“This action, which is part of the coalition agreement between New Zealand First and National, will give distribution businesses the confidence they need to invest in generation, helping to increase regional resilience and the national energy supply,” Mr Jones says.

Distribution businesses are currently prohibited from owning more than 250 MW of generation connected to Transpower’s national grid, and/or more than 50 MW of generation connected to their own networks unless they operate that generation in a separate company or seek an exemption from the Electricity Authority.

“The current rules place undue costs on distributors, given that other regulations cover similar ground. The exemption process can also impose costs, as well as cause delay and uncertainty, which we are striving to avoid,” Mr Jones says.

Safeguards in both the Electricity Authority’s Code and the Commerce Act that provide protections for competition will apply to distribution businesses’ investment in generation.

Mr Watts says the change will further drive the investment needed in generation while continuing to preserve competition.

“It is very difficult to grow the economy when energy security is at risk. This change is among a number of measures the Government is taking to ensure businesses and ordinary Kiwis have access to a reliable and secure energy supply.”

The change will be included in the Energy and Electricity Security Bill which is expected to be introduced in the first half of this year.