NZ energy sector moves to world mainstream

By CHRIS DANIELS energy writer

New Zealand's deregulation and reform of the energy sector are increasingly a thing of the past.

Business consultancy Cap Gemini has published its annual survey of world energy executives.

John Hancock, the company's associate director of energy and utilities, said New Zealand executives had expressed a growing sense of the need for pragmatism - that we had an "incredibly pure" economic electricity market design, but that supply security was a political issue.

Hancock said New Zealand had been the world's "poster girl" for reform in the energy sector, with a sophisticated market, but was now coming into the mainstream.

While there had been promises that power prices would drop, perhaps they had simply not risen by as much as they might have, had the system remained centralised.

Deregulation was not an "end in itself" but a means to an end.

It is the company's third global survey on the deregulation of energy utilities, and the challenges of the industry.

More than 130 senior energy executives were interviewed from around the world.

New Zealand and Germany had been the only countries to set up a system where the industry would regulate itself. In both countries this had failed, with the need to appoint a new regulator - in our case the new Electricity Commissioner.

"Interestingly, a change of Government in the 1990s meant that New Zealand's market reforms were not followed by the type of privatisation common in other jurisdictions," the report says.

"Most of the industry remains owned by central Government, local trusts and councils, yet universally the need for investment was seen as at odds with an increasingly intrusive regulatory regime which demands declining prices."