Fitzsimons Jeanette: Electricity Industry Reform Amendment Bill — First Reading 
Fitzsimons Jeanette: Electricity Industry Reform Amendment Bill — First Reading 
[Volume:644;Page:13987] 
JEANETTE FITZSIMONS (Co-Leader—Green) 
: 
 Once again the House sits to fix up Max Bradford’s dog’s breakfast and I think back to just how many times we have had to do that since 1998. 
Hon Harry Duynhoven 
: It was such a bad mess. 
JEANETTE FITZSIMONS 
: It was such a bad mess. I sat on the select committee considering Max Bradford’s bill and we had officials who were lawyers and economists come along to the select committee and say: “It will work like this. Under this great market we are having this person here will be able to sell to that person there.” I said through the chair: “But they won’t because there aren’t any wires running from here to there.” The economists and lawyers looked at me and said: “Wires? What have wires got to do with it?”. Well I told them that if one is to sell electricity from here to there one needs wires for it to run through. That idea seemed to be something that was completely beyond their comprehension. 
The Max Bradford bill was a matter of pure ideology triumphing over all practicality and feasibility. It broke up an integrated and efficient system that was the envy of the world in that it had a plan for dispatching the most efficient generation first. That is replaced these days with a market which sounds fine except that a market can be gamed. A market can be gamed and we have no guarantee that it is the most efficient generation that is displaced first. The very sophisticated computer that Electricorp used to have did a good job of that. It broke up what it saw as a horizontal monopoly with retail companies and lines companies owned in the same structure and it was worried about cross-subsidisation. Well it replaced that with a very much more powerful and very much more serious vertically integrated monopoly. We actually do not get competition because we have five major generators that do not all retail in all areas. Where we have incumbent retailers in different regions that have virtually a regional monopoly we do not have a fully competitive electricity market. We warned everyone at the beginning that we would not have that because the market in New Zealand is too small for that and ever since then we have been trying to fix it.  
We learnt shortly afterwards that when that bill went through 500 megawatts of new renewable generation—mainly wind power—fell off the table because the lines companies had been planning to build another 500 megawatts and suddenly they were not allowed to. 
Peter Brown 
: Is the member saying that the wind power got blown away? 
JEANETTE FITZSIMONS 
: Yes I am saying that wind power got blown away by the Max Bradford reforms—500 megawatts. We have people standing in this House saying that not enough generation was built after that legislation went through. Well 500 megawatts that would have been built was not built because all of a sudden the builders were no longer able to do it. 
In 2001 the first step was taken which allowed lines companies to build small-scale renewable generation without a cap and fossil generation up to 10 megawatts. That was logical for distributed generation to be built in the area where it was used rather than having it built at one end of the country with massive pylons taking it to the other end. We do not lose as much on the lines if we use it locally. That sounded like a great idea but what happened then was that the lines companies that looked into building such generation found they could not really sell the power because they were selling it into a market that was totally controlled by their competitors. One does not get a very good price when one is selling through one’s competitors. The problem was that they were not allowed to buy hedges. They were not allowed to buy back-up for their power. If a lines company builds a wind farm and it cannot buy hedge power from the market to sell to its customers when the wind is not blowing—like say from someone else’s hydro which is the perfect match for wind power—then it is hamstrung. It has to take whatever price the market hands out rather than being able to sell at a good price. This legislation fixes that. Lines companies with generation will be able to buy hedges up to the level of the maximum output of their generation so that they can fill in the gaps when the generation is intermittent. That is a totally logical thing to be able to do. 
I think it is also time now that we have some of the new renewables like wind power happening to revisit the definition of renewables in the 2001 Electricity Industry Reform Amendment Act. At that stage we excluded hydro conventional technology from the definition of renewables. We also excluded geothermal because there were quite a lot of doubts at that stage about the amount of carbon dioxide that geothermal was putting out. At this stage when we look at a future where we are trying not to use fossil energy for generation it is appropriate to reinstate hydro and geothermal in that definition and that is what the bill does. We need to look at this in relation to the review that is going on at the moment of section 62 of the Electricity Industry Reform Act which ends the requirement to supply rural areas in 2013. That review is going on at the moment and we need to make sure that this decentralised and distributed generation is able to fill that gap. We want some certainty now that companies wanting to invest in renewables in their local community will be able to do so and will be able to engage with the market in a fully competitive and effective manner and will not be trying to do so with one hand tied behind their back. 
We still have not dealt though with the question of the generators/retailers monopolies. We still have very very large industries making very very large profits and shortly they will make larger profits still when the emissions trading scheme comes in. Three of them are owned by the Government and one of them is not. They are able to exert considerable monopoly power because they combine generation and retailing. That is something that has still not been addressed and I suspect that when this legislation comes back to the House for a further look sometime in the future that is the thing we will be looking at. The Greens will be supporting the legislation.