5 June - Electricity Authority briefing: the economics of electricity

Electricity Authority Chairman Dr Brent Layton has published a comprehensive paper on the economics of the electricity industry in response to calls for changes to the industry and criticism of the current market arrangements.

In this section:

Dr Layton presented his paper in a briefing to key stakeholders on Wednesday 5 June.

“The Authority has received proposals to change the market and is aware there have been public calls for others which could be implemented within the current Code. But they simply won’t benefit the electricity consumer,” Dr Layton said.

“Our focus is on operating an efficient market for the long-term benefit of consumers. We have introduced several initiatives to improve competition, such as the “What’s my number?” campaign, and have facilitated the development and rapid growth of a futures market for energy.

“There is more work to do, but that work must be based on sound economics. Concerns about spot pricing or charging for “free” water or windfall profits are not based on sound economics, and calls to return to a central planning model would not benefit consumers.”

Dr Layton said the Ministerial Review of the Performance of the Electricity Market in 2009 found the primary area of concern for lack of competition was in the retail market, and the Authority is focussing on that area.

“Increasing competition in the retail market provides the best prospects for achieving better value for consumers over the next few years,” he said.

The full paper The Economics of Electricity along with related speeches presentations are available here.(external link)