Sowry Roger: Electricity and Gas Industries Bill — In Committee 
Sowry Roger: Electricity and Gas Industries Bill — In Committee 
[Volume:620;Page:15711] 
Hon ROGER SOWRY (National) 
: 
 This is a major part of the bill and one we are very very opposed to. I start by saying to the Minister in the chair the Hon Harry Duynhoven that his help on Part 1 in the Commerce Committee does need to be acknowledged and I thank him for that help. If I can give a bit of history it was during the latter stage of the bill—in fact after all the submissions had been heard—that Transpower toddled around the back of the bike shed and went to see the Minister Pete Hodgson. Transpower said that it must be excluded from any legal action being able to be taken by a lines company or a generator that thought Transpower was at fault—if there had been a breakdown in supply or something like that and someone wanted to take legal action Transpower wanted immunity from legal action. That was not in the bill so I thank the Hon Harry Duynhoven for agreeing with me that interested parties should at least be consulted on this. And they were. A number of parties came to the select committee and they were outraged by this. Meridian Energy as a generator and Orion as a lines company are two that stick out in my mind. They were just outraged that they would have no legal remedy against Transpower if there was a fault that was due to Transpower’s negligence. 
There are very few times that I am disappointed in the advice from officials but this was one of them. The officials sat in front of the select committee and to paraphrase it basically said that this is what is done around the rest of the world there are precedents for this; so be it. When we looked at those precedents we saw that it was not done. In fact other State-owned transmission companies do have the right to be sued—albeit it in a narrow range. We now have those clauses back in the bill with a much narrower range around them. 
So I start this speech by being positive and saying to Harry Duynhoven: “Thanks for your help in getting that part of the bill right.” because I think we have got those clauses right in this part. What worries me about this part though is the levy on industry participants. I say to the Minister that we are tabling an amendment to this and I am looking forward to other parties’ support on the amendment. We are not being radical. United Future members do not need to die in a ditch just worrying about whether they will or will not support the Government—again. All we are saying is that before the levy is set we believe that the Electricity Commission should have to consult all affected parties. That is fair enough. 
At the moment if one goes to the Electricity Commission’s website right now—and Mr Copeland can shake his hand; he does not think it is fair—one will see the levy that it is putting on lines companies. There are now lines companies planning legal action against the commission. They were not consulted. No one asked them. They were levied. “Bang. This is what you pay. That’s it. End of story. There’s your cost. Pay up.” That is a cost that goes straight through to consumers. I was with my lines company Electra this morning and they are furious about this. They are involved in legal action using consumers’ money to fight this proposal. It will be interesting to see how the Labour members vote; whether they think that the lines companies should be consulted. That is all! We are not asking that they have to agree because I do not think I could get people to agree to that. So it is a soft amendment saying that at least the commission should have to consult. 
I hope that the Committee will see fit to put this amendment into the bill so we do not end up with the commission having the power to tax with no accountability at all. The Minister in the chair the Hon Harry Duynhoven is checking to see whether the amendment is soft and I am pleased he is. I hope he takes a call. In fact I hope the Government supports the amendment because I do not think it is onerous on a Government at all to ask for consultation. For members who are following the debate it is an amendment to add new paragraph (d) to subsection (1A) of section 172ZC inserted by clause 16 which talks about the way the levy is prescribed. I am saying that we should add that any levy must be determined by the commission after full consultation with all the relevant industry groups including consumers. 
The reason I put in “including consumers” and I do not expect them to go out there and consult every household is that I have had Grey Power members in my office. They are very worried about the cost of the commission being levied on the lines companies and the lines companies saying: “Oh well that’s a tax.” and then whacking it straight through to elderly consumers. They are saying there is no consultation in the bill. All I am saying by adding new subclause (d) is that any levy must be determined by the commission after full consultation with all the relevant industry groups including consumers. 
 I have to say that I do not think we could get a softer amendment than that. It has no financial implications. I do not think the Government can go out there and veto it because it is only consultation. Once it has consulted it can still see it but at least it can give people a chance to have a say. The Minister must acknowledge this. Consumers are really wound up. They do not get a chance to have a say any more. They get a letter from Contact Energy from their lines company saying: “Your prices are going up.” Contact blames the lines companies. They end up having to go to the Commerce Commission to get it sorted out and they find out it was actually Contact that put the prices up all along. Genesis Energy whacked its prices up the other day. 
Consumers just get this continual barrage of price increases. We can blame all sorts of previous structures but we have a structure that the Minister is trying to make better. I do not think this bill does it but I think that by putting in this amendment at least we are giving people a say. We will be moving some further amendments as Grey Power in particular is concerned to have a say on some of the industry committees and I think one appointment does not actually matter a big deal. I think that is a good point to have. We will be looking to do that. We will be looking to increase the lines companies’ ability to generate. 
But I particularly want to make this point to Harry Duynhoven given that he helped the committee dig the Government out of a hole on the issue of Transpower not being able to be sued when the fault was there. Given that he was reasonable about that when the Minister clearly was captured by Transpower officials—the Minister did not even bother to come to the committee to explain it to us but Mr Duynhoven was very generous in his willingness to work with the committee to get some better clauses in this part of the bill—my appeal to Mr Duynhoven is to support the addition of new paragraph (d) to subsection (1A) of section 172ZC inserted by clause 16. This is a small change to enable us to go back to our lines companies and say that before the levy is placed on them they will at least be consulted so that they do not find out about it as lines companies did on this one by logging on to the web and finding out that this is what their levy will be so pass it on. We are not talking about a small amount of money. It is millions of dollars is it not Minister? 
Hon Harry Duynhoven 
: Yes it is. 
Hon ROGER SOWRY 
: It is and he nods; generously so. It is. It is millions of dollars. So I think that amendment will go a long way and I hope the Minister can see fit to support this. I hope that others in the Committee will support it too. I know the Greens will because they are always worried about low-income earners and Grey Power. I do not think they will want to say to Grey Power: “Actually we just did not favour any consultation.” 
I think this is a small move. It will not solve the Act. It does not alter my view of the bill at all in terms of supporting it but it is a small move that says to the Government that if it is going to ram this through as it is at least put a bit of consultation in there for people who are most at risk. And those who are most at risk in electricity terms are consumers who end up bearing all of the cost. Lines companies do not bear any of this as none of the fees and none of the levies stay with them. They do not take it off their bottom line; it all gets passed through. 
That is why Electra and two other lines companies are looking at legal action. What a waste of money! What a waste of the money that those lines companies will spend. Judy Keall who was a member of this House is on the Electra trust board and she is looking at legal action to fight her Government because of the levy and the way it has been put on. What sort of nonsense is that? So when the Labour members who have gone on to the trust board are fighting their own Government that tells us that all is not right in the state of Rome or the state of Levin or wherever one happens to be at the present time. 
So I am saying to the Minister that I hope he can say a few words on this and explain to the Committee that he is happy to support it because that will go a long way to facilitating this debate. 
Hon HARRY DUYNHOVEN (Associate Minister of Energy) 
: 
 I accept the member’s point that there should be some consultation involved in this. Although he says it is millions of dollars he should remember that that is a small fraction of a percent on power bills and it is to provide the reserve capacity needed that is not provided because of the way the market works. I say to the member that his amendment would be a good one if it were not already covered. If he checks section 172ZCA in clause 16A he will find that the budget set-up includes consultation with the parties involved. 
I will make a quick comment in relation to Mr Brownlee’s earlier comments about the Dobson project. The Dobson project just happens to be in the South Island. Mr Brownlee said that it could cure the supply problem in the northern part of the North Island. 
Gerry Brownlee 
: I raise a point of order Madam Chairperson. I appreciate the Minister’s response but so that we be clear I said it was about security of supply in the northern part of the South Island. 
Hon HARRY DUYNHOVEN 
: I thank Mr Brownlee. I misheard him and I apologise for that. Mr Brownlee also said there was a responsibility on the part of the Labour Government for generators gobbling up retailers. In fact all purchases of retail businesses by generators and that includes the State-owned enterprises took place in 1998 and 1999. All of them were completed by 1 April 1999 except in one instance. That was On energy in 2001 which was taken over by Genesis and Meridian because On energy had failed to take out hedge contracts before the 2001 winter. One of the reasons that this legislation is being put in place now is of course as a result of the shortages that occurred at that time and the way in which the market did not cope and did not provide for security of supply. The electricity market is a technical complex and dynamic being to the extent that we could never include in primary legislation everything needed to ensure that it operates in response to every situation and when we get into regulation and rules Ministers have to be involved. This cannot be totally delegated independently. 
I thought Mr Franks’ simple and dogmatic arguments that the Government was in panic and we should have a hands-off approach were interesting. That failed us years ago. Intervention is necessary at times and that is what this is about. It is to ensure that where necessary the right amount of signal is given. The Electricity Commission has a large number of features. It does not simply regulate. It does not simply make decisions. It is not only about recommendations but also about regulations and rules and three or four recommendations regulations and rules have already been promoted. It is about initiatives. It is about new legal initiatives that might be required. It gives effect to the Government’s policies on electricity. It is a much broader mandate than a simple regulatory body as has been portrayed. It makes contracts for reserve energy to ensure security of supply. It will regulate and coordinate to ensure security of supply to ensure not only that we have the capability in the system but also that fuel stocks are available that we have coal stockpiles where needed etc. It is very simple to write it off and say that it is a panic reaction. By the way it is very hard to argue that this is a panic reaction on the one hand then say on the other hand that for 5 years the Government sat on its hands. Clearly that is not the case. 
Hon Roger Sowry 
: Are you coming back to the amendment? 
Hon HARRY DUYNHOVEN 
: Mr Roger Sowry says that the amendment does not cover consumer groups. 
Hon Roger Sowry 
: No it doesn’t cover consumer groups. 
Hon HARRY DUYNHOVEN 
: I am not sure that the member is correct in that because the advice I have had from the officials is that in the setting of budgets groups have to be consulted. The suppliers and participants—and presumably therefore their voice from the consumer groups—have to be consulted. After all as the member has just pointed out many of them have trusts that are involved. Surely they represent the consumers in the area. I know that in my area they certainly do until events that are happening right now that are quite separate from this bill. 
Hon Roger Sowry 
: So will Grey Power be consulted? 
Hon HARRY DUYNHOVEN 
: I am not sure of the answer to that but I imagine that it will have very strong representation particularly in Electra. As the member said I am sure that with Judy Keall there Grey Power will have very strong representation. But one of the features of the system we have now— 
Darren Hughes 
: She’s a former member who got elected to that trust. There’s a former member from our area who will never get elected to it. 
Hon HARRY DUYNHOVEN 
: Can I say in response to the interjection that Judy Keall was a very good and assiduous member of Parliament and I am sure that the views of Grey Power will be strongly represented in that particular electricity trust.