Dowie Sarah: Electricity Transparency Bill — First ReadingText is incorporated into the Bound VolumeDowie Sarah: Electricity Transparency Bill — First Reading[Sitting date: 02 December 2015. Volume:710;Page:8519. Text is incorporated into the Bound Volume.]SARAH DOWIE (National—Invercargill): Thank you Mr Assistant Speaker for the opportunity to speak on the first reading of the Electricity Transparency Bill sponsored by the member opposite Mr Shearer. I rise in opposition to this bill. The way that Mr Shearer describes this bill certainly on the face of it more transparency sounds like a good idea but at the end of the day I think that this bill is misconceived. The question really is why this so-called extra transparency is needed. What is it actually trying to achieve? What is the problem that this bill would solve and if this bill was passed what would be the effect on the electricity market—in particular retailers in the industry? The Government maintains that although this bill may be well-intentioned it is misguided for a number of reasons and I will come to outline those shortly.What the bill aims to do is to bring into the market a specific mechanism—that is itemised billing—so that all electricity retailers must include on every electricity bill sent to the consumer a breakdown of what part of the bill is attributed to the generator the distributor and the retailer plus the GST component and any Government levies. Paying electricity bills is not fun for anyone especially if you live down south—but I do note that Invercargill reached 28 degrees today so it is not all doom and gloom in the winter down there—but it should be noted that residential electricity prices fell by 1.4 percent in the June 2014 quarter—Hon Member: How much?SARAH DOWIE: —1.4 percent and that is the biggest drop since 2001. But in the grand scheme of things seeing a breakdown of costs in isolation is actually not that helpful. It is when the change in cost that rise or fall is seen that is the important distinction.How these changes are communicated to customers is what is important. Within our electricity sector we do not want to start a blame game between the generator the distributor and the retailer because that is simply unhelpful. Recently the Electricity Authority—which again is independent and charged with promoting competition in the reliable supply by and the efficient operation of the New Zealand electricity industry for the long-term benefit of consumers; that is of consumers—looked specifically at the issue of transparency of electricity charges. After considering submissions from both consumers and the industry the authority decided not to proceed with a standardised template of electricity bills. The reason it gave for not having prescription was that it would stifle innovation and it would reduce the flexibility to tailor offerings to different customer needs and adapt to changes over time. Bespoke pricing is a case in point; developing and grouping options for a particular type of consumer for their benefit which also gives the retailer a competitive point of difference is a made-to-measure approach.If retailers have to report prices in a standardised way it will be difficult to do and it will be costly administration-wise and that cost—to go through this detail and break down the information—will ultimately be put back on to the consumer. So the effect of standardisation may be that retailers would move away from bespoke options to a more one-size-fits-all type of product. As I said before those administration costs of having to break all those details down will be passed on to the consumer.Bundling of services—such as electricity services with say telecommunications and broadband or gas such as TrustPower has done—gives the retailer a competitive advantage but suits classes of customers and that is another way that the industry has innovated in providing this. Bringing in a prescriptive measure of reporting for billing as this bill would do—a certain way of reporting one’s accounts—reduces the flexibility of the retailer to make such offerings as TrustPower has done and having that bundling of services has proved very popular with consumers. We do not want to restrict retailers’ ability to think outside the square and then pass that on to consumers.Another example is the advancement in the way companies communicate with customers. If Parliament starts adding a layer of prescription as to how communications are supposed to occur with consumers in a certain form in a prescribed way again it stifles innovation. If you look at the evolution of technology and at for example our iPhones the apps on our phones that are providing information have absolutely advanced. So retailers may be able to provide some sort of information via an app or using pie graphs or pie charts. A picture paints a thousand words and this presentation in this way may in fact be more meaningful to a customer than a standard itemised bill.So this type of prescription does not take into account how quickly the scene in the electricity market or its structure can change especially if people move to self-generation for example by way of solar or wind and how their generation will or will not be incorporated into the grid. We cannot foresee at this stage how the electricity industry and its structure will change with those advances in technology and with electricity generation becoming more accessible.The other thing I want to touch on is that this bill wants consumers’ accounts to detail in percentage terms the amount of renewable energy used so that consumers can make an informed choice as to their electricity use. Companies are already using a percentage of renewables in their own marketing campaigns and this information does not need to be accessed via a bill or an account. It is on the internet and as I said before different companies are using it to attract their customers through their marketing brand and holding themselves out as renewable providers and being responsible users of the environment. Meridian Energy is an example of that. It advertises that it has 100 percent renewable generation.So although this bill has good intentions the Government believes that it is misguided. It is restrictive and it is far too prescriptive. It does not solve an issue; instead it would prevent innovation and evolution in the industry. It would not at the end of the day be good for consumers and therefore I do not support this bill.