Mahuta Nanaia: Electricity Industry Bill — In Committee 
Mahuta Nanaia: Electricity Industry Bill — In Committee 
[Volume:667;Page:14166] 
Hon NANAIA MAHUTA (Labour—Hauraki-Waikato) 
: 
 I rise to speak to Part 3 subparts 1 and 2 which allow lines companies to retail in their local areas. If this part was considered in and of itself I can see that a number of elements would be very attractive to lines companies. In fact I expect that many lines companies will welcome the opportunity to retail in their particular area. 
I will comment briefly on what that landscape will look like. The primary motivation obviously for lines companies who get into this will be to deliver back a benefit to their shareholders many of whom are electricity users. Some companies will see quite a strong motivation to get involved and ensure that the benefits not only go back to their shareholders but strengthen the infrastructure within their local areas. 
My colleague Damien O’Connor spoke earlier and made the point that this part could well be a benefit to and opportunity for rural communities. I expect that it could be but it will not be through increased competition in some of those areas; it will be because there is a strengthening of the role of lines companies. In Hamilton for example I am sure the same could be said: energy networks will relish the opportunity to retail in that area. More significant I can see that they will invest back into infrastructure. Lines companies are critical to ensuring that local infrastructure is invested in and is strengthened to be able to deliver electricity to households. In fact again they could actually be the critical part in ensuring that hospitals have improved infrastructure in their areas as well. 
If this part was considered in and of itself I can see that a lot of benefits and opportunities could be delivered to the consumers who are also shareholders of particular lines companies. However—and this goes to the substantial debate—nothing in the Electricity Industry Bill deals with the issue of fairness to consumers. We have raised that issue consistently through the debate and we believe that the Government should recognise it. Overall there is a huge differential between domestic and industrial tariffs and there is a huge differential in terms of the increases on domestic households. We know that there is pressure already on their household prices and the bill overall does not address that. We would like the Minister in the chair the Hon Dr Jonathan Coleman to simply respond in terms of showing how the bill will address these types of differentials ensuring fairness exists in the market and explaining in some detail how competition will deliver back a benefit to the domestic consumer. That is the nub of what this bill will be tested on—whether it will deliver those types of benefits. 
As I said overall there can be a lot to gain from increased retail competition but we should not see it as the answer because it exists within a wider matrix of changes that the Government is introducing. Those changes do not address the issue of environmental sustainability of electricity generation do not address the issue of fairness to consumers in terms of pricing and do not give any sense about whether the Government will show leadership in tackling the huge differentials between domestic users and industrial users. We think that that will become the litmus test for reform in the electricity sector. 
More important going forward the Government has not signalled either in the draft energy strategy or the Energy Efficiency and Conservation Strategy what it will do to continue to show leadership in investing in renewables. We put that major challenge to the Government to ensure we will have a future where we rely more on renewable energy rather than on thermal generation. Also in the area of security of supply I think it is notable in this part of the debate that the Government has increased the effort in terms of investing in the upgrade of the grid through Transpower. I definitely applaud that investment; I think it is long overdue. 
I come back to Part 3. As I said Part 3 cannot be considered in isolation from the whole bill. Overall the bill will be tested on the areas I described. It will afford opportunities to particular lines companies; I do not doubt that. I think those lines companies can see the advantages in playing a strengthened role in the retail sector which will deliver some gains to their shareholders who can also be consumers. It will also reinvest back into the lines network and infrastructure but lines companies have been doing that. 
My colleague Clare Curran raises a very important point about ensuring that lines companies are part of the broader roll-out of broadband but that brings its own difficulties. We do not want to get to a situation where when we are looking for an integrated seamless roll-out of broadband we have no strategic overview of how it will work in practical terms across different lines companies especially when we are talking about the roll-out of rural broadband. There are resource management issues that need to be addressed I suppose and there will also be some more technical aspects of that particular task to consider. 
Notwithstanding the issues I have raised a number of challenges and pertinent questions have been put to the Minister by members of the Labour team. Although the Minister in the chair may not be able to respond I hope the questions are being noted so that when the responsible Minster sees fit to respond to those questions he is able to do so. We believe that at the end of the day the litmus test for this bill in terms of the structural reforms and the governance solutions it is proposing will be whether it delivers cost benefits to domestic consumers lessens the differentials between domestic consumers and industrial consumers and ensures predictability of pricing over the long term. 
I hope and I sincerely believe that the Government will think about showing leadership in terms of the sustainability of electricity generation in our country because that leadership is sadly missing. Fairness is missing in this bill and it needs to be addressed if the Government is serious about the issues that matter to New Zealanders. What hurts people in the pocket will be the real test. Electricity prices are far too high—far too high—and it cannot continue.