Companies in the electricity distribution and transmission sectors have monopoly characteristics and are subject to legislation designed to limit their monopoly powers. The electricity sector is framed by the Companies Act, Electricity Act, Resource Management Act 1991, the Commerce Act 1986, and the Fair Trading Act 1986.
The Government steadily developed the regulatory regime through the Electricity Industry Reform Act 1998, which initially restricted companies from being involved in both generation and distribution activities, and the Electricity Amendment Act 2001, which focused on tighter governance of the sector and reducing the monopoly powers of electricity companies. Recently, there’s been some loosening of the ownership restrictions, particularly in regards to lines companies' ability to own certain types of generation, as well as establishing electricity retail activities.
Following the amendments to Part 4 of the Commerce Act, introduced in late 2008, the Commerce Commission has undertaken significant consultations on the development of the regulatory framework for the economic regulation of electricity lines businesses, underpinned by a set of methodologies developed in 2012.
The complex regulatory environment, under which the economic returns of lines companies are managed and scrutinised, continues to evolve and is likely to do so for the near future.
How we can help
We work extensively with the electricity distribution sector. We offer advisory, audit and tax services to most of New Zealand's sector participants and understand their business, the issues, challenges and risks. We assist them to navigate through industry changes and the ongoing evolution of a complex regulatory environment.