In a speech to the Electricity Networks Association this morning, he conceded that the competitive part of the industry - the generators and retailers - needed more attention.

"As a rough rule of thumb, it is the competitive part of the industry where more attention is needed" and he said that was the intent of the Electricity and Gas Industries Bill tabled in Parliament today.

Hodgson also admitted some of the ENA's suggestions had merit, such as lines companies being able to retail any distributed electricity they generated. "The idea is an interesting one and I have requested further work be done on it, as I remain concerned that retail competition is not as vigorous in many regions as I would like to see."

Last May the government said lines companies could own up to 25MW of "reserve" or other generation and unlimited renewable power. The government also abolished the requirement that generation owned by a lines company be connected to its own network and not to the national grid or another company's network.

Hodgson said the new legislation also covered gas, as well as electricity, and sought to apply a consistent regulatory framework to the two sectors, reflecting the linkages between them.

In particular, the bill contained powers to expand the functions of the Electricity Commission to govern gas if the gas industry was unable to achieve the government's policy objectives for gas, and for the commission to be renamed the Energy Commission in that event.

Hodgson also said he was open to the suggestion that the electricity commission be more independent of the government, along the lines of the Commerce Commission.

The Bill also included a number of amendments to constrain the powers of government ministers and the electricity commission, which were to be subject to judicial review. However, Hodgson believed "that the checks and balances already in the system means the risk of arbitrary, ad hoc or capricious exercise of powers is low."

He said implementing the new regulatory regime was urgent, "so we can make much-needed improvements in a whole host of critical areas, from security of supply to retail competition to transmission investment and pricing.

"We are faced with crucial challenges with the impending depletion of Maui, our on-going vulnerability to dry hydro years and the steady increase in demand for electricity. This means that there is real pressure on everyone in the electricity business, and it's likely to remain that way for a year or two yet," he concluded.