Brownlee Gerry: Questions for Oral Answer — Questions to Ministers 
Brownlee Gerry: Questions for Oral Answer — Questions to Ministers 
[Volume:608;Page:5821] 
5.  
GERRY BROWNLEE (NZ National—Ilam) 
 to the  
Minister of Energy 
: Will the energy industry changes signalled yesterday by the Prime Minister and announced today by relevant Ministers remove the risk of an electricity shortage in the event of a dry year in the future; if so why? 
Hon PETE HODGSON (Minister of Energy) 
: 
 Today I announced that the electricity sector will be managed so that demand can be met in a 1-in-60 dry year without the need for a national electricity conservation campaign. The necessary reserve generation capacity is likely to be accrued over the next 3 years. 
Gerry Brownlee 
: If the solution to the dry-year electricity shortages is more generation why does the Minister believe he can get reserve generation in 3 years when a number of generation projects are currently held up by Resource Management Act issues the Conservation Act the unknown cost of Kyoto compliance and a lack of long-term gas contracts—and any additional generation proposals will face the same problems? 
Hon PETE HODGSON 
: In the course of the next 3 years approximately 700 megawatts of ordinary generation will come to book most of which is already consented. A further 150 megawatts or thereabouts will come on line in June 2004. It is a Contact proposal. That will begin I suspect the portfolio of reserve generation. The Resource Management Act is of course no impediment as the member would assert it is. 
H V Ross Robertson 
: Will the introduction of the 1-in-60 dry-year standard cause power prices to rise; if so why and by how much? 
Hon PETE HODGSON 
: Yes power prices will rise. Why? Because that is what an insurance premium is. By how much? It will rise by less than 0.5c a unit or less than 80c a week for an average household consumer. 
Peter Brown 
: Noting that we have had 2 dry years in the last 3 by stipulating 1-in-60 I ask whether the Minister is sure he has got it right 
Hon PETE HODGSON 
: That is a good question. The 1-in-60 dry-year risk profile was chosen from the Davidson commission into the 1992 electricity event and was put in place as a temporary measure because it was thought then that the market would deliver surety beyond that when the market came into being. Today we say that market or no market we need that 1-in-60. The advice is that 1-in-60 would get us through without a public conservation campaign as in 1992 2001 and so far 2003. 
Hon Ken Shirley 
: In view of the Government’s statement that the necessary portfolio for reserve generation will be built up within about 3 years are we to conclude that the Government’s response will do nothing for the current crisis this year or indeed very little for the next 2 years; and given that this Government has been in power for almost 4 years why should the public not conclude that the Government has totally failed on the energy issue? 
Hon PETE HODGSON 
: The reserve generation will be built up over the next 3 years so it will begin to be built for next winter—some more the winter after and some more the winter after that. In respect of this year today’s announcements do not alter the winter security issue at all. This year we get to save; this year we get to continue with the plans that have already been announced. 
Jeanette Fitzsimons 
: Will the new Electricity Commission be encouraged to contract with large power users to provide secure demand reductions as an alternative to new supply and to be considered on an equal basis as part of dry-year security? 
Hon PETE HODGSON 
: No the demand side has been explicitly excluded in order that it can play its ordinary role and useful role during ordinary generation times—which is nearly always. 
Gordon Copeland 
: Will the Electricity Commission in addition to the specific measures announced today on reserve generation be asked to minimise dry-year risk through the design of the overall generation mix—for example hydro in high-rainfall areas and wind? 
Hon PETE HODGSON 
: The reserve generation will embrace a variety of fuels—not to overcome rain shortage because all those fuels it will be using will overcome rain shortage—so that in the event that for example as occurred in February there is an outage at the Maui platform non-gas reserve generation can be used as part of the mix. 
Gerry Brownlee 
: Given the Minister has told the House today that much of the reserve capacity that will be developed over the next 3 years is already consented to and therefore a proper investment decision on the range of projects has already been made by those developing that generation why is there a need to tax New Zealanders up to $200 million a year by means of this half-cent levy on each unit they consume? 
Hon PETE HODGSON 
: The member I think has misheard me. Let me say the generation he refers to is not reserve generation but substantially ordinary generation. 
Gerry Brownlee 
: Read your  
Hansard 
. 
Hon PETE HODGSON 
: You said “Today”. The reserve generation— 
Gerry Brownlee 
: Read your  
Hansard 
 of today. 
Mr SPEAKER 
: Please carry on with the answer. 
Hon PETE HODGSON 
: The reserve generation— 
Gerry Brownlee 
: I raise a point of order Mr Speaker. I do not think it is acceptable for a Minister to give an answer to a supplementary question about four questions ago and then when put on the spot by having to explain a reasonably substantial tax simply do so by saying: “Well the member didn’t understand what I said.” I am very clear about what he said. The  
Hansard 
 will show it. He should stand by what he said just minutes after he said it. 
Mr SPEAKER 
: That is a matter of debate. 
Hon PETE HODGSON 
: The reason there needs to be a price increase up to half a cent a unit or up to 80c a week for the average household is that that is the price of the insurance premium. 
Jeanette Fitzsimons 
: Does he think it appropriate for a Minister in charge of the Energy Efficiency and Conservation Act and the National Energy Efficiency and Conservation Strategy to tell New Zealanders in his press release today that with this increase in generation capacity they will never have to save power again? 
Hon PETE HODGSON 
: The important thing for this Government to achieve is to ensure that whilst conservation campaigns hopefully become a thing of the past—except perhaps once every 200 years or similar—energy efficiency campaigns remain unmolested. 
Gerry Brownlee 
: Why would any generators choose to invest in more generation capacity for normal-year use when they know that the Energy Commission will be collecting $200 million a year in levies on consumers—a tax on consumers—in order to purchase the capacity they are proposing to invest in? 
Hon PETE HODGSON 
: I invite the member to read carefully what the Government’s plans are. The whole idea is to ring-fence part of the generation so that it does not compete with ordinary generation in order that the latter will be well built.