Retail Competition in a Consolidating Market
Welcome to our latest edition of Between the Lines, Tenco's publication, highlighting our capability, people, and ideas.
The State of Play
Ongoing consolidation in the New Zealand electricity retail market is prompting clients to review procurement timing, pricing certainty, and embedded network strategies.
Prime Energy exits retailing: Prime Energy ceased retail operations following a failure to meet prudential security obligations. The Electricity Authority activated contingency measures, encouraging proactive switching before reassigning Prime Energy customers to other electricity retailers. Tenco supported several clients through this transition, ensuring they achieved competitive pricing and contract certainty.
Genesis consolidates Frank Energy and Ecotricity: Genesis Energy is absorbing Frank Energy and Ecotricity to reduce operational complexity. Further updates on the Ecotricity integration are expected in the coming months.
Flick Electric acquired by Meridian Energy: Meridian Energy has acquired Flick Electric, reducing independent retailer diversity. Flick primarily targeted residential consumers.
Manawa Energy acquired by Contact Energy: Contact Energy’s acquisition of Manawa Energy, approved by the Commerce Commission in May 2025, will increase Contact’s renewable generation capacity. While primarily a generation-focused acquisition, the transition of Manawa’s retail customers to Simply Energy and Contact may have minor impacts on retail dynamics.
Compounding the issue, gas supply forecasts have been downgraded due to lower production, leading to increased reliance on other forms of thermal generation. This shift has in turn elevated the Electricity Risk Curves for 2025 and 2026 – updated regularly by the Electricity Authority to assess supply security – signalling heightened risks of electricity shortages. Certain steps are being taken to mitigate a repeat of the winter 2024 market price spikes, including Genesis increasing their stockpile of coal to power the Huntly Power Station and Methanex, which uses approximately 45% of New Zealand’s gas output, will again divert its contracted gas volumes to support electricity generation.
Further, the flexibility built into the Tiwai Point Aluminium Smelter electricity agreement has already been called upon, allowing demand reductions to help manage system stress.
The importance of Huntly’s multi-fuel capability (coal, gas, and biomass) cannot be understated, with the station expected to play a critical role in system security through to at least the mid-2030s, bridging the gap while new renewable generation is built.
Tenco is aware commercial gas contracts are once again difficult to come by. Both retailers offering commercial gas supply are reluctant to offer long-term contracts until gas supply constraints are further understood.
What We're Hearing
Following recent meetings with several electricity and gas retailers, we observed:
A strong pipeline of new renewable generation projects exists, but electricity supply remains tight over the short to medium term. Generators are using gas, coal, and potentially wood pellets to maintain reliable supply during this period.
Retailers are generally pricing off the ASX through to 2028, providing budget certainty despite underlying risk premiums.
All major electricity retailers now offer Renewable Energy Certificates, with this market continuing to evolve.
Retailers are motivated to support customers with EV charging and solar installation project plans.
The gas supply market is very tight with offers from gas retailers difficult to obtain. If they are prepared to offer contracted supply – this is often on the condition that customers have a timeframe and strategy to remove gas use from their sites.
Retailers estimate 5-10 years of supply from current gas fields, with future supply dependent on new field development or LNG imports.
What This Means for Tenco Clients
While consolidation can reduce retailer choice, Tenco-managed embedded networks remain open, with contracts in place with over 15 retailers across New Zealand, ensuring robust retail choice for tenants and residents. We continue to expect competition within our managed networks and will continue to monitor market developments to protect client interests.
Clients should review electricity and gas supply procurement timing and negotiation strategies, as fewer retailers could reduce short-term discounting opportunities. Our procurement team is available to support your planning.
Next Steps
If you would like to discuss how these changes may affect your procurement strategy or embedded network operations, please contact your Tenco Client Manager or email us at en@tenco-ebs.co.nz
