A new power sector investigator will work on bringing more generators and independent retailers into the electricity market to strengthen competition.
The Commerce Commission and the Electricity Authority established the Energy Competition Task Force last month to tackle high prices on the wholesale market.
The regulator’s work programme will include breaking down barriers to competition.
Commission chair Dr John Small said for example, new market entrants need to know the sector can support them if the wind did not blow or the sun did not shine.
“A big issue for independents who are investing in renewable technology such as wind and solar [is] these are intermittent sources of power, but you and I need stable flows of power or need to know that the lights are going to come on when we turn the switch.
“There’s a need to bridge that intermittency if you like, so we’re looking at whether some of New Zealand’s flexible generation in the form of stored hydro and such can be used to help bridge the gaps when the winds not blowing or the suns not shining so that those new investors can sell a stable product through to their customers.”
He said the country needed to massively expand its capacity for power generation to fix the troubled electricity sector.
The taskforce will also work on giving both residential and big commercial power consumers more options to manage their power use and cost.
“For the big customers, we want to make sure that the demand response that they can supply is properly contracted and taken account of. For the household users, we want to make sure there are proper incentives for people to either inject power if they can from a battery or their rooftop solar, or potentially to turn things off at peaks and get rewarded for that.”
Small said August’s fuel shortage and price spike showed the country needed to massively expand its capacity for power generation.
“If you have more investment, more competition prices will be lower and there will be more supply, so it all fits together logically and hopefully for good outcomes.”
The task force will give recommendations to the regulators over the coming months for final decisions to be made.