Why compliance matters in a changing electricity sector

Compliance rarely attracts attention when it's working well.

Most electricity industry participants meet their obligations, issues are identified early, and consumers never see the work happening behind the scenes.

But compliance matters. High levels of compliance help protect consumers, support competition and maintain confidence in New Zealand's electricity system.

That's why we've published the Electricity Authority's first Compliance and Enforcement Report.

The report provides greater transparency about compliance trends across the electricity sector, highlights emerging risks and recurring compliance issues, and explains where we are focusing our compliance efforts in the year ahead.

More reporting does not necessarily mean worse compliance

Overall, the sector continues to demonstrate relatively high levels of compliance.

One of the report's main findings is that alleged breach notifications increased significantly during 2025/26, with 60% more notifications received than in 2024/25.

At first glance, that result might sound concerning. But the story is more nuanced than that.

A significant contributor was the introduction of the Consumer Care Obligations and retailer self-reporting as part of their annual compliance obligation.

Industry participants have obligations to report alleged Code breaches to us.

In many cases, participants identified issues themselves and reported them to us. That's an important feature of an effective compliance system. Self-reporting helps identify emerging issues earlier, supports timely action and improves outcomes across the sector.

Compliance is about more than enforcement

When people think about compliance, they often think about formal investigations and penalties. Those tools are important, but they are only one part of the picture.

Education, engagement and monitoring are equally important. We work with participants to help them understand their obligations, identify issues early and strengthen compliance arrangements before more formal intervention is needed.

We aim to resolve compliance matters through engagement and corrective action where appropriate. However, when conduct presents significant risks to consumers, competition or system security, stronger regulatory responses remain an important part of our framework.

Our enforcement approach remains proportionate, consistent and risk-based, with formal action focused on matters involving greater potential harm, repeat non-compliance or broader risks to consumers, the market or the power system.

During 2025/26, we increased our use of stronger enforcement tools where circumstances warranted. We appointed investigators to 11 matters and referred four complaints to the Rulings Panel.

We also improved the efficiency of our compliance processes. During 2025/26, we reduced our median case closure time from 150 days to 106 days. Resolving matters more quickly provides greater certainty for participants and helps ensure compliance issues are addressed in a timely way.

The electricity system is changing, and compliance risks are changing too

Another theme emerging from the report is the pace of change across the electricity sector. We're seeing significant regulatory change, increasing market complexity, and growing investment in renewable generation.

This is reshaping the compliance landscape and creating new areas of risk. As the sector evolves, compliance frameworks need to evolve with it. That's why we take a proactive approach to identifying and addressing areas of greatest risk.

During 2026/27, the Authority will prioritise six compliance focus areas: Consumer Care Obligations, non-discrimination obligations, prudential and settlement obligations, protection setting requirements, intermittent generation forecasting, and limitations on revised offers within gate closure.

We have selected these areas because of their potential impact on consumers, market competition and system security. By highlighting them, we aim to provide greater transparency about our expectations and help participants identify and manage compliance risks.

The Authority will also continue to proactively monitor eight areas during 2026/27. This helps us identify emerging risks early, better understand how obligations are being met in practice and support compliance across the sector.

Transparency supports better outcomes

This report is more than a summary of what happened during the last financial year. It reflects the Electricity Authority’s commitment to being a strong and responsive regulator.

By sharing the trends we're seeing, the compliance areas we're prioritising and the risks we're monitoring, we hope participants can better understand our expectations and take proactive steps to strengthen compliance within their own organisations.

We encourage participants to read the report and consider how these areas relate to their own activities. It's an important opportunity to assess whether their systems, controls and governance arrangements support strong compliance.

Ultimately, high levels of compliance benefits everyone. Continued commitment from participants, supported by the Authority's compliance and monitoring activities, will strengthen market integrity, support system reliability and contribute to affordable and reliable electricity for New Zealanders.

Airihi Mahuika, General Manager Legal, Monitoring and Compliance

Electricity Authority Te Mana Hiko