First it deregulated generation.
Then distribution (no more exclusive franchise).
Only now is New Zealand turning
to the wholesale market.
A decade ago New Zealand's economy was suffering from prolonged stagnation. The country relied too much on the public sector. In 1987, before the first reform efforts began, New Zealand's electricity industry (em with its generation and transmission monopolies (em was owned and operated by the central government. Ownership and operation of distribution fell to local governmental organizations, such as the Auckland Electric Power Board (now Mercury Energy).
Today, however, under a system of light-handed regulation proposed and carried out under two different political parties (Labour and National), New Zealand maintains no explicit price controls for either the competitive or the natural monopoly segments of the electricity industry.
How did New Zealand get from there to here?
Since 1987 the New Zealand electricity industry has undertaken many major reforms. The process began in April 1987 with the formation of the Electricity Corporation of New Zealand (ECNZ) from the Ministry of Energy's government monopoly in electric generation and transmission. Over the next 10 years, the reforms led to deregulation of the generation and retailing sectors, plus the introduction of the so-called "light-handed" regulatory framework. The next important step will occur on October 1, 1996, with the introduction of an open, competitive wholesale electricity market. (See sidebar, "Industry Milestones.")