Copeland Gordon: Electricity and Gas Industries Bill — First Reading 
Copeland Gordon: Electricity and Gas Industries Bill — First Reading 
[Volume:613;Page:9831] 
GORDON COPELAND (United Future) 
: 
 I rise on behalf of United Future to support this bill on its first reading. It is important legislation in that it addresses in a clear and consistent manner several problems that have arisen in the electricity sector. We may not agree with every detail but it is good to see the Government taking such bold and decisive steps with an issue as important as energy infrastructure and supply. Dithering is really not an option particularly with regard to the medium-term security of New Zealand’s electricity supply. I agree with Gerry Eckhoff when he says that we are facing in the near future—over the next few years I think—a grave risk of the demand for electricity outstripping supply. We certainly must do all we can as a Parliament to try to ensure that that does not happen. I think we also have to appeal to the people of this nation to stand together in solidarity and clearly face the fact that we will be short of electricity. We need therefore to come together as a nation and determine a way through this situation. This is not a time for provincial or parochial attitudes; this is a time for us to pull together. We will either pull together on this one or sink together I greatly fear. 
United Future’s policy in principle is to support a free-market model for the New Zealand electricity industry. However as a party of common sense we know we cannot cling to free-market preferences on a purely ideological basis regardless of verifiable facts. Indeed I understand that it was after the Californians completely deregulated that blackouts started and they have gone back to regulation to put that situation right. We understand that in the real world of practical policy outcomes things do not always work out as well as they should in theory. For this reason we are pragmatic enough to accept a compromise based on the adage of as much market as possible and as much Government as necessary. Security of supply stability of price clarity and consistency of regulation are all essential to New Zealand’s economic growth and social well-being both now and into the foreseeable future. 
The facts speak for themselves. We have had two electricity shortages in the past 4 years. We are confronted with scientific projections from both the public and the private sectors that show a looming and serious shortage of readily available gas supplies upon which a large proportion of our electricity generation capacity over the last 15 years or so has relied. Probably the most important part of this bill is the provision for the Electricity Commission to contract for reserve electricity. Provision of reserve capacity to ensure that New Zealand has secured its supply—even in a one-in-60-years dry year—is vital for our economic stability particularly for major industrial investors. It is also vital for the peace of mind of our most vulnerable citizens and I am thinking here particularly of say elderly people living through a South Island winter. The fact is that a shortage of electricity affects all our lives in a multitude of ways. 
That is not to say that the reserve capacity scheme is the only way or even maybe the best way to deal with the problem but it is at least a robust well-analysed way that should not result in too many extra costs for the average consumer. There are few other strategies that can meet those benchmarks at present. 
We will be watching with interest the submissions to the Commerce Committee with regard to the emphasis the bill should have on ensuring that adequate hedge contract options are available for commercial electricity users. We are also interested in strengthening the regime for the holders of guaranteed electricity supply contracts such as Comalco to be able to conserve electricity during a dry year then on-sell on the spot market the electricity it has saved. A market-based electricity-savings regime is something we view favourably and we are interested to see to what degree submitters think it could at least reduce the amount of reserve capacity that the Electricity Commission has to have available. 
 Another preliminary concern United Future has about this bill is the level of regulatory power being given to the Minister of Energy. Although we are pleased to see that the Minister can act only on recommendations from the Electricity Commission we are not so pleased about all the exceptions to the rule. For example the Minister may decide not to act on that recommendation or may defer for any period making a decision on the recommendation. We will be watching the submissions to the select committee for suggestions about those things as well. 
One aspect of this bill that United Future is unreservedly pleased about is the inclusion of efficiency in the objectives of the Electricity Commission. That alone provides us with some confidence that the new regulations will not be allowed to become an unnecessary burden on New Zealand’s economic growth but will instead be of assistance in that respect. 
We are also pleased to see the backstop regulatory powers regarding the gas industry. It is good to see that the gas industry itself will be given an opportunity to create its own industry rules as the electricity industry was. But failing that a regulatory regime for the gas industry that integrates with the new electricity regime will be a positive step forward. 
Overarching complaints about resolution systems for both the electricity and the gas industries are also a positive step. It is vital that ordinary household energy consumers have an overarching complaints regime to which they can voice their concerns. I add as an aside that right now I am the meat in the sandwich of a battle between Genesis Energy and Contact Energy about who will pay to shift a meter at my house that has been incorrectly installed. I am about to take a personal complaint to someone to ask how I can get that meter shifted 12 inches and who will pay for it. I have so far been dealing with the matter for about 4 months. That is a personal anecdote illustrating why we need to have some organisation with the authority to say: “Look guys sort it out and get on with it.” In addition earlier this year I had a bill from Genesis Energy for $4500 worth of gas that it said I had consumed in 6 weeks. My personal experience in 2003 of the energy industry has not been very positive. That is the second problem I have had. 
That is not to say the bill provides all the answers to New Zealand’s energy problems. Even as it provides us with the means to move forward and address energy issues such as security of supply the Government may be pushing us backwards in other areas. For example an obsession with alternative energy supplies such as wind and the delays and uncertainties around a carbon tax under the Kyoto Protocol together with the uncertainty about whether Russia will sign that protocol mean that we may be unnecessarily delaying the proper use of our abundant coal supplies—a concern that Gerry Eckhoff has already mentioned. There is also an obsession with maintaining the exact configuration of the conservation estate—a preservation mentality rather than a land resource issue mentality—which means that promising new hydroelectricity generation schemes such as the proposed Dobson dam scheme are stopped before they can begin. The Resource Management Act has also in some cases proven to be a barrier to electricity generation. 
However that said the Minister of Energy is to be congratulated on the Electricity and Gas Industries Bill. It provides a robust regulatory response to the problems facing the gas and electricity industries and appears to do so with due consideration to economic realities and to the need to keep regulations clear and compliance costs as low as possible. On that basis United Future has pleasure in supporting the bill and its referral to a select committee.