MBIE hid modelling showing LNG has no material effect on electricity prices

The suppressed slide said the quiet part out loud

The Chief Ombudsman has just handed the government’s LNG case its most damaging blow yet, and it has nothing to do with process. On 14 August 2026, John Allen ruled that MBIE should not have withheld a key Concept Consulting document behind the decision to proceed with a Taranaki LNG import terminal. Now released in full, the document’s withheld ‘Key insights’ slide concluded that LNG access “shouldn’t materially affect average electricity prices”.

That is the exact opposite of what ministers have told the public. The government justified the over $1 billion facility on the claim it would save consumers $265 million a year by cutting forward electricity prices. The document it commissioned, then hid, says the price benefit shows up only in extreme dry years under narrow conditions, and that “other resources can provide a similar system security service to LNG”, including coal at Huntly, more gas storage, and accelerated renewables.

Why this hits every energy-using business

This is not an abstract transparency spat. Gas sets New Zealand’s wholesale electricity price far more often than its share of generation suggests. A BCG report cited by Newsroom found that even with renewables supplying 85 percent of generation in 2024, gas set the price 90 percent of the time. If LNG becomes the marginal gas source at roughly double the cost of domestic gas, that price flows straight through to every business paying a power bill, not just those burning gas directly.

MBIE’s own December 2025 modelling is more honest than the political messaging. In the central 2028 scenario, LNG trims average spot prices by $11/MWh in normal years and $58/MWh in dry years. But with supply and demand better balanced, the normal-year reduction shrinks to $2/MWh. In some scenarios with local gas prices tied to LNG, the facility actually raises spot prices by $20/MWh.

The ministry hid data from its own consultants

The most awkward detail sits in a letter released alongside the ruling. MBIE energy markets policy director Rebecca Heerdegen revealed the ministry held newer gas reserve data showing reserves had fallen 23 percent against the prior year’s estimate, but chose not to share it with Concept Consulting. “Rather than revealing commercially sensitive information, we did not correct or engage with Concept’s opinion that the gas assumptions are conservative,” she wrote.

Here is the problem. MBIE has leaned on the argument that the modelling was too optimistic about domestic gas to justify dismissing its conclusions. Yet it withheld the very figures that would have shifted those assumptions in the ministry’s favour. The consultants, working from MBIE’s low-end projections, considered their approach conservative. You cannot argue the modelling was wrong while sitting on the data that would have fixed it.

Everyone with a technical mandate has flagged this

Allen found the document was not the rough draft MBIE claimed but “fairly advanced”, with the public interest in release “very high” in an election year. He is the latest independent voice to question the project. In March 2026, Parliamentary Commissioner for the Environment Simon Upton warned LNG risked being “the worst of both worlds”, raising both emissions and costs. In June 2026, the Infrastructure Commission’s advisors urged the government to slow down, flagging a potential $2.4 billion investment over 15 years and warning it was “unclear” whether forecast price reductions would eventuate.

An earlier partial release in June 2026 exposed the headline finding: “Modelled need for LNG is low, even in scenarios with less other security resources”. Officials had also not modelled an international LNG price spike, testing only $20 and $25 per gigajoule.

The one real argument, and what happens next

There is a genuine economic case buried here, but it is not the one ministers keep making. MBIE’s GDP analysis projects declining gas supply without LNG cuts real GDP by $4.5 billion by 2035, versus $3.3 billion with it. That concerns gas supply for industry broadly, not the retail electricity price consumers were promised relief on.

Eleven advocacy groups have written to the Auditor-General seeking an inquiry into procurement. The forward-price fall ministers point to as proof the policy works has been attributed by the Electricity Authority to a glut of new renewables. If that is right, the central justification for a billion-dollar bill loaded onto business power costs collapses, and the government is left proceeding against the weight of its own commissioned evidence.

Sources

• RNZ: LNG document should not have been hidden, ombudsman says (2026-08-14)
• RNZ: Officials redacted advice showing ‘low need’ for LNG imports (2026-06-11)
• RNZ: Infrastructure Commission warned govt to slow down on LNG plans (2026-06-22)
• RNZ: Government’s plans for LNG terminal didn’t model international price spike (2026-04-22)
• Newsroom: LNG plan ‘worst of both worlds’, environment watchdog warns (2026-03-25)
• Newsroom: Why the new LNG terminal could raise, not lower, your power bill (2026-02-10)