Sowry Roger: Electricity and Gas Industries Bill — In Committee 
Sowry Roger: Electricity and Gas Industries Bill — In Committee 
[Volume:620;Page:15720] 
Hon ROGER SOWRY (National) 
: 
 We are now into Part 2 of the bill and I guess the pattern of the debate has been set where we will see the Greens voting with the Government on this bill which will put up the price of electricity substantially. They are doing it I guess for conservation reasons. They think that if people have to pay more they are more likely to conserve. We see United Future voting with the Government to put the price of electricity up. I am not quite sure what their reasons are. United Future seems to take an increasing approach of voting against the business sector and the business community and this is probably part of that approach. It is also their little game that goes on with the Greens as to who will be in bed with the Labour Party on any particular day. 
That aside we are now into Part 2. In this part we have an amendment to delete paragraph (a) of clause 22. Part 2 is a very important part because the constraint in the electricity industry at the moment is one of availability of power. We do not have the fuel or the generation that we need in this country. We have five major generators of which three are State-owned and two are privately owned. It is a pretty cosy little club to be honest. 
A whole lot of other potential generators are lines companies. They are sitting out there with an enormous amount of capital ready to invest back into the industry. This bill increases the amount those companies can generate up to a maximum of 50 megawatts or 20 percent of the total demand for their lines. We say that is just not enough. 
The two major lines companies in New Zealand are Vector which is Auckland-based and supplies Auckland and Wellington and Powerco which is headquartered in New Plymouth and supplies the New Plymouth and Tauranga regions right through down to Wairarapa—as the Minister indicated. They are the two largest lines companies in the country. They came to the Commerce Committee and said: “We want to get into generation. We want to build some generation facility but we won’t do it if you put these artificial limits on.” 
That is what New Zealand First members were talking about when they said that we needed some more generation. We might differ with them on how much generation is needed but National’s view is that given that the Commerce Commission now controls the pricing of the lines business through its consumer price index minus X formula lines companies are highly regulated and given that they cannot cross-subsidise—which is the purpose of the Commerce Commission regulations—then why would one restrict them? 
The Government has fallen between a couple of stools. Pete Hodgson says: “Well I don’t want them to generate but I’ll let them do so much. They can do a little bit of generation so that ideologically I’m not being totally opposed to them generating.” Then the Greens toddled into Mr Hodgson’s office and said: “We think that the lines companies should be able to generate as much as they like from renewables.” and the Minister said that was OK. 
So a lines company can put up as many windmills as it likes but it cannot put up a coal-fired unit. The Greens nod and say that that is fine except if one is cold and the lights go out. I predict that the Greens will feel the political blast of that in the near future. 
So there is no principle in this at all. I know that New Zealand First can see there is no principle in it because its member said so in the House before. He might not go as far as us but at least he understands the issue. What I would really be interested to see is where United Future members go on this. In effect they have said that the deal has been done behind closed doors and they will not listen. But I ask whether they will be prepared at least to look at the fundamental principle. 
A lines company is either generating or it is not. What we have now is lines companies with abundant amounts of money and not knowing what to do with it. Powerco is off to Australia with its money. Because we deny the company here it will invest in Australia. That is smart; really clever. Vector is likely to do the same. That does not seem very smart politics to us. 
However what is even more worrying to me is the small lines companies out there doing all sorts of potty things with their money because they cannot buy or invest in a local generation scheme. For example Electra owns a finance company. Well that is really useful for power consumers. Electra owns Oxford Finance in Levin. I am sure that every power consumer wants to own one of those. Electra also owns an electrician’s business. I suppose one could say that owning an electrician’s business is OK. 
The other day Electra’s chairman said to me that it was looking at investing in a winery. I said: “What?”. But there is more. It has just put up its prices. The Government has Electra on a consumer price index minus X formula which allows it to put up its prices this year so it has put them up to meet the formula. So consumers are paying more money and the lines companies want to invest the money in generation but they are not allowed to except if it is wind. Well it does not blow very much on the Kapiti coast. Electra’s chairman said: “What the hell we’ll buy a winery.” I hope that he was pulling my leg but I do not think he was. So that is the worry with the nonsense of this. It is just ludicrous; absolutely ridiculous. 
I say to the Minister—and this is genuine—that he has gone out there and staked his reputation on getting new explorers into the country and good on him. We have two rigs out there at the moment which is the most we have had for a zillion years and all of that. God help us if they find anything! If they find something and want to bring it on shore in Canterbury the major investor to help them would be the lines company and it will not be allowed to. I bet that if they find something we will be back in this House changing the rules because that is what we will have to do. 
Hon Harry Duynhoven 
: It’s a good thing they’re drilling in the Wairarapa. 
Hon ROGER SOWRY 
: I do not know why and I am not sure how that helps because Powerco still will not be able to invest in it. 
We are locking out major chunks of potential capital for no good reason. Why would the Government vote to say that the power companies cannot build a combined-cycle gas turbine plant but can build a windmill? Why would it say that? Who built the last combined-cycle gas power plants? A lines company did. 
Hon Member 
: Genesis. 
Hon ROGER SOWRY 
: No Genesis Power did not build them and the Minister knows that. Genesis is about to build one a little jet engine thing. The one the Minister knows I am talking about which is the Taranaki one—the one he is proud of and beats his chest about and for good reason—is a good plant and he knows that it is. He has been there. He told me that when I was there. It was built by the lines company. Why would we lock them out? Why would we allow windmills to be built but not small coal-fired power stations or combined-cycle turbines? It just does not make sense. So we have an amendment to take out clause 22(a). Let us tell the lines companies to make their business decisions go out there and if it stacks up build it. If it stacks up and they can get resource consents they should build it. 
If the Greens think that the answer is in wind I ask them what happened tonight at 6 o’clock. The Genesis wind farm failed to get consent because it offended Maori values. That is a Resource Management Act issue and I suspect that members will probably come to that in the House tomorrow. It is an issue in itself. The wind farm met all the other criteria but offended Maori values. The proposal was turned down by the Environment Court today. 
So wind power is not that easy to get. It is easier for a lines company to buy a finance company a winery or God knows what next—a Chinese restaurant or something—than to invest in the infrastructure that we really really need in this country.