Rod Drury talks to Herald NOW's Ryan Bridge on his call for structural separation in NZ's electricity market. Video / Herald NOW
An influential collection of business and consumer organisations are calling on Prime Minister Christopher Luxon to fix the “broken” energy sector.
In a letter published in today’s Sunday newspapers titled “Our energy market is broken”, Luxon was told the country was running out of gas, new electricity generation is takingan age, soaring prices are forcing businesses to close and families are struggling to heat their homes over winter.
Among the organisations to sign the letter were the Auckland Chamber of Commerce, whose chief executive, Simon Bridges, is a former National Party leader; the Employers and Manufacturers Association, the Northern Infrastructure Forum, Consumer NZ and four independent power retailers.
Under the headline, “Our energy market is broken”, the organisations appealed for urgent reform of the energy sector, which they said has failed to serve New Zealanders, businesses and the country’s infrastructure needs.
“Our dysfunctional electricity market is holding back New Zealand’s productivity, restricting our international competitiveness, and driving up the cost of living,” the letter said.
In response to the letter, Minister for Energy Simon Watts acknowledged “our electricity market is not functioning as well as it should” and emphasised that Kiwis should have confidence the market is competitive enough to deliver affordable prices.
“New Zealand has an energy shortage. We experienced a dry year in winter 2024 and at the start of 2025, with low wind generation and faster-than-expected falls in gas production,” Watts also highlighted as factors.
Last year, after acknowledging there was a “power crisis” during the winter, the Government launched a review of the electricity market to ensure the right regulatory settings were in place to keep prices down and the lights on.
Watts said today the Government will make announcements on the review “in due course”, adding it was his “bottom line” as minister to ensure an affordable New Zealand energy system.
Prime Minister Christopher Luxon is being urged to fix the "broken" energy sector.
Today’s letter said the time for incremental adjustments had passed and called the issue the Government’s most impactful economic reform opportunity.
“Level the playing field. Put protections in place for consumers and businesses alike. Unlock investment in low-cost renewable generation. Put forward an energy strategy that all political parties can sign up to,” the letter said.
“We urge you to use this once-in-a-generation opportunity to reshape our energy market.”
Wind farms are contributing to meeting the demand for new electricity.
Speaking on Newstalk ZB today, Consumer NZ chief executive Jon Duffy said a significant and growing number of people are contemplating whether they can afford to put the heater on.
“They are having to make really tough choices about how they manage their electricity bill. Sometimes those choices are so tough, it comes down to choosing to put food on the table in a given week or pay the power bill,” he said.
Duffy said electricity is an essential service and after 30 years of giving the market a good crack, it’s time for a new, unified strategy. Otherwise, the country will end up in a dark place.
Consumer NZ chief Jon Duffy said growing numbers of people are struggling with power bills.
Alan McDonald from the Employers and Manufacturers Association said the letter reflects the urgency to fix some severely significant structural problems that led last year to some members’ businesses closing down, and others considering the same this year.
New Zealand has gone from a country with internationally competitive pricing that attracted businesses to pricing that is closing businesses down, McDonald said.
There are no quick fixes, but the country needs to get on with gas exploration or some kind of thermal option to back what’s happening with things such as solar and wind, he said.
Speaking today from the Act Party’s annual “Free & Equal” rally in Auckland, Deputy Prime Minister David Seymour said he was not familiar with the specific letter, but he had met with a group including the electricity users association and several pulp and paper companies at the Auckland Business chamber just last week.
“At the end of the day, the only thing that will get more electricity is more electricity generation capacity. You can’t build solar and wind forever unless you’ve got baseload to balance it out,” Seymour said.
The Act leader said he believed changes to the Resource Management Act will make it easier to get geothermal energy production as well as making it easier to build more hydroelectric power plants.
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