Parker David: Electricity (Disconnection and Low Fixed Charges) Amendment Bill — Second Reading 
Parker David: Electricity (Disconnection and Low Fixed Charges) Amendment Bill — Second Reading 
[Volume:646;Page:15445] 
Hon DAVID PARKER (Minister of Energy) 
: 
 I rise to speak in support of the Electricity (Disconnection and Low Fixed Charges) Amendment Bill and I thank National members for their indication that they are going to support it. The bill has two main parts. The first relates to amending the definition of “low-use consumer” for the purpose of the low fixed-charge tariff option. I would not want to overstate the benefits that that tariff option confers upon low users of electricity who can opt for a lower fixed-charge option. Rather than choosing a higher fixed-charge option and lower variable costs those electricity users can chose a low fixed-charge option and higher variable costs for the electricity that they use where that is to their benefit. 
The rules as they are now—before this bill—confer additional benefits to the areas in the country that are warmer and as a consequence do not have to spend as much on heating as colder districts. The effect of that for example is that more Auckland consumers on average benefit from the low fixed-charge option than Invercargill consumers notwithstanding the fact that in some ways the Invercargill consumers need the low fixed-charge option more because they live in a colder part of the country and therefore have to spend more on average on heating and they have higher electricity bills. It is rather unfortunate that the rules as they currently stand apply the same threshold for the low fixed-charge option across the country and do not differentiate between different parts of the country based on average use that reflects how cold it is in different parts of the country and how much people have to spend on electricity. 
This bill fixes that problem by creating more than one region within New Zealand for the purposes of the low fixed-charge option. It creates a regulation-making power under the legislation the Electricity Act 1992 which enables regulations to be promulgated that have that effect so that we have more equity in terms of the operation of the low fixed-charge option between Auckland and Invercargill to use the example I just referred to. This will be of benefit to low-quantity electricity consumers. The threshold is currently 8000 kilowatt hours throughout New Zealand. That threshold will in due course be lifted for some parts of the South Island where the low fixed-charge option is currently unavailable to some people because most people use more than 8000 kilowatts an hour which is the threshold. Most people in Invercargill would use more than that because it is colder and as I say they have to use more electricity to heat their houses. 
There are some other minor alterations in the bill. There is a power for the Minister to grant exemptions from the low fixed-charge option. This provision is directed to small isolated networks that are not connected to the national grid. For example on some of our offshore islands where there is a very small pool of customers paying for the network the cost of servicing those customers can be higher than is the norm for the larger grid networks in other parts. The provision enables those who are running power systems in those isolated areas to have an exemption from the low fixed-charge option because it is not practicable or fair to apply it in those areas. 
The other change that is made under the Electricity Act is that regulations can now be made to protect vulnerable consumers from inappropriate disconnection. We had the terrible situation last year where mistakes were made that led to the disconnection of someone who was in need of electricity for medical support and that is a situation that I do not think anyone wants to see happen again. At that time the Government found that it did not have a regulation-making power that would have entitled the Government to fix the situation; we were reliant upon voluntary efforts on the part of the electricity companies. The electricity companies in fairness to them have responded very well and unnecessary disconnections have decreased as a consequence of their looking again at what their rules and procedures should be surrounding disconnection. The electricity companies have done this under the guidance of the Electricity Commission which has developed guidelines that electricity retailers until now have adopted voluntarily. We were in the position where had that voluntary agreement not been secured we would have lacked the legislative power to fix it. 
Despite the fact that most people in New Zealand realise that it ought to be within the power of Governments to require electricity companies to do things in a certain way we did not have the ability to require it. Now it appears that these powers will not be needed to be used in the near future but it does seem responsible that the Government has these powers. If in the future regulations are necessary to protect vulnerable consumers who might need electricity to maintain electrical devices they need for their health for example it seems appropriate that the Act should include regulation-making powers to enable the Government to make those regulations. 
I thank the Commerce Committee for its consideration of the bill and I thank the other parties who are going to support it. The committee was unanimous I note in its report back and the only change made to the bill was a minor one. I look forward to the passage of this bill. Thank you.