Market dominance

Electricity and to a lesser extent gas billing for consumers large and small has been deregulated in many economies. However the retail energy providers still have to buy their energy from the electricity generating companies. Where fewer of those exist - in say a small country like New Zealand - they can use their market dominance to distort prices. A recent New Zealand Commerce Commission report says that power generators overcharged customers $4.3 billion over six years by using market dominance.

The study has found find that the country's main electricity generators, state-owned Meridian Energy, Genesis and Mighty River Power and privately owned Contact Energy, effectively used their market power to maximise profits, including withholding power at peak times. But the power companies have been cleared of the most serious allegations levelled against them - that they breached the Commerce Act by abusing market dominance and that they colluded to make extra profits.