Contents
“Open electricity” will follow “open banking” as the second sector to be exposed to the pro-competition forces unleashed by the consumer data right (CDR) legislation, now before Parliament and expected to be passed next year.
A discussion paper on what this might look like is out for consultation and can draw on the Australian model, Australia having introduced a CDR regime in 2022 to spur energy market competition, efficiency and innovation in products and services.
Proposed scope
The Ministry of Business, Innovation and Employment (MBIE) consultation proposes that all electricity retailers be required to participate, in contrast to “open banking” which is restricted to New Zealand’s five largest banks, with others able to voluntarily opt in.
The rationale for wide mandatory participation is to ensure a ‘level playing field’, where all consumers have equal access to their data.
Feedback is sought on the specifics of how this might be achieved, including any potential exemptions or phased rollouts, and whether fringe businesses such as solar panel or battery storage providers, may be captured.
No timeline has been proposed at this stage for implementation, but prospective participants should be giving some thought now to whether the system will work for them and what it will require of them.
What information will it apply to?
Two categories of information have been identified for inclusion.
Customer Data: This may include half hour consumption data, both current and historical, as well as additional customer specific data such as use of distributed energy resources (solar and battery storage).
It would have to be provided, with consumer consent, to accredited third parties and may also need to be provided directly to consumers. Direct-to-customer access is not currently proposed (similar to the initial roll-out of open banking). Separate customer access rights are already addressed under the Electricity Industry Participation Code 2010 (the Code).
Product Data: Retailers would be required to share information related to the goods and services they offer, facilitating comparison and service-switching.
Although this data will already exist in machine-readable form, investment will be required to ensure that it can be made available in real time to third parties through electronic systems that meet the regulations (when designed). The compliance costs associated with this will become clearer as the regulatory framework develops.
MBIE is not currently proposing any action initiation requirements for the electricity sector under the CDR regime, given that provider switching is already facilitated separately by the Code.
Next steps
New Zealand has been exploring the application of a CDR since 2020 and is looking to the Australian and European experience to avoid some of the more costly design choices that have been adopted elsewhere.
But it is important that we develop a CDR structure that responds to the specific needs of the New Zealand economy. CDR regimes rely on usability, trust and confidence to become successful.
We encourage electricity retailers to consider how the proposed scheme may affect them, and to highlight any factors they would like MBIE to take into account.
Technology and other businesses seeking to use CDR data should also consider whether the proposals capture the information needed for design of open electricity products (particularly in the absence of any express action initiation capability under the CDR).
Consultation closes at 5pm Thursday, 10 October 2024 and a Ministerial decision to designate the electricity sector for CDR is expected in early 2025.
