Auchinvole Chris: Electricity Industry Reform Amendment Bill — First Reading 
Auchinvole Chris: Electricity Industry Reform Amendment Bill — First Reading 
[Volume:644;Page:13984] 
CHRIS AUCHINVOLE (National) 
: 
 I rise in support of the Electricity Industry Reform Amendment Bill. I understand that it is in perfect line with National’s 2005 policy initiative. Indeed we probably would have had it more quickly— 
Hon Tony Ryall 
: It’s a photocopy! 
CHRIS AUCHINVOLE 
: Mr Ryall could well be right; it could be a photocopy.  
I fully concur with the points that have already been raised by my colleague Gerry Brownlee. In taking this call I will illustrate how useful this bill will be to the smaller lines companies like those we have in the West Coast and Buller regions. The mission of Westpower down on the West Coast is to operate successful businesses that provide the following electricity-based services: distributing electricity generating electricity providing power systems electrical contracting asset management services and electrical engineering consultancy services. Further north at Westport we have Buller Electricity Ltd and its mission is to be “an innovative customer-focused company providing excellent services and a high quality reticulation system.”  
Those specifications are exactly what people would want. Both of those organisations exist for the community or are owned by the community but the impact of legislative and regulatory changes on companies the size of Buller Electricity and the somewhat larger Westpower is considerable. On the one hand they strive to be a successful enterprise and on the other hand they have been caught between the narrowing gap of escalating costs and prices restricted by regulation. The key to success for these smaller lines companies in this bill is that hydroelectricity generation is now classed as a renewable—something that was not certain previously.  
This bill frees up small lines companies to get engaged in electricity generation thereby improving their income and their security of supply and limiting their dependence on imposed costs from other generators. Without this bill if Westpower wishes to build a hydro scheme it has to seek a special exemption from the Commerce Commission. Making an application for an exemption is not a cheap exercise and the associated costs are restrictive. That does not stop the development from happening but the arm’s length rules provisions in section 25 of the Act make it necessary—and expensive—to seek exemption. 
The interpretation clause in the bill specifies that “ ‘renewable energy source’ means solar wind hydro geothermal biomass tidal wave ocean current sources or any other energy source that occurs naturally and the use of which will not permanently deplete New Zealand’s energy sources of that kind because those sources are generally expected to be replenished by natural processes within 50 years or less of being used”. This lifts a whole load of restrictions that small lines companies previously worked under. It allows them to look at having hydro schemes for increased security of supply and a reduction of supply costs and it reduces the cost of the 30 percent transmission loss that is reputed to occur when electricity is sent from Lake Coleridge across Mount Horrible to the West Coast.  
We already have Westpower looking at a hydro scheme that will produce perhaps 6 megawatts in South Westland which would be adequate for the development of hotels and dairying in that area. Without increased electricity we will not get development there. The West Coast has 56 rivers and heaps of creeks with limited reservoir capacity. The development of new systems will probably depend on the use of run-of-the-river systems taking full advantage of the plentiful and frequent gifts of rain we enjoy down there. This bill provides for a 50 megawatt limit on generation by lines companies. This is not at all restrictive in the case of the West Coast which has a capacity to use 42 megawatts at peak periods.  
Another benefit this bill will bring is in allowing knowledge to be freed up and used to good advantage. There are presently large reservoirs of intellectual capacity relating to electrical generation within the lines companies. For instance Westpower has a contracting subsidiary called ElectroNet with over 120 qualified staff involved in asset management information technology and electrical and lines divisions. The company has an excellent record of having the resource and expertise to compete at the highest level in the electrical field. Adding generation capacity to lines companies creates an opportunity for career path development. It is particularly important at the present time with the brain drain and skills drain to Australia that we take every opportunity we can to attract people and hold them by usefully engaging their talents. This bill goes some way towards that.  
Looking further north I see that the bill allows Buller Electricity to continue to develop hydro opportunities. It has a chequered history of doing that. One reflects on  
Buller Electricity Ltd v Attorney-General 
 over the Ngakawau scheme which brought everything to a grinding halt. Without this bill if small community-owned lines companies such as Buller Electricity have fulfilled an intention to generate locally from hydro generation—and this is the catch 22—it would be compelled to sell it off because ownership of hydro generation without hydro being classed as renewable prevented any benefits from coming to Buller Electricity. In other words it was stuck in a poverty trap. This bill will provide potential income streams which will benefit Buller consumers. None the less the company is still in the situation of having no foreseeable load growth capped revenue and ever-increasing costs. At least now there can be revenue from its own generation plus sales outside the region the benefits of which go back to the consumer-owned trust.  
In conclusion I support this bill but would like to sound one note of caution: in spite of this beneficial change of regulation the Resource Management Act could still stifle the sensible development of this initiative. I think the beneficiaries of this bill will welcome National’s policy on revision of the Resource Management Act to give this bill true effect.