A long-term look at the development and reform of New Zealand's electricity supply industry

During the course of the 1980s and 1990s the New Zealand economy went through a process of considerable economic reform. One aspect of this reform was the corporatisation of state-owned enterprises, the opening up of these enterprises’ markets to competition and in some cases their privatisation. One of the most important of these policy reforms of the 1990s was the restructuring of the New Zealand electricity supply industry. This process was encouraged by the perception that the state owned Electricity Division of the Ministry of Energy that generated and transmitted electricity in New Zealand, as well as the regional power boards that distributed and retailed it, performed poorly in the 1970s and early 1980s. During the 1990s the industry was fundamentally reformed through a process of the corporatization and then breaking up of the generation and transmission industry in New Zealand into competing generator companies and an independent, regulated transmission company that operates the countries’ wholesale electricity market. The article observes the long term performance of the New Zealand electricity supply industry. In particular the growth in demand for electricity, the productivity growth of the industry as well as electricity prices, profits and debt levels are all presented. In doing so an evaluation is made of the degree that these reforms and industry restructuring have improved the productivity and efficiency performance of the industry.