Vector Welcomes the Terms of Reference for the Government Review of Electricity Prices
Vector has welcomed the Government’s announcement of the final terms of reference for its review of electricity pricing,
saying it is nearly a decade since the retail and generation components of the sector were last independently and
robustly assessed and the review should deliver needed transparency across the entire make-up of a consumer’s bill.
Vector Group Chief Executive Simon Mackenzie said, “We agree with the underlying principles of the review, in particular
the focus on delivering efficient, fair and equitable prices to end-consumers, and on the importance of sustainability
and new technology for the sector. We also see this as an important opportunity to deliver greater transparency across
all aspects of a consumer’s electricity bill. As it stands today, the distribution of electricity is the most
transparent, heavily scrutinised and regulated component of a customer’s bill, the legacy generator and retail
components are the missing link.
“In investigating the effectiveness of competition in both the retail and generation sectors, New Zealand is not alone
in asking this question, with both Australia and the United Kingdom recently reviewing their sectors and finding issues.
Those jurisdictions have recognised systemic problems with the operation of their markets, including; sustained high
market shares among integrated generation/retail incumbent businesses, difficult barriers for new entrants, tariff
complexity, low pass-through of cost savings to final bills, and low levels of customer trust. Such issues cannot be
assumed to be absent in New Zealand, which operates on a similar design.
“Lastly, this is an especially exciting time to be in the sector, with rapid advancements in technology offering
significant opportunities to enable greater customer control, increase resilience, and accelerate New Zealand’s
transition to a carbon neutral economy. So, we welcome the review’s focus on the benefits of new technology and the
decarbonisation of energy, in particular in the context of the growing take-up of electric vehicles. That’s welcome news
for companies like Vector who take the lead on innovation and sustainability and who wish to continue to invest with
certainty and confidence in new technology and new energy solutions for New Zealand consumers.
“To use an analogy from a different sector, we are now moving as an industry from a linear pay TV phase to an online
Netflix and Lightbox phase. Nobody can predict all the possibilities this may unlock for consumers, but whatever is
coming, we do envisage, in time, more consumer choice and control, more competition, more resiliency of supply, more
retailer innovation, and more efficient network investment. If this Government review helps to deliver on that energy
future, we believe New Zealand consumers will benefit. Vector looks forward to engaging fully in the Electricity Price
Review process, and will support MBIE to help ensure greater transparency for the benefit of consumers across the energy