Breaking up NZ's electricity gentailers could backfire on consumers
New Zealand parties want to split power companies. But economists warn separation could raise wholesale costs.
New Zealand First and the Greens want to break up the country's major electricity companies. Breaking them into separate generation and retail businesses is their goal.
Independent retailers could buy power on better terms, they argue. Greater competition would then lower household bills.
But a long study of energy markets shows a hidden problem. Standalone retailers must buy all their customer electricity from the wholesale market.
When prices spike, they face serious losses. During Britain's 2021-22 energy crisis, 29 retailers failed.
They could not protect themselves from rising costs. Separation could also raise wholesale prices.
Generators selling only to the market face fewer limits than those serving their own retail customers. And customers would pay multiple profit margins instead of one.
- 6.8%
- Price increase first half 2026
- 29
- British retailers failed 2021-22
- New Zealand First, Greens
- Nations backing split policy
Why it mattersBreaking up energy companies sounds like a quick fix. But it could backfire. It might make electricity less reliable and more expensive to produce. This would harm the people it aims to help.
AustraliaAustralia's energy regulators may draw lessons from this debate as they consider whether similar structures apply to our own market.
✓ Claims checked against the source and corrected before publish. checked 1 h ago
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