Hodgson Pete: Estimates Debate — In Committee 
Hodgson Pete: Estimates Debate — In Committee 
[Volume:618;Page:14371] 
Hon PETE HODGSON (Minister of Energy) 
: 
 I thank the member for his comments and acknowledge his ongoing interest in the energy portfolio and his knowledge of it. He wanted to know whether I am happy with the situation and he wanted to know whether it has got better or worse. Well no I am not happy with the situation. 
I think the energy portfolio is quite a challenging one and I think New Zealand is going through an energy transition. When one tries to work out why that is one could say: “Oh we are trying to fix up the Bradford reforms and all of that.” but that will not do. The underlying cause of the energy transition we are going through is this: the Maui gasfield is running out. That gasfield had two characteristics. One was that it was very big. When it was discovered it was big by world standards. Even now it is big by New Zealand standards but it is running out. The second characteristic of the Maui gasfield was that the gas was cheap. The gas was cheap because when the contract was signed 30 years ago the price inflator on Maui gas was allowed to be half the price of inflation. So right through the 1970s and right through the 1980s the price of Maui gas was rising at half the price of what then was a very high inflation rate so that by now the well-head price for gas is NZ$1.80 or thereabouts a gigajoule. Let me just say that that is cheap. 
New fields are being discovered. The member is wrong to suggest that gas is running low—gas is not running low—but he is right to suggest that cheap gas is running low. There are new fields. Pohokura is one and McKee and Mangahewa are a couple of others that are running now. Dear old Kapuni does not seem to want to stop Kupe will be around in another couple of years and so on. Those gas fields especially Pohokura and Kupe will all sell their gas at a much higher price—maybe at twice the price; a 100 percent increase. So when the member says that we have price rises in electricity that is the underlying reason. There are others but that is the underlying reason. The future of electricity prices is not that they will return to where they were in the 1980s—they just will not. The member said we used to have an abundance of supply. We still do have an abundance of supply but we do not have an abundance of cheap supply and I invite the member to reflect on that. The cheap gasfield is gone and the cheap hydro sites have gone—we can use them only once. 
The member made a couple of other comments. He said that there is a bunch of things—he said there were four things and then he added a fifth or whatever it was—that he thought were important for energy. I would simply say that I roughly agree with that list. I roughly agree and I like the idea of security of supply at the top of the list. The member then went on to talk about incentivising conservation. I think probably he would prefer to use the language of incentivising energy efficiency because conservation tends to mean going without and efficiency tends to mean using the same amount of energy but smarter. I would say to members that this Government has more than trebled the effort into energy efficiency over the last 4 years. The budget has more than trebled. That is a very very significant increase and in the same breath much of it is still in front of us. There is still a lot of low fruit to pick in this country. 
The member instanced solar water heaters. He told us that Australia has a subsidy system for solar water heaters. So do we—New Zealand has solar water-heating system subsidies. In fact in the last Budget that quantum doubled. The amount of money put in was doubled. The idea is not to subsidise every household however. The idea is to grow quietly the level of solar water-heating installation by 30 to 40 percent a year until at some point—probably in the next couple of years—the number of units is so high that the price comes down and then the market transforms. At that point solar water-heating will become more available and affordable for many other people. So that is the gain there. 
Then the member went on to compliment the Government—and I thank him—on the 30c plus GST low fixed-charge option. He went on to say that the ACT party and the National Party had claimed this would mean rich people with baches would get cheap electricity and he asked what was good and socialist about that. Well of course they are wrong and the member is right. The ACT party and the National Party got it wrong and that is because they keep changing their energy spokespeople and they do not have people who understand the energy portfolio—unlike New Zealand First. 
I would say to the member that when he says that wind has only a small contribution to make at the moment he is right. But the potential for wind is around 3000 megawatts. Our total generation at the moment is around 8000 megawatts so let us not write it off. He talked about noise—I think he is wrong—and he talked about people not liking them. The member did not read the public opinion poll that was recently done by the Energy Efficiency and Conservation Authority which said wind was easily the most favoured generator in New Zealand. It went down to a lower level and asked: “But what if it is close to you? What if you can see it? What if you can hear it? What if you can see and hear it? How do you feel?” and still the level of support remained very high. So the member ought not to tell New Zealanders what they think about wind because we have just polled them and I think he should update his information. 
The member says we have a lot of coal and should be using it. Nothing stops us except price. Coal is more expensive than wind geothermal hydro or a combined-cycle gas turbine generally. Sometimes it is cheaper and if there is an existing plant that has already been paid for we should put coal in it by all means. That is why Huntly runs on coal. But generally speaking the reason we do not have a coal plant built in New Zealand is not that the Government has a law against it—we do not. It is just that it tends not to match the price that can be achieved by other forms of generation. 
Vote agreed to.