Genesis, Contact, Meridian, and Mercury seek authorisation for Strategic Energy …

The arrangements are proposed to provide a commercial incentive for Genesis to maintain Rankine Unit 2, a gas/coal-fired unit at Huntly Power Station, for use as ‘dry year cover’ when other forms of electricity generation (such as hydro generators) may not be sufficient to ensure security of supply. The arrangements provide each of Contact, Meridian, and Mercury with an option to access spot price electricity cover in exchange for an annual premium, which Genesis may use to contribute to the cost of maintaining, operating, and resourcing the Rankine Units.

The Commission has published a statement of preliminary issues relating to this application. The statement outlines the key issues that the Commission considers important in deciding whether or not to grant authorisation for the Gentailers’ proposed arrangements.

The Commission invites interested parties to provide comments on the likely benefits and detriments of the proposed arrangements, including any likely competitive effects. Public submissions on the application can be sent by email to registrar@comcom.govt.nz with the reference ‘Huntly authorisation’ in the subject line. Any submissions should be received by close of business on 27 August 2025.

The statutory deadline for making a determination on this authorisation is 16 February 2026. However, the Commission appreciates the urgency with regard to this application and will progress this as soon as possible.

The Statement of Preliminary Issues and a public version of the application for authorisation is available on the Commission’s case register.

Background

Genesis owns and operates three Rankine units at the Huntly Power Station. However, Genesis has publicly stated that it intends to retire Unit 2 in January 2026 because it does not believe the uncertain revenues from operating it as ‘dry year cover’ are likely to offset the costs of maintaining the plant and a sufficiently large stockpile of coal onsite to properly utilise the capacity when demanded by the market.

Against this background, Genesis proposes to enter into and give effect to arrangements with the other three Gentailers which it says will help keep Unit 2 running, which is seen as essential to managing seasonal energy risks over the next decade. Broadly, the arrangements provide the other three Gentailers with an option to access spot price electricity cover in exchange for an annual premium, which Genesis may use to contribute to the cost of maintaining, operating, and resourcing the Rankine Units.

The Gentailers consider the arrangements requiring authorisation are important for New Zealand because they will help meet New Zealand’s electricity demand for at least the next ten years and enhance confidence, improve affordability, reduce extreme market volatility, and strengthen system resilience. In particular, the Gentailers say that the arrangements are pro-competitive because they will incentivise Genesis to make more capacity available to the market, resulting in lower wholesale prices, as well as ensuring energy security across dry-Winters while New Zealand pursues net zero carbon emissions by 2050. The Commission will test this with industry and stakeholders.

About authorisations

Competition law recognises some agreements that lessen competition or contain cartel provisions may have public benefits that outweigh the detriments arising from the agreement.

In such cases, firms can voluntarily apply to the Commission for authorisation.

The Commission may grant authorisation under section 58 of the Commerce Act 1986 (the Act) for agreements that may otherwise breach the Act if it is satisfied that the agreement will in all the circumstances result, or be likely to result, in such a benefit to the public that the conduct should be permitted.

The Commission’s Authorisation Guidelines explain when anti-competitive agreements that may lessen competition will be authorised under section 58 of the Act, and our process for determining such authorisation applications. A copy of the guidelines can be found on the Commission’s website.