Adams Amy: Electricity Industry Bill — Second Reading 
Adams Amy: Electricity Industry Bill — Second Reading 
[Volume:665;Page:12486] 
AMY ADAMS (National—Selwyn) 
: 
 I am happy to take a call this evening on the Electricity Industry Bill having been part of the Finance and Expenditure Committee that had the pleasure of working through the process in respect of this legislation. 
The electricity sector is a key part of our country not only of our economy but also of our household sector. I think it is worth recapping that the reforms in the bill arose from a ministerial review into the performance of this sector. That review came about because there was widespread concern amongst New Zealanders about prices security of supply and issues with the governance of the sector. It is also worth noting that the ministerial review was aided by an exceptional technical advisory group. The work that that review panel did laid the foundations for the bill we have before us. 
The key findings were that there were price rises particularly in some sectors well outside what could be justified. In particular the margins in the residential power price sector were much higher than could be reasonably expected. The review looked at the question of the adequacy of the new generation capacity. It found that New Zealand had a particular vulnerability to dry years and consumers were being repeatedly asked to go through public conservation programmes to make up for the failure of the electricity sector to adequately manage that vulnerability. The other key finding was that the Electricity Commission was trying to juggle too many balls and it was not sufficiently focusing on the key aspects of its role. 
With that in mind I say that the Electricity Industry Bill has come before us. I think the select committee process was valuable and the committee came up with some important improvements to the bill. One improvement I want to touch on relates to the work we did to make sure that the mechanics of the assets swap in terms of the transfer of Tekapo A and Tekapo B from Meridian Energy to Genesis Power would work properly and ensure in particular that third-party users of the Waitaki River system would not be detrimentally affected. There was considerable concern about ensuring that moving from dealing with just Meridian to dealing with Meridian and Genesis would leave the Waitaki irrigators in no worse a position. We understand and accept that they have issues remaining to deal with but they were outside the ambit of this bill. Our concern was to ensure that nothing to do with the asset transfers would put any party in a more difficult position in terms of resolving those matters. I think we have come to a good place there. 
We also did a lot of work around some of the technical aspects of governance including looking at some of the issues like the necessity for by-elections upon the retirements of trustees of consumer trusts and the like in order to ensure that we have a good balance between consumer protection and unnecessary cost. 
One of the other key changes that the committee recommended is increasing the threshold before lines companies are required to undertake corporate separation between their lines company business and the generating/retailing aspects of their business. The bill always had a threshold for that. There was considerable concern from submitters that that threshold was so low that it would defeat the objective of getting lines companies back into the game. We took that on board and we recommended that the threshold be increased. Certainly it is good to see the Minister take that on board. 
In closing my brief contribution tonight I want to mention some of the comments we have seen in the mainstream media on the reforms. The  
Press 
 editorial from my own part of the world commented: “Changes made by Labour did little to improve the sector and if anything worsened it.”—and I think we can all agree with that. It continues: “The signs are that the package may well deliver more competition and the prices will be more stable. These reforms should be effective in better meeting the aims of an efficient market.” Interestingly enough we have Jeanette Fitzsimons blogging: “The Government’s moves to make the power retail market more competitive are good”. That is strong praise indeed from Ms Fitzsimons. Consumer New Zealand’s chief executive said: “I think the asset swap—both the physical one and the virtual swap—will mean they will no longer be just competing in the regional area they are generating in but will have to go nationwide.” 
I think we will see from the reforms in this package a better-organised sector a better-governed sector more competition and at the end of the day a better outcome for the users of electricity which is what this is all about. I am pleased to commend this bill to the House. Thank you.