Energy Policies of IEA Countries: New Zealand 2006 Review

Over the last two decades, New Zealand’s energy policy has been marked by a commitment to light-handed regulation, to ongoing government monitoring and review and to liberalisation. Relative to many IEA member countries, New Zealand has a small population, low population density and is isolated from the rest of the world. Given this, its success with energy market liberalisation is remarkable. In fact, New Zealand was a pioneer in electricity market liberalisation, whereas many countries are just starting down the path of liberalisation. Furthermore, the country’s strong commitment to undistorted and transparent liberalised markets is evidenced by a general lack of direct energy subsidies to specific customers or producers. Its commitment to ongoing review of its energy markets to ensure efficient and competitive outcomes is shown by the government’s recent creation of two new regulatory bodies, the Electricity Commission (EC) and the Gas Industry Company (GIC). In short, New Zealand should be proud of its high-quality energy policies. Nevertheless, the government’s commitment to ongoing policy improvement and its new and very difficult energy challenges require continued policy evolution and government action. To that end, the government of New Zealand should strengthen its policy documents to reduce regulatory uncertainty, particularly in the face of recent energy policy and institutional changes.