ACT is promising to open more of New Zealand's electricity system to competition while rejecting calls to break up the country's major generator-retailers. The policy could give households and private investors more freedom to generate, sell and move electricity, but the central question is whether greater competition around the edges of the system will translate into lower costs, greater resilience and more generation for consumers
Report by eLocal
ACT has set out an electricity policy built around a relatively simple proposition: keep New Zealand's large vertically integrated electricity companies intact, but introduce more competition into the networks, connections and small-scale generation surrounding them.
Energy spokesperson Simon Court announced the policy at Parliament, saying ACT would oppose proposals to separate the generation and retail businesses of New Zealand's major "gentailers". Instead, the party wants households and businesses to have greater freedom to generate and sell electricity, private investors to be able to develop transmission connections, and qualified contractors to compete for customer-funded network work.
The distinction matters. ACT is not proposing to dismantle the existing electricity market. It is proposing to liberalise parts of it.
Under the policy, New Zealanders generating their own electricity, including through rooftop solar, would be able to choose who buys that power and export it when network capacity allows. Private investors could build, own and operate new transmission connected to the national grid, while qualified providers could compete for customer-funded electricity connection work.
ACT also wants conventional network investment in poles and wires to compete more directly against batteries, demand management and other "smart grid" technologies.
Court argues that breaking up the gentailers would not itself create another megawatt of generation or another kilometre of transmission capacity. He told RNZ that structural separation could instead undermine investor confidence at the point New Zealand needs substantial investment in new electricity capacity.
That position puts ACT directly at odds with New Zealand First, which is campaigning to break up the gentailers so generation and retail are no longer controlled within the same companies.
The Gentailer Question Is More Complicated Than Either Side Suggests
New Zealand's four large gentailers, Contact Energy, Genesis Energy, Mercury NZ and Meridian Energy, combine electricity generation with retail operations.
That structure has advantages. A retailer that also owns generation has a natural hedge against movements in wholesale electricity prices, potentially reducing financial risk and supporting investment.
But vertical integration also creates a competition problem that regulators have already recognised.
The Electricity Authority introduced non-discrimination obligations in 2026 requiring the four large gentailers to supply risk-management contracts to other buyers on an even-handed basis. They cannot favour their own retail businesses on price or non-price terms.
That intervention is significant because it establishes that concerns about competition between vertically integrated gentailers and independent electricity retailers are not merely political rhetoric. Regulators have considered the issue serious enough to change the market rules.
It does not, however, establish that breaking the companies apart would produce cheaper electricity.
Documents released by Treasury show officials considered vertical separation and warned it was unclear whether separating generation from retail would solve the fundamental problems of electricity supply and generation capacity. Treasury said separation risked creating uncertainty, slowing investment and sacrificing some of the efficiencies created by vertical integration.
The OECD's 2026 Economic Survey of New Zealand took a more conditional position. It argued that market design and conduct reforms should come first, but said structural solutions should be reconsidered if those measures fail to produce greater investment, independent market entry and improved affordability.
The real argument is therefore not simply whether gentailers are "good" or "bad". It is whether competition problems can be corrected without dismantling the integrated businesses.
Opening the Solar Market
Potentially the most immediate part of ACT's proposal for households is its approach to distributed generation.
ACT says people producing electricity should be able to sell it to whichever buyer offers the best deal, whether that is a retailer, community network, local school or business, subject to the network having capacity to carry the electricity.
Court argues that a household producing electricity should not effectively be captive to a single purchaser.
But this is also an area where reform is already underway.
The Electricity Authority's Energy Competition Task Force has introduced measures requiring electricity retailers to offer plans that better reward households supplying electricity from rooftop solar and batteries when the system needs it most.
The Authority has also been reviewing network pricing rules for distributed generation and storage.
ACT's proposal therefore pushes further in the same broad direction rather than beginning from an untouched market.
The practical issue will be whether a genuinely competitive market for household-generated electricity develops. Giving consumers a legal right to choose a buyer does not automatically guarantee multiple buyers, attractive prices or sufficient network capacity to export the electricity.
Those outcomes would depend on the detailed market rules.
Who Pays for the Grid?
ACT's second major proposition concerns infrastructure.
Court points to Northland as an example, arguing the region has substantial solar generation potential but limited transmission capacity to move additional electricity south towards Auckland.
His answer is to allow private investors or consortia to finance new connections to the national grid rather than waiting for the existing system to provide them.
That could potentially unlock generation that otherwise remains stranded by network constraints.
But electricity transmission and distribution are unusual markets because much of the infrastructure is a natural monopoly. Building competing sets of poles, wires and transmission corridors can be economically inefficient.
The Commerce Commission regulates these businesses for precisely that reason. Transpower and electricity distribution businesses face regulatory oversight intended to reproduce some of the disciplines that competition would normally provide where direct competition is impractical.
ACT's proposal therefore raises a more difficult question than simply public versus private investment: where can competition genuinely reduce costs, and where would duplicating infrastructure ultimately leave consumers paying for unnecessary assets?
Court acknowledges part of that problem himself. He warns New Zealand could overinvest in poles, wires and transmission infrastructure when batteries, demand management or other technologies could sometimes deliver the same reliability at lower cost.
That argument has merit in principle, but its success would depend heavily on how investment decisions and network access were regulated.
Competition for Connection Work
ACT also wants qualified contractors to compete for customer-funded electricity connection work rather than leaving customers dependent on their local lines company.
Court says property developers have complained about long delays and high connection costs.
Opening that work to competing qualified contractors could reduce waiting times and introduce price competition. But electricity infrastructure also carries obvious safety and reliability consequences.
Court says network companies would retain responsibility for safety and network performance, with contractors required to meet common standards and obtain approval in much the same way competing contractors work on roads.
The 2024 collapse of a Transpower pylon in Northland provides a reminder of why those safeguards matter. The tower collapsed after subcontractors removed nuts from three of its four legs, causing a major regional outage.
Competition in infrastructure work can reduce costs. It does not remove the need for strong engineering standards, supervision and accountability.
What Would This Mean for Households?
Will this in fact make New Zealand stronger? Parts of ACT's policy could strengthen consumer choice and electricity resilience if they result in more generation, faster connections, better returns for household solar and lower-cost alternatives to conventional network investment. Allowing capital to enter parts of the system currently constrained by monopoly infrastructure could also accelerate projects that otherwise struggle to connect.
But those benefits are not automatic.
The strongest part of the policy is arguably its attempt to expose more investment decisions to competition rather than assuming every increase in electricity demand requires another regulated infrastructure project.
The unresolved issue is the gentailer structure itself.
ACT argues that breaking the companies apart would damage investment confidence without producing additional electricity. New Zealand First argues that companies controlling both generation and retail have too much influence over power and price. Regulators have already acknowledged competition concerns within the existing structure, but have so far chosen targeted market rules rather than structural separation.
That creates a useful test.
If the new non-discrimination rules, improved hedge markets, greater distributed generation and additional investment produce stronger competition and more affordable electricity, the case for breaking up the gentailers becomes harder to establish.
If they do not, the structural question will remain.
For ordinary New Zealanders, the measure that ultimately matters is not whether electricity businesses remain integrated or are divided. It is whether the system delivers reliable power, encourages enough new generation and investment, gives consumers meaningful choices and reduces the long-term cost appearing on household and business power bills.
Source
Based on reporting by Russell Palmer, Political Reporter, RNZ, with additional reporting and analysis from eLocal.
Additional sources: ACT New Zealand, Electricity Authority, Commerce Commission, New Zealand Treasury, OECD Economic Survey of New Zealand 2026, and New Zealand First.