The Ministry of Business, Innovation and Employment (MBIE) released the Discussion Document for the Electricity Distribution Businesses ("Discussion Document") on 19 August 2026, seeking feedback on options to lift performance and drive efficiency across New Zealand's electricity distribution businesses ("EDBs").
Submissions on the Discussion Document close on 30 September 2026.
The consultation forms part of the Government's broader ongoing programme of work relating to its Energy Package released in 2025 – see our previous articles on the Energy Package linked here and here.
Background
New Zealand's electricity demand will continue to increase with more electrification, and the distribution system will play a key role in enabling that growth. To accommodate this anticipated growth, ongoing maintenance and replacement of network infrastructure and strengthening the network resilience (both in relation to physical and software infrastructure) will require important investment by EDBs – forecast by EDBs to require more than $32 billion of capital and operating expenditure over the next decade.[1]
The long-term benefits of electrification for the economy, consumers and environment are well-known. The Discussion Document reflects on the tension between the investment being needed now to prepare for increased future demand and the higher costs required to fund that investment and the extent of those costs being borne by consumers.
Rather than requiring structural consolidation, such as merging the 28 EDBs into five as suggested in the 2025 "Frontier Report", this Discussion Document shows the Government's focus on promoting efficiency by EDBs through regulatory change and more voluntary measures, such as collaboration and standardisation. We anticipate that the proposed measures, if implemented, could bring continued attention to whether EDBs are using the right model to achieve the efficiencies sought. The question will be whether the measures incentivise change over time.
What is MBIE proposing?
The Discussion Document considers three key areas for improving efficiency of EDBs:
- Increasing collaboration and standardisation to drive efficiencies of scale.
- A more tailored approach to monitoring performance under the Commerce Commission's economic regulation.
- Strengthening governance oversight and accountability requirements.
Each of these areas are discussed in further detail below.
Discussion Document Part 1 – Collaboration and standardisation
MBIE considers greater collaboration and standardisation across EDBs could achieve efficiencies of scale across the sector and ensure that EDBs and consumers benefit from consistent rules and processes.
The Discussion Document describes collaboration as involving EDBs retaining separate ownership but shared services being used to combine specific functions. One example provided is PowerNet's shared operational model across three South Island networks.
For standardisation, the Discussion Document highlights that standardised processes could involve distribution system operator models (DSO models) being used by EDBs to align on operations, new investments and interfaces for customers for the benefit of EDBs themselves. MBIE also sees potential benefits from standardisation for other sector parties:
- electricity retailers who currently manage different pricing plans from EDBs for their retailer pricing systems;
- consumers having faster and more standardised processes for new connections, eg for installation of solar; and
- "innovative" service providers benefitting from more consistent information on network capacity.
Discussion Document Part 2 – A more tailored approach to economic regulation
The Discussion Document proposes to draw on the economic regulation framework recently introduced for water services under Part 4 of the Commerce Act 1986 to modify the EDB framework. Proposed changes include:
- changes to information disclosure ("ID"), the form of economic regulation currently imposed on all EDBs, including to remove the prohibition on comparative benchmarking and to expand the Commission's information gathering powers to include non-regulated services;
- changes to price-quality ("PQ") regulation, including the introduction of individual PQ paths for larger EDBs (as opposed to default or customised PQ paths); and
- changes to make it easier to extend additional regulation to consumer-owned EDBs who are subject to ID only. This would include equipping the Commission with a broader set of intermediary economic regulation tools that sit between ID and PQ regulation, based on the tools available to the Commission in the water services sector. These new tools would include:
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- revenue thresholds – setting minimum and maximum revenue expectations;
- performance requirements – enabling the Commission to direct specific actions such as investment programmes or consumer consultation;
- quality-only regulation – setting quality-related outcomes that EDBs must meet; and
- financial ringfencing rules – ensuring revenue collected from regulated services is spent only on those services, with the ability to restrict dividends.
The rationale behind this proposed broadened toolkit is that a sharper threat of increased regulatory intervention would incentivise consumer-owned EDBs to improve performance.
Discussion Document Part 3 – Strengthened governance oversight and accountability
MBIE is also consulting on whether the existing governance arrangements for EBDs are fit for purpose. EDBs operate under a range of ownership models with different reporting, transparency and accountability requirements. For example, some EDBs are defined as public energy companies under the Energy Companies Act 1992 (where they are owned by either consumer trusts, community trusts or local authorities) and EDBs that are wholly or partially trust-owned are also governed by their trust deeds and subject to the Trusts Act 2019.
EDBs are also subject to sector-wide requirements set out in the Electricity Industry Act 2010. The Discussion Document identifies its governance concerns are more focussed on trust-owned EDBs, particularly regarding accountability and transparency.
The Discussion Document does not advance a preferred ownership model for EDBs but highlights the need for the frameworks governing EDBs to ensure consistency in accountability, support reliable, affordable and resilient network services, encourage innovation and collaboration, and impose low compliance costs.
Options for strengthening and refining the existing governance frameworks include:
- More focused objectives for consumer-owned EDBs (in the form of statutory requirements or voluntary sector-wide commitments), placing greater emphasis on efficient investment, network reliability resilience and supporting electrification rather than simply "operating as a successful business";
- Greater monitoring and regulation of ancillary investments (not related directly to their core distribution activities), to ensure that EDBs remain focussed on their core role;
- Measures to enhance governance capability for EDB boards through a combination of non-statutory support and guidance from the Government together with statutory requirements (potentially modelled on the statutory requirements for board members under the Local Government (Water Services) Act 2025); and
- Measures to review ownership models for trust-owned EDBs to ensure they remain fit for purpose over time.
The consultation closes on 30 September 2026 and submissions can be made via MBIE's website.