Heatley Phil: Electricity and Gas Industries Bill — In Committee 
Heatley Phil: Electricity and Gas Industries Bill — In Committee 
[Volume:620;Page:15858] 
PHIL HEATLEY (National—Whangarei) 
: 
 I also rise to talk about this issue of investment or lack of it. There is no lack of disincentive for investment. There is no lack of risk for investment. But there is a lack of investment—whether it is investment in the wholesale gas market exploration processing facilities or in the transmission and distribution of gas. In all of those cases there is a degree of risk and that risk is reflected in the lack of investment. We in the National Party can say only that the risk goes up when the Minister gets his dirty fingers involved in the deal. That is what this clause is about—the Minister getting his dirty fingers involved in the deal. 
Clause 43C in Part 4A is headed “Gas governance regulations for wholesale market processing facilities transmission and distribution of gas”. It states that the Governor-General by recommendation of the Minister can make regulations for all or any purposes. That is of course along with the industry. But our question is: who in the industry makes these recommendations to the Minister? Which side of the industry when it is in disagreement gives the Minister a mandate to make these regulations? The idea that in some way this is market-led or industry-led is quite absurd because the Minister first of all has to either get 100 percent of industry participants backing him in his views or he has to pick winners in the industry that he will get to back his views. 
Looking at the wholesale gas market I am intrigued that the Minister can provide for the “establishment and operation of wholesale markets for gas” including and this is through regulation providing and forcing the “disclosure of data and other market information”. Who would want to come to New Zealand or arise out of New Zealand and make multimillion-dollar investments when this Minister can make provision for the disclosure of data and other market information? We understand through the electricity markets that it is quite important to disclose some significant information in order to run those markets correctly so that there is the correct bidding of price into the market. But for it to be as broad as any “other market information” and that is stated in clause 43C(2)(a)(iii) is too much discretion for the Minister who is enforcing the divulgence of sensitive commercial information. If businesses are forced to divulge sensitive commercial information they will not want to take that risk and therefore they will not invest. That is our message to the Government. 
Another subclause concerns “arrangements relating to outages and other security of supply contingencies”. I am concerned the Minister believes that the bureaucracy can decide on arrangements relating to outages and security of supply better than the industry can. I would have thought that the bureaucrats would struggle compared with the industry and I cannot see how the Minister would expect them to do better than that. 
In terms of processing facilities the Minister apparently being industry-led can make regulations relating to the setting of “reasonable terms and conditions for access to and use of gas processing facilities”. We have heard a number of speakers talk about that. Why would overseas investors come to this country spend millions of dollars on exploration gathering gas and processing gas to compete with others in the market only to be told that they have to open up their processing facilities to competitors? 
Brian Connell 
: They won’t. 
PHIL HEATLEY 
: They will not do it. There will not be any investment because this implies an increase again of risk. It is the most serious form of risk when competitors can walk into a processing company’s property and use the facilities to produce a product against that processor’s products in the marketplace. That seems quite absurd to us. 
There is an argument to say that spare capacity should be available or could be made available only if the person accessing or using the facilities paid reasonable costs of providing the additional capacity. But who is to say that there is spare capacity? If one disgruntled gas wholesaler or an exploration company wanted processing to take place it could very well claim that there was spare processing capacity. Where is the burden of proof—on the processor that owns the company to prove that there is no capacity or on the disgruntled supplier to say that there is capacity? All we know is that it would be a long-winded process costing many resources and much time. 
I ask the Minister where the burden of proof would be as to whether there was spare capacity available or spare capacity that could be made available. I ask the Minister to take a call and answer that question. 
Further to that that spare capacity or the potential of spare capacity will change over time. Has the Minister decided whether that could change over a matter of days? Could spare available capacity change over a matter of weeks or months or will we forecast this for years ahead? What certainty is there for a processor that has to forgo the use of its own facilities for a competitor into the future? There may very well be spare capacity at one point in time but only weeks or months later there is not. A processor will have to shift its whole processing regime which is set up for a competitor back to a regime that is set up for itself. Again that takes resources time and money as well as expertise. 
 There are lots of questions around this whole idea of regulating that a competitor could walk into one’s facility and use that equipment to compete against one. None of those questions have been answered. I ask that the Minister be courageous enough to take a call and answer those questions and the one in particular to do with the burden of proof as to whether there is spare capacity available or not. I want to know who does that. 
I also notice the issue regarding the transmission and distribution of gas through the pipelines. I note in clause 43C(2)(d) that there is a requirement for “expansions upgrades or service quality improvements” that will have to be undertaken through regulation at the whim of the Minister and companies will have to pay for it. That is far too much interference in my view.