Is the Electricity Sector Broken? Calls for Urgent Reform Rise as Costs Soar
Is the Electricity Sector Broken? Calls for Urgent Reform Rise as Costs Soar
By Herald Editorial
July 17, 2025
A growing chorus of business and consumer groups is demanding urgent reforms to New Zealand’s electricity sector, citing a “broken” market that is increasingly straining households, businesses, and the economy as a whole.
An open letter published in Sunday’s newspapers, signed by a coalition of organizations including the Auckland Chamber of Commerce, the Employers and Manufacturers Association, and Consumer NZ, as well as four independent power retailers, has called for immediate action to address what they describe as a dysfunctional energy market.
“Our dysfunctional electricity market is holding back New Zealand’s productivity, restricting our international competitiveness, and driving up the cost of living,” the letter states. “The status quo cannot be allowed to continue.”
Recent data shows that electricity prices have risen by 6.2% since last year, placing additional pressure on households already grappling with the rising cost of living. Consumer NZ’s chief executive, Jon Duffy, highlighted the stark reality faced by many New Zealanders: “Sometimes ... it comes down to choosing to put food on the table in a given week or pay the power bill.”
The impact of these rising costs is not limited to urban centers. In smaller communities, energy-intensive industries such as mills have been forced to close due to the inability to afford power bills, leading to job losses and economic decline.
Energy Minister Simon Watts has acknowledged that the electricity market is not functioning as well as it could but has expressed confidence that the market is competitive enough to deliver affordable prices. However, this sentiment is at odds with the growing calls for reform, as the open letter underscores the urgent need for change.
The letter advocates for a comprehensive reshaping of the energy market and the introduction of protections for both businesses and consumers. It argues that the current structure, where a few companies control both generation and retail supply, stifles competition and innovation, limiting the ability of new investors to enter the market and drive efficiency and fair pricing.
Prime Minister Christopher Luxon has pointed to the issue of supply as a key challenge, particularly in the context of the previous government’s ban on new oil and gas exploration, which he argues has left the country short on gas. Luxon has suggested that repealing the ban would be the most significant step in addressing the energy crisis, while also emphasizing the need to fast-track renewable energy projects and reform the Resource Management Act.
Although the government initiated a review of the electricity market last year to ensure regulatory settings that would keep prices low and the lights on, the pace of reform has been criticized as too slow. Energy Minister Watts has indicated that the government will make announcements on the review “in due course,” but many are calling for more immediate action to provide relief to households and businesses struggling with rising energy costs.
As the winter approaches, the stakes are high. With energy prices rising and the market in disarray, the need for a clear and decisive response from the government has never been more pressing. The question remains: will New Zealand’s energy sector be reformed in time to prevent further hardship for its people?
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