The Labour Party threat to implement a single buyer electricity model was off the table for at least three years, if not indefinitely.
As the election drew near, the polls started to support a National win outcome and all the electricity stocks rose ahead of the market, he said.
''We believe the policy gained traction partially as a politically inspired counter to the state asset sales and a full overhaul of the electricity market is unlikely in the future.
''However, electricity prices are still a voter trigger point and we don't believe the Labour Party electioneering sound bite of 'electricity prices will come down if water wasn't given away for free' will entirely disappear.''
Craigs was still applying a water tax of about $150 million to 2019 electricity sector earnings but expected the market to ignore it until the build-up to the next election began. Over the next 12 months, the focus would be more on the attractive sector-wide dividend yield, he said.
Now the biggest concern was off the shelf, the driver of value would focus on whether the Tiwai aluminium smelter shut after January 1, 2017 in a worst-case scenario, ran at just 400MW from January 1, 2016 or remained business as usual with the potential to increase above 572MW over summer periods in a best-case scenario.
''Our earnings forecasts have Tiwai reducing production in 2017. If there is a full shutdown, earliest termination being January 2017, Meridian would hold up the best, with Genesis the most negatively affected and Mighty River Power and Contact having an average negative outcome.''
It would mean Contact having to quickly shut its CCGT (combined cycle gas turbine) plants and Genesis re-contracting its coal pile. It would mean dry year thermal utilisation could remain above 50%, keeping contract prices from falling materially, he said.
Also, the market would focus on how quickly Contact and Genesis altered their gas contracts and kit to support a falling need for thermal energy. In Craigs' view, the contractions impact on capacity would have a positive upward effect on contracted prices, Mr Timms said.
A transmission pricing review would take place, with particular focus on its impact on who paid for the DC links charges.
There were $167 million of DC charges - likely to be spread across the industry - currently being borne by South Island generators, with Meridian carrying 70% of the burden.
The industry was moving to paying 80% of normalised free cashflow as dividends, he said.
Genesis and Meridian were already paying out more than 80% and Mr Timms expected Contact to move to a similar regime after its interim result in February next year.
Mighty River Power was expected to announce a more aggressive dividend policy of paying out 90% to 100% of after-tax profit at its annual meeting next month.
