Tisch Lindsay: Electricity Industry Reform Amendment Bill — Second Reading In Committee Third Reading 
Text is incorporated into the Bound Volume 
Tisch Lindsay: Electricity Industry Reform Amendment Bill — Second Reading In Committee Third Reading 
[Sitting date: 02 September 2008. Volume:649;Page:18552. Text is incorporated into the Bound Volume.] 
LINDSAY TISCH (National—Piako) 
: 
 It is very interesting that the Electricity Industry Reform Amendment Bill which we are having a second reading on now is in line with the National Party’s policy at the last election in 2005. Here we have a bill that will be passed and National is supporting this bill because it is something that we have identified as being important. It is actually consistent with National’s 2005 policy that would have allowed line companies to enter into generation. 
Lines companies have an interest in electricity distribution. They also have very stringent limits on what they are able to invest in at the present time. Some have the ability to invest in generation and this bill implements policy changes firstly to make it easier for owners of lines companies to sell the output of the generation they are permitted to own under the 2001 and 2004 amendments to the Electricity Industry Reform Act 1998 often referred to as EIRA. The objective is to encourage owners of lines businesses to invest in permitted generation especially generation from renewable sources. That is fine; that is something we subscribe to. It will be achieved by allowing retail sales of electricity to go up to 100 percent of the nominal annual output capacity of permitted generation by allowing trading and financial hedges by allowing grid-connected generation to count as local generation in certain circumstances by requiring at least one independent director and not permitting executive directors by allowing the same person to be a manager of both companies up to a threshold of 30 megawatts and by allowing the cost of corporate separation and compliance with arm’s-length rules. 
The second policy change is to narrow the scope of ownership separation requirements in order to focus on the geographic areas where there is potential for the exercise of market power and anti-competitive practices—namely where lines and supply are co-located. And the third main change is to amend the definition of “renewables” to include all renewable energy sources. 
We have just debated another bill that has had its third reading the Commerce Amendment Bill which adds value to the points we are now debating under the Electricity Industry Reform Amendment Bill. Year in and year out we have power shortages. Not a year goes by when there is not some concern about whether there will be enough electricity over the winter periods in particular to be able to have the lights on in our homes in Auckland and to be able to keep industries operating. Even this year with having experienced so much rain in the Waikato we find that the Southern Lakes are still below their normal levels. Yet given that we have had so much torrential rain one would expect that the Southern Lakes would have had the water. But that has not been the case and it has not been the case for over the last 9 years. One of the things in terms of generation and in terms of the whole energy sector is that this Government has made it far too difficult for investment in these areas. 
Hon Member 
: Bollocks! 
LINDSAY TISCH 
: Well it has because in the 9 years of the last National Government we put in 1600 megawatts—1600 megawatts of new electricity came on line. What has it been under Labour? What has it been under Labour’s 9 years? It has been less than 700 megawatts. So why is there no generation? Why are we having these challenges each winter as it comes up when people talk about shortages of power and of maybe having to cut back? I will tell members the statistics; I am not making them up: in the 9 years of a National Government we put on line 1600 megawatts—1600 megawatts went into the grid so that we could have security of supply in our homes in our businesses and wherever we live. This Government which is on its last legs now has put in only 700 megawatts or less over the last 9 years. That is an absolute insult when energy is part of that infrastructural area we need to be so mindful of whether in terms of energy roading or broadband. This Government is found wanting in those three areas. 
Let us put this in the energy distribution concept—electricity distribution is important in underpinning New Zealand’s economy. The Government has $6.3 billion worth of assets and that compares with Transpower’s which is separate at $2.4 billion. There are 1.9 million connected consumers. There are 149000 kilometres of lines and that compares with Transpower’s 11000 kilometres. The forecast investment is $3 billion to $5 billion over the next 5 to 10 years to meet the needs of consumers. At the moment the demand is of $3 billion to $5 billion per year and hopefully with this bill we will be able to achieve those figures because at the moment we are falling far short. Demand for electricity is growing as the economy grows while spare capacity networks have been consumed and assets are ageing. 
The digital age is driving demand for a more reliable energy supply. Our prices have declined by 4 percent in real terms since 2001. The electricity distribution sector can have an important role to play in distributed generation and fibre optics networks if regulation will allow and that is certainly what we are trying to achieve here. 
What are the potential benefits of this bill and of the Commerce Amendment Bill? There will be some certainty that there will be the $3 billion to $5 billion of new distribution investment over the next decade which could be distributed in a timely manner. The investment will improve security of supply through certainty over longer-range planning. It will increase reliability and quality. We will see new technology implemented sooner and more often. There will be a lower cost of the regulatory environment and something we are always very mindful of is that the costs associated and any regulation that goes with those costs are fair and equitable. 
The new regulatory regime will provide the environment for lines businesses to improve efficiency of energy use—for example by reducing line losses upgrading demand sites and management services and installing smart meters. A number of technologies will become available to be implemented under a new regulatory regime which of course is to increase the distribution generation. 
Strong consumer protection still remains with this bill and the bill will be beneficial to smaller lines companies. There are 28 lines companies and 16 of them are owned by trusts. The bill will be beneficial to smaller lines companies like those on the West Coast in Buller where my colleague Chris Auchinvole comes from. Those companies will be the beneficiaries of this legislation. The bill frees up small companies to get engaged in electricity generation thereby improving their income and securities of supply. It limits of course their independence on imposed costs from other generators. 
Without this bill becoming law it will be extremely difficult for us to progress and to provide that security of supply that we believe is so important. As I said this is in line with what National said in its policy of 2005. We said there that our policy was to allow lines companies to enter into generation. The select committee has made only minor changes to the substance of the bill and the changes were made unanimously. National is happy to support the second reading and we look forward to the Committee stage shortly.