Mahuta Nanaia: Electricity Industry Bill — Third Reading 
Mahuta Nanaia: Electricity Industry Bill — Third Reading 
[Volume:667;Page:14292] 
Hon NANAIA MAHUTA (Labour—Hauraki-Waikato) 
: 
 I rise to speak to the third reading of the Electricity Industry Bill and to signal that Labour will be opposing its introduction into law. 
Throughout the consideration of this bill Labour members have measured their consideration against the three key pillars that we believe underpin responsible reform in the sector: first does the bill balance the security of supply and transmission? Second does the bill address the affordability and the predictability of electricity pricing? Third does the bill enhance the sustainable production of electricity? This bill does not pass that threshold; instead it promotes competition streamlines governance and progresses structural shifts of assets—all of which we would argue do not constrain the price of electricity and all of which rest the security of supply on thermal generation. We just do not think that that is a responsible way forward. 
We have concerns about both the proposal to disestablish the Electricity Commission and replace it with the Electricity Authority and the narrow focus of the authority which will now not consider issues of fairness and sustainability in the supply of electricity. Although I presented Supplementary Order Paper 163 to include that as a focus for the new authority the suggestion was rejected by Government members with little reason. Our concern is that it will be more difficult to ensure the industry operates in a sustainable manner that aims to limit carbon emissions for any new electricity generation. 
On the issue of fairness we do not believe that fair delivery of power to consumers will be achieved. The authority will not be required to monitor the environmental impacts of electricity generation to ensure greater sustainability in the long term. That further highlights Labour’s concern that the Government refuses to take leadership on achieving the 90 percent renewable electricity generation goal in any serious way. That may well remain an aspirational goal with no coherent targets. 
A key concern raised by Labour members is the ongoing pressure that households feel with regard to their monthly power bill. Baycorp Holdings predicts that it will be increasingly difficult for many households to pay their power bills and household expenses. I propose that the code that guides the authority be amended to include fair consumer pricing and sustainable electricity generation. That would go some way to ensuring that fair consumer pricing would be actively considered by the authority. Instead the Government’s solution is to encourage greater competition and to believe that somehow consumers may see better pricing options. I remain sceptical about that view. 
Labour members also raised issues regarding smart meters and a smart grid. We agreed with the recommendation of the Parliamentary Commissioner for the Environment and proposed that the provision for a smart grid - enabling mechanism be included in the Electricity Industry Participation Code. That was rejected by Government members because they believe that rather than future-proofing our grid for the benefit of consumers and retailers we should take a fast-follower approach while technology is developed. That lack of leadership means that right now we have “dumb meters” being rolled out in some of our regions. That does not make sense when the Minister of Energy and Resources could grab the bull by the horns. 
A substantial debate on asset reconfiguration has been repeatedly ignored by the Minister. Government members do not accept that there is no evidence that efficiency gains through swapping Tekapo A and B will be achieved. The Treasury regulatory impact team who considered the bill noted that the bill was lacking in certain areas. In particular the regulatory impact team presented information that more comprehensive discussion was needed to assess the risk of asset swaps. There was no cost-benefit analysis to assess whether asset swaps would fix the problem that the Government believes it is addressing and there was no assessment of other examples where asset swaps have delivered efficiency gains. The upshot was that it did not make sense to swap assets between State-owned enterprises when there was no evidence of its benefits. 
The Minister of Energy and Resources claims that he has received no concerns from Meridian Energy over the asset reconfiguration. But a letter was sent from the chair of Meridian Energy Wayne Boyd in December last year to Ministers Power and English to suggest that splitting the management of the Waitaki chain between two operators would result in a loss of efficiency in managing the water resource. From an energy perspective Meridian Energy would need to hold its lakes higher in order to counter the security of supply risk that it outlined. Advice went on to highlight that that would result in a much higher likelihood of spillage and loss of efficiency. Ari Sargent chief executive of Powershop slammed the reforms proposed by the Government. He said that there was a high risk they would lead to both higher prices and to less secure power supply. It was evident that those comments contrasted starkly with those of the Minister of Energy and Resources and Mr Sargent’s criticisms were quickly removed from his blog. 
Labour members have consistently raised through the debate in the House our concern about the rising cost of power prices for those who are more vulnerable—those on fixed incomes. Baycorp Holdings chief executive Geoff Harper noted in his press statement that the number of New Zealand households unable or unwilling to pay power bills on time was set to increase over the next 6 months according to its debt recovery agency. Baycorp Holdings said that rising electricity prices fuelled by emissions trading scheme levies and the increase in GST were likely to result in people defaulting on their power bills in order to pay more pressing bills such as mortgages and their grocery bills. 
Our concern remains that the differential between domestic and industry users will not be fixed by this particular bill. We still do not think that the solution offered by the Minister will go anywhere near to addressing these very important issues. The bill increases bureaucracy and there is little evidence to suggest that asset swaps will be efficient and without risk. It lacks leadership to progress the measure that all new energy generation be from renewable resources. It fails to address fairness to consumers and the huge differential between domestic and industrial electricity users. It fails to address price predictability at a time when people need greater assurance. So for those reasons and several more Labour will not be voting to pass it.