Task Force identifies opportunities to improve major electricity investment deci…
The Energy Competition Task Force has identified ways to improve how some of the country’s largest electricity network investments are assessed and approved, helping ensure spending is targeted so that it delivers the greatest benefit for consumers.
A review led by the Commerce Commission suggests new regulatory measures and scrutiny may be needed to ensure better outcomes for consumers.
Energy Competition Task Force Member and Commerce Commission Chair, Dr John Small, says making the right investment decisions will be critical as New Zealand's electricity system grows and changes.
“A number of large electricity distribution network projects, known as grid exit points (GXPs), worth around $600 to $700 million are currently being investigated, developed or delivered. GXP projects do not get the regulatory scrutiny of other transmission grid projects, but a single GXP investment could add around $200 to $300 a year to the electricity bill of an average household in some regions. With electricity already a major cost for consumers, it’s essential these investments genuinely stack up and that alternatives are actively considered.”
The review examined investments in these GXPs, where electricity is delivered from the national grid into local communities. While it found examples of good practice across the sector, the review also identified several opportunities to improve the way investment decisions are made.
These areas included opportunities for local lines companies to sharpen demand forecasting, more rigorously test alternative options like flexibility solutions, and better demonstrate that major network investments deliver the best value for consumers.
“Getting the fundamentals right is critical to properly assessing new technology options. Stronger demand forecasting, better understanding of consumer willingness to pay, and more rigorous testing of investment timing, scale and alternative options can help ensure consumers receive the greatest value from network investment,” says Dr Small.
The review found that flexibility solutions were not always comprehensively assessed alongside traditional network upgrades, potentially missing opportunities to defer or reduce network expenditure.
Dr Small says demand response, distributed energy resources and battery storage should be comprehensively considered alongside traditional network upgrades when addressing future network needs.
“Consumers are best served when lines companies rigorously test all credible options and can clearly demonstrate that the solution they choose is the most efficient and cost-effective. Getting these decisions right can save consumers millions of dollars and help keep future electricity costs down.”
Task Force member and Electricity Authority General Manager, Networks and System Change, Tim Sparks, says the Task Force welcomes views on whether lines companies could do more to signal GXP investment costs to their consumers.
“These sorts of signals could play a key role in reducing investment costs and saving consumers significant amounts of money on their power bills,” says Mr Sparks.
The Energy Competition Task Force is now seeking feedback on the issues identified and whether additional measures are needed to provide greater confidence that major electricity network investments are delivering the best outcomes for consumers. Submissions will be open until 5pm on Thursday 15 December.
The review is part of wider work to improve the performance of New Zealand's electricity sector and support reliable, affordable electricity for homes and businesses.
Background
The Energy Competition Task Force is a joint initiative of the Commerce Commission and Electricity Authority. Representatives from the Ministry of Business, Innovation and Employment participate on the Task Force as observers.
Reviewing major GXP investments is one of its priority work areas for 2026. See more on the Electricity Authority's websiteopen_in_new.
GXPs are substations where electricity leaves Transpower's National Grid and enters local distribution networks. These networks are operated by Electricity Distribution Networks (EDBs,) the local lines companies that deliver electricity to homes and businesses in a region.
EDB‑initiated GXP investments arise where an EDB identifies a future network capacity, reliability, resilience, or growth-related need and engages with Transpower to investigate potential transmission solutions.
The review of EDB-initiated GXP investments covered an assessment of four electricity distributors to understand how investment needs are identified, assessed and progressed under the current system.
The review findings highlight concerns about how some investments are being evaluated. There was limited evidence that alternative solutions, including flexible demand options and staged investment approaches, had been fully explored in some cases. It also found limited information on customer preferences, pricing signals and cost-benefit analysis, making it difficult to determine whether proposed investments represented the best value for consumers.