Government’s Energy Market Reforms: A Step in the Right Direction

We’ve all felt the impact of this year’s dry winter — and with next winter expected to be similar,the pressure on New Zealand’s energy system isn’t going anywhere.

To help tackle the issue, the Government commissioned a report from Frontier Economics to explore ways to strengthen the country’s energy resilience. On 1 October 2025, the Government announced the first set of actions it plans to take.

While not everything Frontier recommended made the cut, a few key steps have been adopted —and overall, I see this as a positive move in the right direction.

1. A Proposed LNG Import Terminal

The first step is exploring the development of a liquefied natural gas (LNG) terminal to bring gas infrom overseas as local reserves continue to decline.

The plan is for this terminal to be operational by June 2027, though realistically, large-scale projects like this often take longer. The imported gas would likely be used only for electricity generation, rather than being sold directly to businesses or households.

Yes, imported gas will cost more — but it would give New Zealand more certainty in dry years by ensuring there’s enough generation capacity to meet demand.

2. Giving the Electricity Authority “More Teeth”

The second change is that the Electricity Authority will gain stronger powers to monitor and regulate the big gentailers — the generation and retail companies.

In simple terms, this means the Authority will have more influence and access to information, helping to create a fairer playing field for independent retailers. That’s an important shift for keeping the market transparent and competitive.

3. Government Signalling Support for New Generation

Finally, the Government has sent a very clear message to the gentailers it partly owns — Meridian, Mercury, and Genesis — that it’s prepared to financially support new generation projects.

That’s significant. It means the Government is willing to back new investments that expand our generation capacity. While it takes years for these projects to go from idea to reality, the signal itself encourages action — and that’s what the market needs.

Conclusion

Some people expected more from this announcement, and I understand that. But I see these steps as a constructive start. If carried through, they could make a meaningful difference to New Zealand’s energy future.

Even a small reduction in wholesale energy prices — say around two per cent — could add roughly $3 billion to the economy. That’s not insignificant.

It won’t solve everything overnight, but it’s a clear move in the right direction — toward greater stability, resilience, and confidence in our energy market.

Key Takeaways