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Vector Welcomes Review of Electricity Prices

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 sector.”
ENDS

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