In 1886 local authorities were allowed by law to supply electricity and this has since been renewed in various local body Acts. Reefton had the first public supply in 1887, followed by Wellington in 1888, and by 14 other centres from 1898 to 1908. Until 1918 there were no local bodies concerned solely with supplying power and others had no incentive to do so. The Electric Power Boards Act of 1918 allowed local bodies to be set up concerned only with supplying electricity.

This Act, amended and consolidated in 1925, allows electric power board districts to be established. There are now 41 boards, which cover almost all the settled part of New Zealand. The Act lays down the method of election of the boards, how they are to be run financially, and how their boundaries are to be fixed. Except for certain actions which need ministerial consent, the boards are autonomous. The setting up of such boards makes it possible for farmers and other consumers in the more isolated areas to obtain electricity at a reasonable cost.

In 1965 electric power was distributed retail by 31 municipalities, 41 electric power boards, and, in Southland and Rotorua, by the State. There is no uniformity in retail charges, which are generally based on units. The average number of country consumers per route-mile of distribution line is low compared with that of town consumers, so that the capital and overhead costs of rural authorities are much greater per consumer. In 1959 a commission of inquiry into retail distribution of electricity was set up.

To help to supply sparsely populated areas, all authorities, including the State, pay a levy of up to one half of one per cent of their revenue from sales of electric power. The Rural Electrical Reticulation Council makes grants from this fund in cases where, under ordinary conditions, the guarantees of revenue would be too high for the consumers to meet. By 31 March 1965, 7,688 miles of line, serving 12,766 consumers, have been subsidised at a total cost of £5,935,306. Subsidies paid during the year 1964 exceeded £220,000.