New Zealand's Electricity Authority decided to amend the Electricity Industry Participation Code to update the way instantaneous reserve costs are allocated so that the stakeholders pay an appropriate share of the reserve procurement costs related to their assets, according to a decision paper published Wednesday.

The cost allocation methodology for the procurement of instantaneous reserves to manage the supply-demand balance has not kept pace with changes in generation technology, the regulator noted. This reduces incentives for parties to actively reduce the risks their assets present to the system and does not support a level playing field between different types of generation technologies.

The proposed amendments will come into force on Oct. 1, 2026. The system operator will publish and maintain a list of all at-risk generation with a total generating capacity of more than 60 megawatts from that date.

In response to an earlier consultation paper, Meridian Energy (NZE:MEL, ASX:MEZ) had said to the regulator that the grid owner faces little or no incentive to avoid the costs related to the transfer of electricity across the High Voltage Direct Current link, which the firm suggested the operator could pass these costs onto consumers.

Meanwhile, Genesis Energy (NZE:GNE, ASX:GNE) had said in its submission that a fair transition meant that the new methodology should not apply to investment decisions or asset purchases made within 24 months before the change.

Contact Energy (NZE:CEN, ASX:CEN) had suggested that reliability and probability of failure should be assessed on a case-by-case basis rather than by broad-based technology assumptions.

Meridian Energy's Australian shares jumped almost 3% in recent Wednesday trade, Genesis Energy's shares added 1%, and Contact Energy's shares were up about 4%.