported by Finance Minister Grant Robertson, was not as broad as discussed above. It was based on research undertaken by Inland Revenue that provided 'hard data confirming fundamental unfairness in our tax system.' The study revealed that 311 people had collective wealth of $85 billion. Further, the effective tax rate of middle-income New Zealanders was at least double that of the wealthiest. Subsequently then Labour Prime Minister Chris Hipkins pulled the plug on the Parker-Robertson initiative; a decision which shocked many and helped contribute to Labour's heavy defeat in the general election later that year. Insightful column Vernon Small's above-mentioned insightful column needs to be read in the above context. He reports that the Labour Party's Policy Council has narrowly endorsed a CGT as the centre piece of its tax reform for next year's election. This reportedly is also Hipkins' preferred position. However, this is not the end of Labour's internal decision-making process. Taxing wealth preferred to taxing capital works (Vernon Small) Small described this choice as one that 'it may come to regret.' Small's argument for this conclusion is as follows: CGT would deliver much less revenue initially and takes a long time to build revenue, if applied only to realised gains. CGT requires a 'difficult sales job' as National and its rightwing allies '…whip up a smorgasbord of concerns over the devilish details with a side salad of misinformation.' By comparison, a wealth tax targeted at the very wealthiest '…should be an easier sell.' The claim, which apparently influenced Hipkins' position, that a wealth tax would lead to fear of capital flight is 'over-wrought' and debunked by Treasury There is political advantage of a wealth tax also being the preferred option of Labour's potential coalition allies, the Greens and Te Pāti Māori. It would be easier for a future rightwing government to reverse a CGT because it is slow to accumulate. Widening the thinking beyond either/or It is hard to argue with Vernon Small's logic; it certainly resonates with me. However, while not critical of his column, the debate should be widened including not constraining it to either/or options. The starting point should be recognising the need to address both the unfairness of tax rate inequity favouring the wealthy at the expense of the rest and untaxed income derived in various ways from speculation. It should also differentiate between getting early 'runs on the board' (I'm a cricket addict, just saying) and longer term measures and longer term benefits. Logically this favours a wealth tax for the reasons discussed. Beginning with something like the Parker-Robertson proposal would produce quicker tangible and identifiable fiscal returns. This would be more likely to be sufficiently bedded in to make it more difficult for a subsequent rightwing government to overturn. While this implementation is underway, work should be undertaken on broadening the range of wealth taxation taking the lead from economists such at Thomas Piketty. This does not mean waving goodbye to a capital gains tax. But it is politically savvy to recognise the longer time required to 'reap the benefits' . Taking advantage of the report from the Michael Cullen led working group, further work should be undertaken in order to develop a practical CGT without unintended consequences. The importance of messaging a good narrative Vernon Small correctly observes that the rightwing government parties will quickly get into attack mode once Labour announces its taxation policy. They know full well Labour's past inability to counter such an attack and to look like a possum in a car's headlights. Expect Finance Minister Nicola Willis to lead the charge. The political right are experts in messaging. My way of describing this politically is as follows: the far right communicates in gestures and soundbites (and sometimes violent threats); the political right communicates in sentences reinforced by soundbites; the political left communicates in paragraphs (social liberals in longer paragraphs); and the far left communicates in footnotes. Labour in my view is more technocratic social liberal than leftwing. I have discussed this previously in Political Bytes (30 April 2023): What leftwing really means. Regardless, however, Labour needs to deliver a good narrative on the unfairness of tax avoidance by taking a lead from the political right. Show more spine and do it in crisp succinct sentences further enabled by smart soundbites.
RNZ News
04-08-2025
- RNZ News
Calls for anonymous reporting of unfair electricity industry practices
The Commerce Commission is calling for business customers to anonymously report unfair or anti-competitive electricity industry practices. Commerce Commission chair John Small spoke to Ingrid Hipkiss.
