Fitzsimons Jeanette: Third Readings 
Fitzsimons Jeanette: Third Readings 
[Volume:620;Page:16122] 
JEANETTE FITZSIMONS (Co-Leader—Green) 
: 
 It always amazes me that people like the member who has just resumed his seat believe that we should blame climate change on the Chinese because there are a lot of them even though each one of them on average produces about one-fifth as much greenhouse gas as that member and other New Zealanders. It appears that there is somehow a view that because we are small and in the South Pacific a tonne of coal burnt here will not have the same environmental impact as a tonne of coal burnt in China which is of course nonsense. These five bills are part of a long-term repeated hugely expensive and complicated fix-up of the destruction of our electricity system for which consumers have paid and paid and paid in terms of higher prices of loss of reliability of loss of service of loss of democratic rights and of loss of any help in managing their own power use for the very dubious benefit of phoney competition among the power companies. It was not much of a deal that the previous National Government foisted on this country. 
I am no fan of the old New Zealand Electricity Department. It built the Clyde Dam which produced the most expensive electricity ever in this nation and compared with anything we may build now it wasted a large proportion of our Maui gasfield by burning the gas in power stations at 30 percent efficiency putting the rest of its energy into the river and the sky. The department built 40 percent overcapacity in the 1970s which was a big waste of public money and it tried to build nuclear generation. But what it had going for it was that there was an integrated system. The department had a model for dispatching the next-most efficient and cost-effective power station in order to meet demand and it had models for back-up capacity. It was able to make rational economic choices between whether to invest in transmission or in generation in order to solve a particular problem. It was under one roof it was capable of taking a whole-system integrated view and that is what we have lost. That is all gone. 
The heart of the competitive model is the concept of never letting the left hand of the electricity system know what the right hand is doing. The consumer has to pay enormous additional costs: the costs of running the market of the lawyers of the people who play the computer games and bid in order to try to game the market and of the court cases as the consumer-owned Transpower and the consumer-owned Meridian Energy sue each other. There are the costs of not one but seven expensive boards and of the chief executive officers and corporate structures for seven entities where once upon a time there was one. And the same consumers have been bought and sold like cattle by those power companies. It is obvious that in this industry competition does not work well. We are working in an industry that has major resource constraints that makes a product that cannot be stored and has to be dispatched instantly and that is highly weather dependent. What we now have instead of competition is a set of virtual regional monopolies. 
The electricity industry was supposed to work through self-regulation. Two and a bit years ago I told the Minister that I did not think it would work. The Greens supported the previous electricity legislation because something had to be done. We said that because self-regulation would not work the Government had to make sure that there was a back-up regulator. There was a back-up for a regulator provided. I predicted it would be used and now it is being used. It would have been much better to provide for the Electricity Commission in the legislation 2 years ago but the Minister wanted to try self-regulation. He was the Minister and he was entitled to do that. But what we are doing now is setting up a huge and expensive structure to simulate the integration that we once had in the industry. We do need the commission and this enormously expensive structure because now it is just about impossible to go back to the integrated system which would have been much better. That is why the Greens support this legislation although we have reservations about the way it works in practice. 
The commission’s job is to give effect to the Government policy statement on electricity and gas. The policy statement is largely good. It stresses important things like security and reliability fair prices energy efficiency environmental sustainability demand-side participation in the market distributed generation and investment in renewables—all things that I would put in it myself. There is a huge amount of work for the commission to do and there are some worrying signs. The commission does not seem to be interested in consulting consumers other than the big consumers in the Major Electricity Users Group. The Government policy statement states the commission must take into account the needs of consumers but I do not see it being very consumer focused at all at the moment. 
The commission is intended to ensure that investment is efficient and the first big test of that is now looming over the next year. It is shaping up to be a bit of a disaster. One of the most serious threats to energy security in New Zealand is transmission constraints. We have had times when water has been spilled because electricity cannot be dispatched over the wires as they are already full yet in other parts of the country we are burning fuel that is scarce and expensive. Something has to be done to deal with the transmission constraints. There have been calls for major transmission upgrades which will cost billions of dollars if they are all carried out. That is a huge cost on the whole economy so we have to make sure that that cost is the most efficient way of proceeding. 
 Now for a number of years we have been shown another way of proceeding by Orion the lines company in Christchurch—and may I say a publicly owned lines company in Christchurch—which has staved off new transmission investment for years and has provided complete security for its customers through distributed generation peak-load shifting and greater efficiency of end use which means that the lines have been running at below their capacity even while demand has grown. Orion has demonstrated the principle of least-cost planning which has been accepted in sensible electricity markets around the world for at least 20 years since I first read about it and maybe for longer than that. That principle means that there needs to be a proper study of the costs of a transmission upgrade versus the costs of putting in distributed generation on the other side of the constraint along with load shifting and greater efficiency in order to achieve the same outcome. 
That is the job of the commission. The Government policy statement indicates that the commission must promote efficient investment in transmission or transmission alternatives at least cost. It must provide a statement of opportunities to identify the potential for transmission alternatives and provide incentives for least-cost options including energy efficiency and demand-side management. So what is happening? There is a deadline imposed of 11 months from now for approval for the initial grid upgrade. That is across the country—the transmission upgrades. So Transpower can spend years—and has done—in coming up with proposals for grid upgrades dump them on the commission and the commission then gives the other players weeks or at the very best a few months to put together the alternative options. That is a highly technical and sophisticated process. There is no help for the development work. It requires gold-plated performance guarantees for peak demand reduction but gives no credit for kilowatt hours reduction. It has to provide its own monitoring and verification. The commission has to dance to the Transpower tune and it has to dance with frantic speed. In fact all the cards are stacked against any least-cost options any demand-side management or any load shifting—which incidentally is also the most environmentally sustainable way to go. 
We must avoid the temptation to perpetuate in the commission the “think big” that the New Zealand Electricity Department indulged in and that the current market players indulge in and move into the 21st century of locally distributed primarily renewable generation that is capable of meeting our essential needs by being reliable efficient and greenhouse friendly.