This is the Authority’s latest update on how we are implementing the recommendations in the Market Development Advisory Group’s (MDAG) final report. It covers May to August 2026.
The Authority has taken action on 15 of the 31 recommendations and is making steady progress on a further 11, taking the recommendations actioned or in train to 26.
Milestones in May-August 2026
This period, our greatest progress was on supporting investment in flexibility and advancing measures to facilitate demand-side flexibility. Unlocking short-term demand flexibility could reduce the need for future network investment by lowering peak demand, and give consumers more choice and control over when they use electricity.
More detail on our work on these and other MDAG recommendations is below. You can also see the status of all the recommendations in our latest dashboard.
Strengthening price signals to enable better risk management
- Standardised super-peak market-making - MDAG recommended introducing mandatory market-making for standardised super-peak contracts if it was needed to strengthen competition in flexible generation. Voluntary trading can be fragile, risking confidence and competition, particularly during times of market stress. Mandatory market-making for super-peak contracts began on 31 July 2026 (central trading of these products was established on a voluntary basis in January 2025). The first market making session took place on 11 August 2026. Mandatory market making is expected to strengthen the price signals supporting investment in flexibility (recommendation 24).
- New reserve product - MDAG recommended the Authority consider a new reserve product to cover sudden reductions in generation from intermittent sources. After consideration, we have instead decided to work with the System Operator on an overarching frequency management strategy. The scope includes identifying potential new ancillary services that will help manage risk in our evolving electricity system. This could provide additional revenue streams to encourage flexible resources such as battery energy storage systems. We are aiming to publish an issues and options paper in early 2027 (recommendation 6).
Improving access to flexibility markets
- Distribution investment - MDAG recommended that the Commerce Commission and the Authority work to improve distribution pricing so it better supports demand-side flexibility, helping to optimise investment in distribution networks and lower costs for consumers. The Authority has progressed a variety of improvements in our distribution pricing work programme, including the introduction of peak injection rebates, and the long-run marginal cost guidance we published in August. Our ongoing work includes the Distribution Pricing for Flex project (discussed below). We will continue to work with the Commerce Commission on how efficient distribution pricing can be reflected in its Part 4 regulatory regime. This work will help optimise distribution investment and flexibility decisions (recommendation 4).
- Demand-side flexibility on distribution networks - We held workshops for interested parties on our demand-side flexibility work in May and published a summary. As a first step towards the long-term goal of exploring distribution dispatch, we are scoping the Distribution Pricing for Flex project to encourage efficient demand-side flexibility. This is important for distribution pricing and dispatch as it will help value demand-side flexibility by relating it to time- and location-specific network conditions. This work will guide flexible resource behaviour, support efficient network operation over the longer-term and lower long-run costs for consumers (recommendation 5 and 19).
- Future distribution system operation - MDAG recommended improving visibility of demand-side flexibility for system operators and removing Code barriers to it. As part of addressing this recommendation, we published a roadmap for the future of distribution system operation in June. This roadmap identifies five key workstreams across the electricity sector that are required to help develop Distribution System Operation functions and capabilities between now and 2030. This will support more efficient outcomes, including greater uptake of demand-side flexibility, as the industry evolves (recommendation 11).
These four recommendations (4, 5, 11 and 19) set long-term objectives that align with our strategic priority of unlocking efficient use of flexible resources and flexibility services. Our work reflects the intent of MDAG’s recommendations, but also considers broader questions around system operation, visibility, pricing and coordination, alongside targeted action on near-term market and regulatory settings.