Court Simon; Shaw JamesSIMON COURT (ACT): Thank you Madam Chair. To the Minister you've raised a very good point: the analogy between house auctions electricity markets and auctions under the emissions trading scheme (ETS) might on the surface appear to have some similarities but a slightly more detailed look will indicate that they are in fact wildly different. And I think the point you make about what control businesses have over how they mitigate their emissions through the scheme—and this bill is intended by setting a confidential reserve price to send a signal.The Government sends a signal: this is what we think roughly the cost of emissions should be and businesses should plan on that basis to make changes in their businesses either to mitigate their emissions or if they can't then to budget for having to offset them through the ETS. That's quite different from the electricity price market where you're able to hedge engage in forward purchases and at the end of the day there is a willing seller willing buyer element. In other words a generator is able to sell electricity from a hydro dam or a coal-fired power station—and that seems to be much more popular this year than it was last year or the year before. They're able to sell that to their customers at a willing seller willing buyer price—although the electricity market has its own flaws in that the cost of units through the emissions trading scheme appears to be flowing through into significantly increased prices in the electricity market. So I'm wondering: has the Minister had advice as to these combined effects? We have increasing costs of New Zealand units we have increasing volumes of coal being burnt and we know that Genesis Energy—which has been responsible for managing the dry year risk through the Huntly power station—are importing more coal. They're proposing to stockpile hundreds of thousands of tonnes and to bring their third Rankine generator online. Has the Minister had advice as to whether setting a high confidential reserve price—a price of potentially close to where it currently is in the secondary market—is likely to lead to increasing electricity prices? And if so is that likely to have a negative impact on the decarbonisation of New Zealand business and our economy—quite the opposite effect of that which you're trying to achieve? So have you had any advice on that Minister?Hon JAMES SHAW (Minister of Climate Change): First of all it's incorrect to say that the Government sends a signal about what we want the price to be because the confidential reserve price through the formula that this bill enables relates to approximately where the secondary market value is. You have to remember that the secondary market price is determined by the market participants themselves not by the Government. So it's actually the market that is setting the price not the Government in sending that signal about what they think the value of it is. And so when you say a high confidential reserve price well whether something is high or low is entirely relative to the secondary market price. So actually it is not a function of what the Government thinks that the price should be at all; it's just that's what the market value is.