Connell Brian: Electricity and Gas Industries Bill — Second Reading 
Connell Brian: Electricity and Gas Industries Bill — Second Reading 
[Volume:619;Page:14710] 
BRIAN CONNELL (National—Rakaia) 
: 
 National strongly opposes this legislation. There is no doubt that New Zealand is facing a power crisis. Each winter Kiwis face an uncertain future. Will there be enough electricity for hot showers will the lights stay on or will they go off? Will there be enough energy to run our industries? Will there be enough energy to provide certainty to industry to attract capital either foreign or domestic into that type of infrastructural development? However this piece of Government-sponsored nonsense will not achieve that certainty. Will this legislation answer the most often-asked question by people overseas who are thinking about investing in this country which is “Will you guarantee a constant and competitive source of electricity?” Jim Anderton bangs on and on about the wood processing strategy in the forestry industry but when one talks to the forestry people they say there are two gigantic flaws in Mr Anderton’s strategy. One is the Resource Management Act and the other is a lack of certainty with regard to the constant source of energy. 
So will this legislation deal with those questions? The answer is that it will not. This legislation typifies what is wrong with this Cabinet. I could write their collective commercial experience on the back of a 45c stamp with a carpenter’s pencil. They simply do not know how to respond to this problem so they are captured by textbook solutions and some very very willing officials. This legislation is the bureaucrat’s answer to a pragmatic problem. 
Unlike Mr Anderton I will not bang on and on about the complexities of this industry—and I do agree that there are some complexities. However the reality is that we do not have enough generation in this country and no amount of Government-sponsored nonsense like this will deal with that issue. Rather than face that simple fact this Minister invents the Electricity Commission as the panacea to all our energy problems. 
Thirty years ago we had first-class infrastructure around energy in this country. But our regional economies have boomed and our population has grown by a million. In Canterbury alone driven by irrigation the demand for energy is now twice as much as two Dunedin Cities combined. What do we get from this Government? The Electricity Commission as if it is the answer! It simply is not. But it is apparent that we will get it whether we like it or not. It would have been nice to get a model that actually works but this arrogant Minister would not listen to some of our leading industry experts. Submitter after submitter came to the select committee and told the Minister that this process simply would not work. Companies like Contact Energy Mighty River Power Powerco Meridian Energy Transpower—all major electricity users groups—and the list goes on and on. But would the Minister listen? Absolutely not! 
The overwhelming number of submitters expressed concerns about the Electricity Commission’s design. It will create an institution with advisory operational and regulatory roles that place it in serious risk of performance failure and judicial review. Under this bill the Electricity Commission is to be a policy adviser proposer of regulation and rules purchaser and/or provider of market operations purchaser of reserve power seller of electricity in dry years adjudicator of fines and penalties industry facilitator promoter of energy conservation decision maker over investment services and prices of State-owned enterprises and Commerce Act regulator of the prices and services of distribution and transmission companies. With the best will in the world no matter how well managed no company can manage effectively with that range of conflicting roles. 
It gets worse. The Electricity Commission will not achieve satisfactory independence while it is subject to Government policy and ministerial intervention. We were warned at the select committee that these provisions are incompatible with a regulatory institution and are in stark contrast to the independent processes associated with the Commerce Commission as an example. The implications for investment in the electricity industry for this country are immense. 
In the absence of safeguards against regulatory appropriation businesses subject to industry-specific regulation will protect themselves by simply under-investing in this industry. What is worse is that the industries that do invest will expect a higher rate of return than they would have otherwise sought because they have to mitigate the risk that is being imposed on them. 
The investment that does occur will be those types of organisations that have a direct door to the Minister—ministerial-friendly companies. What we will get are those organisations that are the mates of “Blackout Pete” applying and no one else will. The commission will work against investment and that is exactly what is needed if we are to avoid further crises in this country. That is why the National Party is totally in support of the removal of any limits on line companies entering generation subject to normal Commerce Commission oversight to make sure that they are not employing any anti-competitive practices. 
That we need investment in lines companies is absolute but what will happen is the greatest tragedy of all. Line companies with fat balance sheets will simply invest in other people’s economies. That will be a tragedy of huge proportions for New Zealand. With what has been suggested by this Minister that may very well happen. 
Finally I want turn my attention to the gas industry. There is no doubt that investment in this industry is expensive and risky but if observers ever wanted a bare example of this Government’s naivety directing business to share their infrastructure is it. This is not one of “Blackout Pete’s” better ideas. This is the rationale: investment in infrastructure is expensive and risky; if company X—and let us call company X “Shell”—does invest and strikes it rich we will tell all its competitor companies to use Shell’s infrastructure. 
Dave Hereora 
: Rubbish! 
BRIAN CONNELL 
: Well that is what he is suggesting. And there is one big flaw in that suggestion is there not? Why on earth would one invest hundreds of millions of dollars into research development and expansion in this country and then be directed by the Government that one must give one’s competitors a leg-up—one has to share the infrastructure? What that would do for one’s competitors is keep their prices down and eliminate risks for them. Does anyone bar this Minister think that will attract foreign investment in our electricity or gas industries in this country? If so they are in a very very small minority. For goodness’ sake! I tell the Minister to get real resign or at least get something more pragmatic and sensible in place before he plunges New Zealand into a permanent state of darkness. The Minister should get real.