Hodgson Pete: Electricity and Gas Industries Bill — In Committee 
Hodgson Pete: Electricity and Gas Industries Bill — In Committee 
[Volume:620;Page:15727] 
Hon PETE HODGSON (Minister of Energy) 
: 
 The preceding speaker has asked a number of questions which basically boil down to: why did we choose 50 megawatts? I will tell him the history. There was earlier in this Parliament a member by the name of Max Bradford and he came to the view—supported by all the National Party members—that the way we should run our electricity system in the future was as follows. If someone owned a line that person could not simultaneously own an electron. That was the view of the National Government at the time. 
Hon Roger Sowry 
: We’ve changed our mind. 
Hon PETE HODGSON 
: Roger Sowry has just chipped in saying: “We’ve changed our mind.” That is good is it not because that is proof that the National Party now realises that that was a most extraordinary error. The disruption around the country was amazing. It was astonishing; so much so that by the time we came to the winter 2001 event— 
Phil Heatley 
: Why 50 megawatts? 
Hon PETE HODGSON 
: I have 5 minutes and I will get to that question. I did not chip away at the member who has just resumed his seat during the course of his speech which went on and on and I expect him to stand by and get an answer to the question that he has put to me. If he does not want an answer he can continue to chip and I will resume my seat. 
What happened then was we went to winter 2001 and we found some reserve generation on the waterfront of Wellington but the person who owned the generator also owned the line and we could not turn it on. That is why we needed to get the electricity amendment legislation of 2001 through the House in a hurry. That is how silly it was. At that stage we said: “Let’s start moving in such a way that lines companies can generate a certain amount.” At that stage the threshold was set at 5 megawatts. 
Then we came to this legislation 3 years later. In the interim something else had happened. Lines companies were placed under Commerce Commission regulatory review. They are under watch. They may be subject to a Commerce Commission inquiry or they may be subject to the CPI-x regime and on it goes. So now for the first time we have decent disclosure as to how lines companies run; whether they are making excess profits; and whether they are doing what they were doing in Britain which was creaming it and behaving monopsonistically and the answer is generally speaking they are not although there are some exceptions to that. Those exceptions are detailed by the Commerce Commission and as the years have gone by we have a much much better handle on whether there has been monopoly rent taken by lines companies and an ability to reduce that rent if it is taken. 
So I put to the House legislation that said: “Let’s raise the threshold. Five is too low so let’s go to 25. Let’s just quintuple it.” That legislation then went to a select committee. In the course of the select committee hearings a number of people came along and said: “That’s still too low.” and the select committee came to the view that it should be raised to 50 megawatts. Then in the House—in front of the member who has asked a question about a so-called secret deal—Gordon Copeland got up during a question and asked: “What does the Minister think about going to 50 megawatts?”. I said: “Well if the select committee decides that is the right thing to do it is fine by me.” And that is the end of the story.