Brownlee Gerry: Questions for Oral Answer — Questions to Ministers 
Brownlee Gerry: Questions for Oral Answer — Questions to Ministers 
[Volume:606;Page:3350] 
9.  
GERRY BROWNLEE (NZ National—Ilam) 
 to the  
Minister of Energy 
: Does he stand by his assessment that electricity prices would rise by up to 8 percent in the next three years; if so why? 
Hon Dr MICHAEL CULLEN (Leader of the House) 
 on behalf of the 
 Minister of Energy 
: Yes. The assessment is based on the expected increase in the cost of gas-fired electricity generation which is projected to raise the average wholesale cost of electricity by about 20 percent over the next 2 to 3 years. A 20 percent increase in the average wholesale cost translates to an increase of about 8 percent in the retail price for domestic consumers. 
Gerry Brownlee 
: What evidence does the Minister offer to dispute the statements made by John Noble technical adviser to the Christchurch Power Consumers’ Society who in considering the rapidly diminishing gas supply from both Maui and the smaller-than-expected Pohokura field said: “I think his”—that is the Minister’s—“8 percent price rise is hopelessly optimistic. I think it’s more likely to be around 20 percent”; and can I make it clear that Mr Noble thought the retail price more likely to rise by 20 percent than 8 percent? 
Hon Dr MICHAEL CULLEN 
: No the estimates are based on the best advice we have. I would like to correct a pretty common misconception in the public arena. The latest estimate on the Pohokura field is actually somewhat higher than the previous estimates the Government had. The comparison is with a very rough estimate that was made in the public arena a couple of years ago. 
Mark Peck 
: What is the Government doing to facilitate the development of future gas supplies for electricity generation? 
Hon Dr MICHAEL CULLEN 
: The Government reviewed the gas sector last year and has taken a number of steps to improve it—for example the negotiation of open access to the Maui pipeline for gas from other fields. Exploration for new gas supplies is being very effectively encouraged and is booming at the moment with 68 exploration permits or licences currently in effect. 
Peter Brown 
: In the light of those earlier answers to Gerry Brownlee if the Minister and his advisers are wrong and the increases are likely to be a good deal more than 8 percent as has been suggested what will the Minister do? Will he consider implementing some sort of price control particularly for low-income people or what other initiatives will he take? 
Hon Dr MICHAEL CULLEN 
: The essential underlying problem is to introduce effective energy conservation measures to increase supply and also to reduce the rate of growth in demand. To introduce some form of price control below the effective market rate would certainly not increase the amount of supply in the medium to long term. 
Hon Ken Shirley 
: To what extent are projected electricity price rises a result of unreasonable bureaucratic delays for new energy projects under the Resource Management Act—as experienced at Pohokura—and aggravated by this Government’s blind adherence to the flawed Kyoto Protocol? 
Hon Dr MICHAEL CULLEN 
: It is hard to understand how a protocol that comes into effect in 5 years’ time could have affected the latest estimate on the amount of gas in the Maui field. 
Jeanette Fitzsimons 
: Has the Minister seen any evidence that most people’s electricity bills could reduce by more than 8 percent in the next 3 years if energy were used more efficiently and what is he doing to get that message across to the people who still do not seem to get it?  
Hon Dr MICHAEL CULLEN 
: Indeed there is a great deal that can be done in terms of energy conservation within New Zealand. There are amendments underway to the Resource Management Act to give greater weight to the national benefits of renewable energy. We set a target for new renewables in the strategy. But equally there is a great deal of work happening to try to reduce the growth in demand over the next few years and I refer the member to the agenda for the workshop that occurred on 28 January on the climate change project which is precisely about reducing that growth in demand.  
Gerry Brownlee 
: Is the Minister at all concerned that the current hydro storage levels are at 82 percent of their normal level for this time of the year and that inflows to the lakes are at only 67 percent of their normal flow for this time of the year—meaning that the dry-year risk for this year is extremely high—and what does that mean for consumers in an environment where there is no longer the same capacity to crank up thermal generation? 
Hon Dr MICHAEL CULLEN 
: Yes there are concerns about the levels of the hydro lakes at the present time as the member will be aware being another East Coast person for New Zealand. There has been relatively low rainfall through much of the East Coast of both islands of New Zealand. As was demonstrated in 2001 the capacity of the public to respond in those situations is much higher than we used to imagine.