10. Question No. 10—Energy and ResourcesJONATHAN YOUNG (National—New Plymouth) to the Minister of Energy and ResourcesQuestion No. 10—Energy and Resources10. JONATHAN YOUNG (National—New Plymouth) to the Minister of Energy and Resources: Does she think Kiwi households and businesses will be paying lower electricity prices in a year's time?Hon Dr MEGAN WOODS (Minister of Energy and Resources): As I've covered before the price they pay will depend on a range of factors. These factors include the amount they use retail overheads distribution costs the wholesale market transmission charges and any other contractual terms that may apply. However I note that the futures price for one year from today is lower than the current wholesale price so the market is expecting to see some movement. At the same time I have seen some industry commentary predicting price rises so this is an issue of contested debate. I'm also aware of three trends putting downward pressure on prices: falling costs of capital which will mean lower transmission charges; we are now seeing over $880 million being invested in new renewable energy generation over the coming year which means lower prices for New Zealanders over the long term because they have the lowest levelised cost; and the Government has also started implementing the recommendations—SPEAKER: Order! We have heard this before. Jonathan Young: Thank you. So does she agree with the Electricity Authority who two days ago said that the increase in future prices for the next three to four years appears indicative of a change in the fundamental drivers used to price electricity—in particular the increasing impact of a tighter gas market appears to be leading to higher longer-term wholesale electricity prices?Hon Dr MEGAN WOODS: As I said there is currently contested debate in the industry. What I've also said is the futures price today is lower than it will be in a year. I'd also point out that in terms of the costs that a consumer sees on their electricity bill 31.9 percent of that amounts from generation. I'd also note that counted against that we have the recent Commerce Commission decision on Transpower's price-quality path which should see consumers pay lower prices as a reduction in the cost of capital as reflected in lower revenue limits for Transpower which are 15 percent less than the current five-year period. So there are many factors at play here. Jonathan Young: So does she then disagree with Fraser Whineray chief executive of Mercury Energy who just last week said that the electricity sector is showing significant stress and that there is a risk of current and spot wholesale prices flowing through to households and residences?Hon Dr MEGAN WOODS: As I said there are many views in the industry. I've also had conversations with Fraser Whineray who has told me that gas has got expensive because it was proved to be unreliable last year. So that fear is being priced into the market. The energy prices are going up in the wholesale market but the retail flow-through is not clear. He has also commented to me extensively about the very positive signals being given to the industry to build renewable generation which has the lowest levelised cost.Jonathan Young: So does she or doesn't she think that Kiwi households and businesses will be paying lower electricity prices next year?Hon Dr MEGAN WOODS: As I have told the member on several occasions now that depends on a range of factors. This is a competitive market and companies will make decisions about how they balance those inputs into their retail pricing to consumers.Jonathan Young: Well with the reduction in natural gas availability being replaced with more expensive imported coal for electricity generation does she now regret not listening to the Ministry of Business Innovation and Employment's advice last year around the oil and gas exploration ban—that it would increase the price of electricity in New Zealand and increase emissions in New Zealand as it has done?SPEAKER: Again any one of those.Hon Dr MEGAN WOODS: I'll address the leg of the question that was the increase in the price of gas because of a shortage of supply. That is patently just wrong. What we are seeing are some problems around contracting but I am reassured by many parts of the industry that there is no shortage of supply. In fact the estimates that we have around the security of supply of gas are the same as they have been for decades: 11 years.