Parker David: Electricity Industry Bill — In Committee 
Parker David: Electricity Industry Bill — In Committee 
[Volume:667;Page:14172] 
Hon DAVID PARKER (Labour) 
: 
 Part 5 is the most ridiculous part of this bill. It forces one electricity company namely Meridian Energy Ltd to give up some of its power stations on the Waitaki River and transfer them to Genesis Power Ltd. That means that we will have less efficient use of the resource. 
Hon John Carter 
: Rubbish! 
Hon DAVID PARKER 
: “Rubbish!” we hear. It is absolutely clear that we will have less efficient use of the physical resource. Instead of having the coordinated use of that water sequentially through the different power generation facilities on the Waitaki system—from Tekapo through the canals through Ohau through Benmore through Aviemore and through the Waitaki system—separate owners will be running separate dams on that system. There will be coordination issues when it comes to the release of water. There will be different players having control of those different assets and they will have different views about what they should be doing with the water and when they should be doing it. 
There can be no more efficient use of that water resource than having it under the control of a single player. If our market is so inept and uncompetitive that we have to cause changes that will cause resource inefficiency in order to have more market competition then we have to conclude that the market is so fundamentally flawed that we should ditch it. 
It is ridiculous that we will use the resource for the generation of power less efficiently in order to get a more competitive market outcome. It is a nonsense that we will use our physical resource—that is the hydro resource—less efficiently in order to try to engineer some improved market outcome and this change was panned virtually universally by the submitters who came to the Finance and Expenditure Committee. Whether they were generators retailers industry commentators or experts in the operation of the electricity system they said virtually universally that this was crazy. Submitters said it did not make sense to use the physical water resource less efficiently in order to have a market outcome. If that water is used less efficiently it means that some of it will be used when it should not be. Some of it will be used when it is worth less and when it should be saved for use at the most crucial times. 
If our market is so uncompetitive that we have to contrive its improvement through the forced sale of assets in a nonsensical way from Meridian Energy to Genesis then we will ruin the Meridian brand which is currently 100 percent renewables in respect of its own generation. Why would the Government do that? I think the reason for that is bloody-mindedness. Gerry Brownlee is not standing up for renewables—and New Zealand has a magnificent advantage in renewable resources for our electricity generation. 
Gerry “Sexy Coal” Brownlee—that is what he called himself in that video before the last election—does not believe in renewables. I doubt that he believes in his heart that climate change is a real or proven threat to the world. He would rather see more thermal generation. In fact rather than celebrating more renewables he is always out there digging up a bit more coal trying to mine national parks or trying to bring forward gasification of coal or more sources of coal all of which produce greenhouse gas emissions—which are not produced by renewables. 
I know that the board of Meridian the chief executive of Meridian and Meridian staff think it is absolutely abhorrent that they are being forced to take thermal generation assets that produce greenhouse gas emissions. Meridian Energy has branded itself on being 100 percent pure and clean but Gerry Brownlee’s definition of 100 percent pure and clean is obviously similar to the view of the Minister of Tourism and he does not mind besmirching this brand by forcing this ridiculous obligation to take thermal assets. Gerry Brownlee then modified that obligation right at the end I think and said it could just put the water assets on Genesis but not require it to take the thermal. Is that correct? [ 
Interruption 
] I am not sure either. Perhaps another member can clarify that for me. But the idea that Meridian should even have to consider doing that was ridiculous. 
I return to the first point I was making. It is an absurd idea that this Parliament should legislate to reduce the most effective use of the Waitaki water for hydroelectric generation. It defies belief that the Government would be so stubborn as to persist with this ridiculous plan against the advice of virtually every submitter to the select committee. This measure will not reduce the tariffs for residential users. It will not narrow the overly large gap between residential and industrial tariffs in New Zealand. 
This legislation will not cure the problem of the higher tariffs that are paid by places like Alexandra which sits right next to the generating facilities on the Clyde Dam the Roxburgh Dam the Teviot scheme and all the other schemes in Central Otago. It will not cause the tariffs paid by residential consumers in Alexandra to be closer to those paid by consumers who are further away from the physical generation assets but who happen to live in the biggest centres of population. 
Part 5 will not fix that problem. Nothing in this part will substantially limit the price increases that consumers are facing. It will not materially improve competition and there is absolutely no justification for using the physical resource less efficiently in order to try to engineer some improvement in the market. In fact it is an acknowledgment by the Government that the market is seriously flawed otherwise why would it inflict upon the system a decrease in the efficiency of the use of the physical resource? That must be its only justification. It is not a good enough justification but it must be the only justification—that there are significant market imperfections currently. We know that in the absence of a proper market there is insufficient constraint on price increases and residential consumers effectively bear the brunt of that through the higher tariffs they pay through this system which is not sufficiently competitive. 
It is time for us to acknowledge in my opinion that the Bradford reforms have not worked. They plainly did not work in terms of lines. I think we can conclude that the system is broken. We can reach that conclusion on the basis of the differential between residential and industrial tariffs which is out of whack compared with the rest of the world and the fact that we have such a lack of competition at least in significant parts of the market throughout New Zealand and perhaps in the whole of the residential market. This tinkering with the market rules will not work and this part of the bill exemplifies how ridiculous it has become. 
I think it was Michael Cullen who occasionally used the example of people making more and more complex changes in order to justify their view of the world. People used to do that when they held the view that the Earth was the centre of the solar system. The different orbits of everything else in the solar system was explained so as to justify the belief that the Earth was the centre of the solar system when in the reality the sun is the centre of the solar system and everything revolves around the sun. 
Well it is a bit like that in the electricity market. We have had to bolt on regulation and we have more regulation coming. We now have these ridiculous changes in respect of the use of the Waitaki power assets and still the Government will not admit what is becoming more and more obvious to every residential consumer in New Zealand. We do not have real competition. We actually have the Government plundering the dividends.