Boscawen John: Debate on Crown Entities Public Organisations and State Enterprises — In Committee 
Text is incorporated into the Bound Volume 
Boscawen John: Debate on Crown Entities Public Organisations and State Enterprises — In Committee 
[Sitting date: 29 June 2010. Volume:664;Page:12243. Text is incorporated into the Bound Volume.] 
JOHN BOSCAWEN (ACT) 
: 
 I predict that the coming year will be a record year for electricity generators owned by the State—a record year. I say that because I believe that Government-owned electricity generators Mighty River Power Genesis and Meridian Energy will make more money than they have ever made before. In 2 days’ time we will have the emissions trading scheme which will contribute substantial extra profits to the Government-owned generators—windfall profits not just to the Government-owned generators but to the privately owned Contact Energy and TrustPower. Why is that? In essence the emissions trading scheme makes electricity produced by burning coal and gas more expensive. 
Genesis with its Huntly power station will have to pay for the cost of the emissions given off from burning coal and gas in the production of electricity. The way the electricity market works is that the wholesale price is established approximately 80 percent of the time by Genesis. Genesis is usually the most expensive generator and when it is called on to produce electricity for the New Zealand market it sets the price. 
From 1 July Genesis will be able to increase quite reasonably the price of electricity. We have already seen electricity companies move to take advantage of that. The first of those was Mercury Energy. How interesting it was to hear Louise Upston— 
The CHAIRPERSON (Eric Roy) 
: The subject under debate is the estimates for Mighty River Power. If the member is bringing in other material he must relate it to Mighty River Power. 
JOHN BOSCAWEN 
: I am certainly bringing in things that are relevant to Mighty River Power. The emissions trading scheme will enable Mighty River Power to increase the price of its electricity and make super profits. We need look no further than the letter Mercury Energy sent to its customers at the end of May. Mercury Energy is a 100 percent - owned subsidiary of Mighty River Power. What does the letter say? It starts by saying that the Government’s emissions trading scheme will take effect from 1 July 2010. It goes on to state: “The ETS is a government imposed cost on all electricity production that emits greenhouse gases reflecting the volume of greenhouse gases produced by the electricity industry as a whole.” Later on the letter states: “This will result in an increase to the wholesale price of electricity and gas which will in turn increase the retail price of electricity and gas.” 
The critical words—for all New Zealanders—in that letter are the words “the electricity industry as a whole”. We heard Louise Upston say very proudly a few minutes ago that 90 percent of what Mighty River Power produces comes from renewable sources. It comes from the Waikato River and it comes from geothermal stations. What will Mighty River Power pay for the emissions given off by electricity produced from the Waikato River and the geothermal stations? Absolutely zero; nothing. The emissions trading scheme enables Mighty River Power to justify an increase of 3.3 percent when it incurs minimal extra costs. One might ask how that relates to Mighty River Power. Well it enables Mighty River Power to charge more for its electricity and make extra profits. 
As I said I believe that the electricity generators owned by the State will make more money in the coming 12 months than they have ever made before. Who will pay for that? The people of New Zealand will. How do I know that? Because the Prime Minister of New Zealand himself has said so. A headline in this morning’s  
New Zealand Herald  
states: “PM admits public face hefty ETS bill”. He acknowledges in the article that the people who purchase electricity from Mercury Energy—which is 100 percent - owned by Mighty River Power; 100 percent - owned by the taxpayers—will be paying more for their electricity. 
The Government has tried to argue that although a 5 percent increase in electricity prices was forecast by Treasury Mercury is actually increasing the price by less. We ain’t seen nothing yet. What will drive those increases will be Genesis and Contact Energy and particularly Genesis because it burns coal and gas. Genesis is sitting on a 1 million tonne stockpile of coal in Huntly right now—it is sitting there in reserve—and it will not have to pay for emissions on it.