A flat rate becomes a moving target
From 1 July 2026, new rules requiring large electricity retailers to offer time-of-use pricing came into force, ending more than a year of lead time since the Electricity Authority announced the mandate in July 2025. This is not a future reform to file away. It is live today, and it changes the basic logic of how a business pays for power.
Energy Minister Simeon Brown said large power companies had long generated electricity at different prices throughout the day but sold it at a single flat rate, a practice he called unfair. The change, he said, “will give more people the option of shifting some of their power usage to take advantage of cheaper rates where possible”. In plain terms, electricity stops being a flat overhead and becomes something you can manage like any other input cost.
Who is covered and what the plans look like
The rules apply to retailers with 5% or more market share, meaning the big four generator-retailers Contact, Genesis, Mercury and Meridian, which together hold about 83% of the retail market. Small businesses, defined as non-domestic users consuming below 40 MWh a year, roughly a small office, cafe or retail outlet, are inside the framework. Larger industrial users negotiate separately.
The plans run on three pricing windows: peak (highest, typically 7am-10am and 5pm-9pm on weekdays), off-peak or shoulder, and night (lowest, 11pm-7am). The catch is simple but hard. You need a smart meter to access any of it. No smart meter, no time-of-use plan, no lever to pull.
The same package also doubled the grid export limit from 5kW to 10kW and improved buy-back rates for solar and battery users exporting during peak. Businesses can compare plans through the Authority’s free tool at billy.govt.nz.
The $3 billion case for shifting load
The system-level argument is substantial. In January 2026, EECA published modelling by consultancy Jacobs showing that between 1,700 and 1,900 MW, roughly 25% of current peak demand, could be shifted off-peak. Using Transpower’s estimate of $1.5 billion saved per gigawatt of reduced peak demand, that is up to $3 billion in avoided spending on generation and network infrastructure.
The report flagged food processing in Bay of Plenty, Waikato and North Canterbury, farming in Canterbury and Waikato, and offices in the main centres as having the most shift potential. With demand projected to grow 35-82% by 2050 as transport and industry electrify, flexibility is becoming a structural necessity, not a nice-to-have.
The split that should worry smaller operators
Here is where it gets real. A business that can move dishwashers, refrigeration cycling, EV charging or batch processing into the cheap windows gets a genuine cost lever. For a firm spending $30,000 a year on power, even a 10-15% cut in peak consumption is meaningful money.
But not everyone can move. Dr Le Wen, senior lecturer in economics at the University of Auckland, put it bluntly: “It’s easy to ask a household to run the dryer later, but for a dairy factory in Waikato or a steel mill in Auckland, it’s not that simple.” He described this as inelastic demand, where some users won’t change behaviour even if prices triple, because stopping production puts jobs and supply chains at risk.
Professor Nirmal Nair of the University of Auckland raised an equity concern that lands directly on small business. Most bills are dominated by fixed costs, transmission, distribution, retail charges, levies and GST. Asking small operators to invest in smart controls or rearrange their day to benefit upstream retailers and networks is, in his view, unreasonable. The practical risk is that firms unable to shift load pay more during peak periods with no offsetting saving, effectively cross-subsidising the ones who can.
The first-mover trap
In its July 2025 submission, the BusinessNZ Energy Council backed demand response as “an affordable way to increase system resilience and flexibility” but named a problem that matters to any business weighing investment in load-shifting kit. Early adopters who cut peak demand let competitors enjoy the system benefits without the same sacrifice, a real disincentive to move first. The council also argued any reward system “should be paid for by the market and flow through into real time prices” rather than becoming an out-of-market cost passed back to consumers.
The honest read is that this is good policy with uneven payoffs. The action items are unglamorous but worth doing now. Confirm your smart meter status, ask your retailer for a time-of-use comparison against your current flat rate, run your usage through billy.govt.nz, and map when your business actually draws power. From 1 October 2026, Category B obligations commence, potentially pulling more retailers into the framework and sharpening competition on plan offerings. The clock is now part of your cost base whether you manage it or not.
Sources
- Cheaper or even free electricity: How new pricing periods will affect your power bills (2026-07-01)
- Electricity Authority announces new rules for big energy retailers (2025-07-16)
- Electricity Authority mandates fair pricing for solar, off-peak power use (2025-07-16)
- Time-varying price plan requirements – Retailer Guidance (2025-09)
- EECA report shows how flexible electricity use could save the country billions now (2026-01-27)
- NZ could save billions just by changing when we use electricity, new report finds
- Shifting power use to off-peak hours could save NZ $3 billion – Expert Reaction (2026-01-27)
- NZ could save billions just by changing when we use electricity – Evening Report (2026-01-27)
- Rewarding Industrial Demand Flexibility – BusinessNZ Energy Council Submission (2025-07-16)