Brownlee Gerry: Electricity (Disconnection and Low Fixed Charges) Amendment Bill — First Reading 
Brownlee Gerry: Electricity (Disconnection and Low Fixed Charges) Amendment Bill — First Reading 
[Volume:640;Page:10799] 
GERRY BROWNLEE (National—Ilam) 
: 
 The National Party will support the Electricity (Disconnection and Low Fixed Charges) Amendment Bill going to a select committee because it does not hurt to have these sorts of matters discussed. But we cannot be overly enthusiastic about what the bill actually does because it is clear that this is the Government’s response to everything that Helen Clark had to say at the time of the tragedy that beset the Muliaga family in South Auckland. Essentially this bill appears to give the Minister the power to regulate as to how disconnections might be carried out if the industry itself does not come up with a satisfactory arrangement and put it in place in a way that means that that sort of event could not occur again. That is all fine; that is just what one would expect in a country like this. I doubt whether the Minister will ever have to use those regulations because I think it is in the interests of the power companies—which are in the main Government-owned anyway—to make sure they have good protocols in place. 
The issue of the low fixed charge is an interesting one because there is no doubt that in the South Island the opportunities to heat homes are pretty much limited to either solid fossil fuel burning or the use of electricity. We do not have a large gas market down there. People do not have reticulated gas anywhere and certainly do not have natural gas in the way that people have it in the North Island. A number of people use bottled gas etc. but by and large the growing need for heating is being met from electrical energy. It is just a simple fact that it is colder in the South Island than it is in the North Island and we still do not have in my opinion adequate incentives in place to encourage people to retrofit their homes with the proper insulation they would need in order for the greatest efficiency to be achieved by the use of that electrical energy. I think we also have some funny views in that regard about the use of solid fuel but that issue is not up for comment in the debate on this bill. 
The Minister quite rightly says that the threshold at which the low-user charge applies is to be moved out by 1000 kilowatt hours a year. On the face of it that measure looks reasonably good. But we have to remember that people are using that 1000 kilowatt hours so it is only an extra 1000 kilowatt hours at the low tariff whatever that might be and we are hearing evidence that that may be as little as $18 a year. So here we have legislation to give low end-users as little as $18 a year. It would be many many years before they could possibly save enough to pay for the cost of putting this bill through Parliament in the first place. 
The big problem in New Zealand with regard to electricity prices is that we have a scarcity of supply. Everyone says that that is not right because the lights have not gone out and we are meeting demand etc. But it is a fact that we are reasonably well balanced. If anyone chose to look at the retail portfolios of the generators then they would find that the demand from their retail portfolio is pretty much balanced with their capacity to generate. We know that each year there is a further demand for another 2 percent or so on top of the electricity that is currently generated. So the market is growing and the industry is only just keeping pace with the demand that it has to supply. 
That is not a recipe in which to see power prices fall. I know that in some parts of the South Island at least one power company has sent out a letter in the last couple of weeks stating that on 1 October electricity prices will rise by about 4.5 percent. Even with the passing of this legislation one can guarantee that it will mean that people at the low end of the scale who take advantage of the low fixed-charge rate now will in fact pay more for their electrical energy simply because the price will go up. Until the Government does something about increasing the amount of available electrical energy and encouraging power companies to invest more in generation then we will not make much progress as far as prices are concerned. 
 I think that one of the things that is holding up decisions on where our generating industry goes is the whole issue around climate change and what it will cost in climate change terms to generate electricity in the future. We know for instance that without the Huntly power station the lights would be out right now. This year when we get into peak-load situations without the E3P gas plant at Huntly we would be in dire straits. So we are heavily reliant on a sector of the industry that is likely to face significant climate change costs. We have a dual-edged sword if you like where we know that demand is just being met so therefore prices can rise but we have those other added costs about to go into the industry which will further force prices up. With all due respect I tell the Minister I think this bill is a nice idea but it is not quite enough for those people who need some help. The only way that prices will go down in my opinion is if we have a considerable amount more in generation. 
I understand that this bill is to be referred to the Commerce Committee. It is my privilege to chair that committee and I look forward to the submissions that we will receive on this bill. If we do not get very many we will require various organisations to come along and talk to us about it. 
I do not see in the bill any suggestion that there is a time line for electricity retailers to comply voluntarily with the disconnection arrangements. I think that without that the general power given to the Minister means very little. It would be nice to think that there was a window of say 6 months where power companies themselves could come up with their proposals and then if they did not meet those they would know that the Minister at a fixed date would regulate on what was to happen. As I have said before most of those power companies are State-owned so one would think it would be pretty easy for the Minister to get voluntary compliance on that from a large sector of the industry. 
I am sorry; I have not finished but I am just— 
Darren Hughes 
: Wrong bill. 
GERRY BROWNLEE 
: —no—taking a moment to consider whether we could widen this debate a little because the issue of transmission costs is one that needs to be looked at here as well. I do not see in this bill any particular reference to Transpower or to what its particular proposals are. The Minister Mr Parker is shaking his head which leaves me wondering why he has not mentioned Transpower in the bill. A lot of the charges do come from transmission; we have to be realistic about it. A good deal of our power is generated in the South Island and a great deal of our power is used at the other end of the country. So there is an issue running through there of getting the stuff out of the South Island. We know that the full capacity of South Island generation is not being fully utilised because of the constraints on the transmission lines. So although we have this bill about disconnections and low fixed charges it might have been interesting I would think to have had some comment in the bill about the expectations that the Minister has of Transpower which is the major delivery agent for electricity throughout the country. 
National members will consider these matters appropriately at the select committee and I welcome the opportunity to discuss this bill with all those whom I know will be interested in making submissions to the committee.