Okeroa Mahara: Electricity (Disconnection and Low Fixed Charges) Amendment Bill — Third Reading 
Okeroa Mahara: Electricity (Disconnection and Low Fixed Charges) Amendment Bill — Third Reading 
[Volume:646;Page:15600] 
Hon MAHARA OKEROA (Minister of State) 
 on behalf of the  
Minister of Energy 
: I move  
That the Electricity (Disconnection and Low Fixed Charges) Amendment Bill be now read a third time 
. This bill will assist domestic electricity consumers. The bill really has two parts and purposes. Clause 4(1) of the bill amends the definition of a low-use consumer set out in section 172B(2) of the Electricity Act 1992. This will allow regulations to be made that will enable a greater number of low-use consumers of the lower South Island to benefit from a low fixed-charge tariff option. This part of the bill will also extend the Minister’s powers to grant exemptions from applications of the regulations to electricity distributors or retailers. This change is directed at small isolated networks that are not connected to the national grid where the cost of servicing customers can be far higher than is normal for grid-connected networks. This exemption is not automatic but is subject to an application verifying that because of the small size of the network and its position a low fixed-charge tariff would not be beneficial to all consumers overall. 
The low fixed-charge regulations were introduced in 2004 with the purpose of assisting low-use domestic consumers and to encourage energy efficiency. Prior to the introduction of the regulations low-use consumers in many areas faced unreasonably high fixed daily charges for their limited or low electricity usage. The introduction of the regulations provided these low-use consumers with a tariff option that was more equitable for low energy usage and was compatible with the Government’s energy efficiency objectives. The regime particularly benefits small low-use households including older people on fixed benefits by lowering their fixed energy costs. These regulations require electricity networks and retailers to make available a low fixed-charge tariff option to all domestic consumers whom they service and who have consumption rates at their primary dwelling of less than 8000 kilowatts per annum. This bill alters the definition of a low fixed-charge consumer from a fixed threshold of 8000 kilowatts currently defined in the Act to a definition to be provided in the regulations so that the different regional locations and averages can be used. 
Once the bill is passed the Minister will finalise new regulations that are currently under development which will address any inequality currently being experienced by South Island electricity consumers. At the moment 52 percent of households in and to the north of Auckland are on a low fixed-charge tariff whereas only 9 percent of households in and to the south of Christchurch are on the tariff. Many in the lower South Island are missing out on the opportunity to take advantage of this rate of low electricity due in part to the colder weather in these regions. The benefits although not large are material for some people. These new regulations will set the lower South Island threshold at 9000 kilowatts which is the average domestic consumption level for this region. 
The second part of the bill responds to concerns about the disconnection practices of electricity retailers particularly in relation to vulnerable consumers. The bill amends the Electricity Act so that the regulations can be set if electricity retailers do not follow the new disconnection guidelines developed by the Electricity Commission. The revised guideline on arrangements to assist low-income and vulnerable customers contains significantly improved arrangements in relation to disconnection of vulnerable consumers. Significant improvements include retailers first reporting on compliance annually and explaining any non-compliance; second having a process for identifying vulnerable customers; third ensuring that disconnection notices contain information on where to obtain assistance and details on the costs of the disconnection; fourth ensuring that all reasonable efforts have been made to contact the person including at least one visit to the premises if necessary prior to disconnection; and fifth providing suitable training to staff and contractors interacting with consumers on overdue bills or involved in identifying vulnerable consumers. Further retailers are compelled to follow a process to obtain the authorisation of consumers to consult the Ministry of Social Development prior to disconnecting any vulnerable consumer and not to disconnect any consumer who is dependent on electricity for critical medical support. The revised guideline places responsibility on electricity retailers to identify vulnerable consumers and then consult Work and Income prior to disconnecting their power supply. 
To give effect to the revised guideline Work and Income together with the Electricity Commission and electricity retailers developed a set of business processes that would guide how they work with one another to support vulnerable and low-income consumers. These processes were implemented in October 2007. There has been ongoing communication between Work and Income the Electricity Commission and retailers to ensure these processes work for all stakeholders and ensure low-income and vulnerable consumers have access to all of the support available to them. This bill will enable regulations to be made that may regulate for arrangements regarding the process for disconnection following non-payment of accounts re-connection billing information and processes for alternative payment options such as smoothed payments the redirection of income and debt recovery and the process for identifying— 
Phil Heatley 
: Well the member can read anyway. 
Hon MAHARA OKEROA 
: —I cannot say that for the member; I will put him as being part of the illiterate—consumers who would be at risk if their electricity was disconnected. The regulation-making powers in the bill will act as an important backstop if the voluntary process proves to be ineffective. 
The Minister has been pleased with the attitudes shown by retailers regarding disconnections over the last 10 months. The number of disconnections has dropped significantly and steadily from between 5000 to 6000 per month to 1000 to 2000 per month. The Electricity Commission has reported that retailers have been fully compliant with the guidelines. The commission will continue to monitor retailers’ compliance and publish disconnection statistics on its website. The Minister’s expectation at this time is that regulation-making powers will not need to be used but their existence will act as a deterrent for the industry against reverting to its old ways. 
In conclusion I would like to commend the Commerce Committee for its work on the bill and I also thank those who made submissions on it. This bill has widespread support from within Parliament and also from the outside. I commend the Electricity (Disconnection and Low Fixed Charges) Amendment Bill to the House and move that it be now read a third time. Thank you Madam Assistant Speaker.