Heatley Phil: Electricity and Gas Industries Bill — Second Reading 
Heatley Phil: Electricity and Gas Industries Bill — Second Reading 
[Volume:619;Page:14745] 
PHIL HEATLEY (National—Whangarei) 
: 
 The biggest favour and the bravest favour that the National Party can do when it is elected to Government next year is to repeal this legislation. Sadly although Clayton Cosgrove says that “it attempts to fix some of the problems” in the electricity and energy industry I say that it fails. Mr Cosgrove is quite right in saying that it does attempt to put it right but I am correct too in saying that it fails—which is a sad thing. 
I was reading over the introductory speeches to the bill made by Labour Party members. There were only two sentences from a number of members but David Cunliffe launched forth with more than two; he risked more. He said—and sadly this was in November 2003: “We want the lights on. That is why we cannot afford to have another 2 years of dilly-dallying. Let us get this bill passed.” That member and his more inexperienced colleague Mr Cosgrove should be reminded that they were part of the Government for the 3 years leading up to the time of that speech. They were in the Government that Mr Cunliffe refers to as “dilly-dallying” and they were among the Government members who have come through with this bill. After those years of dilly-dallying and after 12 months of absurd bureaucracy coming together they have achieved nothing. 
This Electricity and Gas Industries Bill will determine the legislative framework for the electricity and gas industries for the foreseeable future. That is true and it is a sad thing indeed. Firstly and probably most important the bill puts together the Electricity Commission and the legislation that will underpin that commission to be an authoritative but ineffective body. The problem is: how authoritative and how effective will that body be? My concern which I would like to put to the House is how this bill—and it is a good question—promotes investment in the sector. It does not. How does this bill promote investment for security of supply? It does not. How does this bill expand compliance costs? It certainly achieves that. 
I would like to address the issue of compliance costs first. The Electricity Commission’s design creates an institution with advisory operational and regulatory roles which will place it at risk of serious performance failure and judicial review. Under the Act the commission has to be a policy adviser a proposer of regulations and rules and a purchaser or provider of market operations. That is three things. It also has to be a purchaser of reserve power and a seller of electricity in dry years. It has to be an adjudicator of fines and penalties and an industry facilitator. It has to be a promoter of energy conservation. That is eight roles. The ninth role is that it has to be a decision maker over the investment services and prices of State-owned enterprises. The tenth role is that under the Commerce Act it has to be a regulator of the prices and services of distribution and transmission companies. 
There are 10 roles. Which of those will it focus on and which ones will it bill the electricity and energy companies for? Who will fund all this? That is a good question to ask. We know that it will be the industry and ultimately the consumer. Who will determine out of those ten roles which are the priorities? Well we can see the Indians coming over the hill. We can see the levies skyrocketing. They will become taxes and there is no way that the Electricity Commission will be able to track back to the levy-payer—who ultimately will become a taxpayer—what the levies are for what roles they fund whether those roles are worthwhile funding and what value comes from it. The levy provisions are currently proposed to look far more like a tax than a cost-recovery levy and the costs imposed on the industry will be unrelated to the services provided. 
 I can tell the House that I am sure the Regulations Review Committee which I believe Richard Worth chairs at this time will be very very busy after the passage of this bill. The combination of poorly defined objectives and roles—and there are 10 of them—an open-ended power to impose levies and a limited discipline on the commission to attribute costs to services directly will see a rapid rise in the costs of operating the commission. We will see bureaucracy grow upon bureaucracy and regulation grow upon regulation and ultimately the power consumer will pay. We will keep a close eye on matters and ensure that the costs recovered from the industry are only those related to services provided to that industry—in other words the levy payer gets the benefit from the levies—and exclude services provided to the Government such as policy advice. 
Why should electricity companies and those out in the power sector be paying levies to drive the Labour Party’s policy machine? Why should they be there to drive the National Party’s policy machine or any party’s policy machine? Those levies should be related only to services provided to the industry. 
Our second major concern about the bill relates not just to compliance costs but also to issues of investment. We are quite concerned about how this bill provides very little in the way of safeguarding against the regulator changing rules related to political waxes and wanes leaping from here to there. When investment is committed by the companies they need security; they need to know what the regulations are today and what they will be in the future. If they know that a Government is going to interfere in some way—and through this bill of course the Government can having appointees to the Electricity Commission and not being subject necessarily to its recommendations—once investments are made those investments will be undermined. Therefore we ask where the incentive is to invest. 
National will not be supporting this bill. It does not support investment for security of supply. It ratchets up compliance costs and that is absolutely unacceptable to the consumer. We oppose this bill.