New Zealand’s Energy Competition Task Force, a joint initiative of the Commerce Commission and Electricity Authority, has reviewed how electricity distribution businesses assess and progress major grid exit point (GXP) investments. GXPs are substations where electricity moves from Transpower’s national grid into local distribution networks. The review examined the practices of four electricity distributors.

Projects worth an estimated NZ$600–700 million are currently being investigated, developed or delivered. Unlike other transmission projects, GXP investments do not receive the same regulatory scrutiny. A single project could add an estimated NZ$200–300 a year to an average household’s electricity bill in some regions, making it important to establish that proposed spending is justified and cost-effective.

The review found examples of good practice but identified shortcomings in some investment assessments. These included limited evidence that alternatives—such as flexible demand solutions and staged investment—had been fully explored, as well as gaps in demand forecasting, information about customer preferences and pricing signals, and cost-benefit analysis. These gaps can make it difficult to determine whether a proposed investment offers the best value for consumers.

The Task Force says distributors should more rigorously assess investment timing and scale, improve their understanding of consumers’ willingness to pay, and compare traditional network upgrades with options such as demand response, distributed energy resources and battery storage. Properly assessing these alternatives could defer or reduce network expenditure and save consumers money.

The Task Force is seeking feedback on the review’s findings, whether lines companies should do more to signal GXP investment costs to consumers, and whether additional measures are needed to give greater confidence that major investments deliver the best outcomes. Submissions are open until 5pm on 15 December. The review forms part of broader work to improve the electricity sector’s performance and support reliable, affordable electricity.