Electricity Market Review
Welcome to our latest edition of Between the Lines, Tenco's publication, highlighting our capability, people, and ideas.
Government Response & What it Means for Our Clients
Ongoing policy changes continue to shape New Zealand’s electricity and energy markets. The Government released its response to the Frontier Economics review -- an independent assessment commissioned in 2024 to test whether New Zealand’s electricity market settings support reliable, affordable, and decarbonised energy supply. While the review confirmed confidence in the overall market design, it recommended targeted steps to strengthen energy security, particularly during dry years and periods of constrained gas supply. The Government’s response focuses on firming capacity, improved market transparency, and strengthening the Electricity Authority - rather than major structural reform.
The State of Play
The Government’s decisions signal a pragmatic approach, emphasising system resilience and regulatory capability over structural change.
Key themes:
Energy security focus -- Frameworks to support investment in firming capacity and dry-year resilience.
Strengthened Electricity Authority (EA) -- Government will strengthen the EA, including faster rulemaking, stronger monitoring and enforcement powers, and enhanced information-gathering capability.
Market structure maintained -- No forced consolidation of distribution businesses.
Gas transparency and planning -- Accelerated gas supply-and-demand reporting and public dashboards to be phased in over 2025.
Crown co-investment flexibility -- Government rejected divestment in Genesis, Mercury, Meridian, and instead signalled willingness to co-invest alongside them in new firming capacity (up to its existing 51% shareholding).
These actions reinforce continuity in market settings while signalling a more hands-on approach to supply security and market data.
What We're Hearing
Recent industry engagement reflects several consistent themes:
Firming remains critical
Continued focus on ensuring flexible generation remains available during dry periods and winter peaks. Electrification remains encouraged -- but system resilience is a parallel priority.Gas remains tight, with more visibility coming
Supply constraints persist; transparency improvements should support planning, but physical supply limitations remain a risk factor.Liquified Natural Gas (LNG) procurement signalling, but economics will guide feasibility
LNG investigations underway, but commercial feasibility and timing remain uncertain. The government has launched a Registration of Interest for an LNG import facility, with submissions closing 17 November 2025, and provisions in the process requesting delivery by June 2027 where feasible.Regulatory sophistication increasing
Expect more granular market monitoring, hedging transparency, and energy-security oversight.Distribution business status quo, with efficiency encouraged
Incremental efficiency measures, including higher allowable generation limits for distribution businesses, improved market transparency, and enhanced network oversight.
Source: Gas Industry Co / MBIE. Daily gas production by major fields, 2018 – 2025.
Gas reserves continue to fall, reinforcing electricity supply risk during dry and winter periods.
What This Means for Tenco Clients
For commercial property owners:
Policy stability supports long-term planning
Framework changes are incremental, not disruptive.Increased transparency may support procurement timing decisions
Better visibility in gas supply and market risk signals should aid procurement planning.Firming signals underscore value of supply resilience
Government policy reinforces that flexible generation will remain essential as renewables scale. We expect continued focus on security-of-supply settings and pricing, reinforcing the importance of procurement timing, contract structure, and scenario planning.Embedded networks remain supported under existing regulatory settings
Regulatory direction remains consistent with efficient, customer-focused operation and competitive supply choices.
Next Steps
If you would like to discuss how these policy updates may affect your procurement strategy, embedded network operations, or market risk, please contact your Tenco Client Manager or email us at en@tenco-ebs.co.nz
Tenco Perspective
Our role is to translate market developments into practical insights for property owners and corporate energy users. We will continue to keep clients informed as policy settings evolve and new initiatives progress.
Team Update
We are pleased to welcome two new members to the Tenco Client team, reflecting our ongoing investment in capability to better support our clients. Anthony Eggertsen joins our Auckland office, bringing client management experience across the retail electricity and network company sectors, while Lisa Grace joins our Christchurch office with more than 20 years of analytical experience within the electricity industry. Their expertise further strengthens our ability to deliver high-quality advisory and support to our clients.
Holiday Office Closure
As we approach the end of the year, we wish all our clients and partners a safe and enjoyable holiday period. Tenco’s offices will close from 23 December 2025 and reopen on 12 January 2026.
