The electricity industry

Who does what?

There are five major groups in the New Zealand electricity sector. The diagram below shows how electricity flows through each of these players to reach the customer.

Generators produce electricity. (Meridian Energy, for example, is New Zealand's largest electricity generator through our South Island hydro-electric power stations). Like other generators, Meridian Energy is also an electricity retailer.

Transpower is the organisation responsible for transmission of the electricity produced by generators. They operate the national grid, which is essentially the system of high voltage power lines that connects to the power stations to send electricity around the country.

Network companies (also called Distribution or Lines companies), own the power lines and networks in local areas that connect to the national grid to deliver power to businesses and homes.

Electricity Retailers (sometimes referred to simply as power companies) sell electricity to business and residential users. They also provide support services – for example, Meridian Energy's account management structure for Corporate customers.

Customers can buy electricity from any retailer they choose as a result of New Zealand's electricity reforms. Very large customers - those who use over 100 gigawatt hours per year (around $10 million dollars in total electricity costs per annum) - can have it delivered directly from the national grid if they have a link to a GXP (Grid Exit Point).

Splitting Network and Retail Capability

Prior to 1999, electricity companies could own local networks and sell electricity as well. In 1998, the government passed legislation forcing electricity companies to split into network companies or generators/retailers. From April 1999, network companies could not sell electricity, and generators/retailers could not own network or lines businesses. Power companies who used to do both had to sell either their network or retail operations.