Parker David: Electricity (Disconnection and Low Fixed Charges) Amendment Bill — First Reading 
Parker David: Electricity (Disconnection and Low Fixed Charges) Amendment Bill — First Reading 
[Volume:640;Page:10797] 
Hon DAVID PARKER (Minister of Energy) 
: 
 I move  
That the Electricity (Disconnection and Low Fixed Charges) Amendment Bill be now read a first time. 
 At the appropriate time I intend to move that the bill be referred to the Commerce Committee. 
This bill responds to recent concerns about the disconnection practices of electricity retailers particularly in relation to vulnerable consumers. It is designed to ensure that the Government can if necessary regulate the content of the disconnection guidelines that have been recently developed. This bill amends the Electricity Act 1992 as the Act does not currently contain sufficient powers to regulate disconnection processes or to regulate the full content of the guidelines. The bill also amends the regulation-making power in the Act relating to consumer contract terms because at present the Act requires retailers to include only the regulated matters in their contract. Once retailers have done this they have complied with the regulation. If they breach their own contract they are not breaching the regulations so they are not subject to the penalty provisions in the Act. 
The Electricity Commission has been working with electricity retailers Government ministries and social agencies to develop new guidelines for dealing with disconnections. Retailers have been given the opportunity to follow the guidelines and this bill will allow for the content of the guidelines to be regulated if retailers fail to adhere to the guidelines voluntarily. The new guidelines will ensure that consumers having difficulty paying their bills are advised of the assistance available from community service providers and Government agencies. The guidelines will also protect vulnerable consumers and those reliant on electricity for medical equipment that maintains life. 
In summary this part of the bill improves the ability to regulate for arrangements regarding the process for disconnection following non-payment of accounts for reconnection for billing information and processes and for alternative payment options such as smooth payments redirection of income and debt recovery. The bill also regulates for the process of identifying consumers who would be at risk if their electricity were disconnected and includes proposals relating to mandatory terms and conditions for the supply of electricity and line function services by electricity retailers and distributors. 
The bill consists only of regulation-making powers. It does not alter any of the existing processes or requirements in the Electricity Act relating to the making of regulations. Under the Electricity Act 1992 regulations or rules can be made only if they implement a recommendation from the Electricity Commission. The Electricity Act requires the commission to satisfy itself that other options such as voluntary arrangements are unlikely to achieve the Government’s objectives. Nothing in the bill overrides the Privacy Act either. 
I have been encouraged by the attitude of retailers who have dedicated time and resources in recent weeks both internally and with the Electricity Commission to ensure that their processes are adapted to prevent any repeat of the events in May. I am confident that they are willing to follow the guidelines. The regulation-making powers that the bill will create are important as a measure of last resort to enable regulations to be made to ensure that Government objectives are met. 
The bill also addresses specific concerns around the regulations for the low fixed-charge tariff options for domestic consumers. The low fixed-charge regulations were introduced in 2004 with the purpose of assisting low-use domestic consumers and encouraging energy efficiency. Prior to the introduction of those regulations low-use consumers in many areas faced unreasonably high fixed daily charges for their limited or low electricity usage. The introduction of regulations provided these low-use consumers with a tariff option that was more equitable for low-energy users and compatible with the Government’s energy efficiency objectives. 
At present these regulations require networks and retailers to make available a low fixed-charge tariff option to all domestic consumers whom they service who have consumption at their primary dwellings of less than 8000 kilowatt hours per annum. That same 8000-kilowatt-hour threshold is used across the entire country despite the reality that in colder parts of the South Island the average power use is higher in large part because the climate is colder and there is little reticulated gas. Analysis of average consumption data shows that an adjustment to the low fixed-charge eligibility threshold of 8000 kilowatt hours per year is warranted because far fewer consumers are on a low fixed-charge tariff in the lower South Island than in other parts of the country. For example in Auckland and the north currently over 52 percent of domestic consumers are covered by the low fixed-charge tariff whereas in the lower South Island being Christchurch south and excluding Westland that figure is only 9.2 percent. 
The bill alters the definition of a low fixed-charge consumer from being a consumer with a fixed threshold of 8000 kilowatt hours as currently defined in the Act to being a consumer under a definition to be provided in regulations so that different regional locations and averages can be used. Subsequently the regulations will be changed to set that threshold in the lower South Island from Christchurch south and excluding Westland at 9000 kilowatt hours which is the average domestic consumption level for that region. This will enable a greater number of lower South Island consumers to benefit from having a low fixed-charge tariff option. I do not want to overstate the benefits here. The differences between the tariffs are not huge but they are material for some low-income consumers. 
Another change in the bill is the extension of the Minister’s powers to grant an exemption from the application of the regulations to electricity distributors or retailers. The change is directed at small isolated networks that are not connected to the national grid. In these small isolated networks the cost of servicing customers can be far higher than is the norm for grid-connected networks and in such circumstances the compliance requirements and business costs of administering the low fixed-charge tariff can be excessive. This has the potential to affect the economic viability of these small isolated networks. In this circumstance it may be more equitable to exempt the entire network from having that low fixed-charge tariff requirement so that the proposed amendment enables such networks to apply for an exemption. The amendment is required because the existing wording in the Act allows for only a subset of customers within the network to be exempted not the entire network. Thank you Mr Deputy Speaker.