11. Question No. 11—Energy and ResourcesBARBARA KURIGER (National—Taranaki - King Country) to the Minister of Energy and ResourcesQuestion No. 11—Energy and Resources11. BARBARA KURIGER (National—Taranaki - King Country) to the Minister of Energy and Resources: What advice has she received in relation to her statement I want to know what if anything might be done to moderate wholesale prices without increasing the risk of power shortages" and what advice has she received on the current risk of power shortages in New Zealand?Hon Dr MEGAN WOODS (Minister of Energy and Resources): I've received regular and ongoing advice in relation to wholesale electricity prices as well as the broader security of supply issues in relation to the dry year we are currently facing. I've also met with officials from the Electricity Authority (EA) and the Gas Industry Company and directed them to undertake work on the matter and Transpower is now providing daily updates on its website about security of supply and electricity risk. The Ministry of Business Innovation and Employment is also standing up an inter-agency response group to monitor the situation and provide advice. But what I would note is that this is not a new issue. We have been here before. The market is behaving as it is expected as it did in other dry years. For example in 2008 wholesale prices were at $475 per megawatt hour while in 2012 they were at $310. We're currently seeing spikes in excess of $350 per megawatt hour. We are not at the stage of standing up a conservation campaign which for New Zealanders would be quite similar to what Aucklanders experienced with water restrictions. However I can assure that member that I am monitoring the situation very closely.Barbara Kuriger: Did the advice say that New Zealand would be at lower risk of power shortage if we had maintained confidence and investment in the gasfields we have?Hon Dr MEGAN WOODS: No it certainly didn't because what officials know is that any exploration that would've been issued after the 2018 cessation of the issuing of new exploration permits would take around a decade to come on stream. Officials also know that since we made that announcement there has been over a billion dollars' worth of investment in existing exploration fields.Barbara Kuriger: What is her response to Carl Findlater of Findlater Sawmilling who wrote to her on Monday stating that despite high demand for timber electricity price increases and a toxic operating environment meant continued operation was untenable?Hon Dr MEGAN WOODS: What we are seeing this year is an increase in the number of industrial users who are exposed on the hedge market. That's around 60 percent exposure as compared with a normal year which would be around 40. Industry analysts think that a large number of industrial users made the decision to wait and see what the ultimate decisions around Rio Tinto and their future at Tīwai Point would be and whether there would be cheaper electricity available in the future. That hasn't come to pass and as the member knows we are currently experiencing a dry year. That coupled with some issues around the production of Pohokura gasfield has led to this but I can assure that industrial user and all users of energy in New Zealand that this is a situation that the Government is taking seriously; it is monitoring. But I do note to that member that we are not even at the 1 percent risk on the curve yet.Barbara Kuriger: What is her response to Major Electricity Users' Group chairman John Harbord who stated "The reality is if the prices continue on the pathway they're on there will be a number of major industrial operations in the country that simply won't be in business any more. We're looking at the loss of thousands of jobs and the hollowing out of New Zealand's manufacturing capability"?Hon Dr MEGAN WOODS: My response to all energy users and the Major Electricity Users' Group is that this is a situation that we are taking seriously. It is a situation that is not unprecedented or even unexpected in New Zealand. Dry-year risk is always something that sits out there in our energy system and is precisely the reason why this Government has invested in exploring what it is that we need to do to address the long-term problem of dry-year risk particularly around looking at the option of pumped hydro. But I also would remind that member that the EA's stress testing for major electricity users actually—the stress tests are at unit prices of $400 a megawatt hour for a period over three months and indeed eight hours over a winter period at $10000 a megawatt hour. This is within the parameters of what our electricity system is set up to deliver.Barbara Kuriger: When she said at the time of the oil and gas ban in 2018 "I don't want to see an abrupt transition that leaves industry stagnant communities without a future and individuals without hope." does she believe a fourfold increase in electricity prices in just three years is an abrupt transition?Hon Dr MEGAN WOODS: I would caution that member about repeating lines that were found during the election campaign when her party tried to run them to be false. This is a serious discussion and it is one that actually we need to look at. What we have—SPEAKER: Order! The member will resume her seat. Again I think she's tried to dance around it but my interpretation is that the member in the statement that she made made an inappropriate reflection on the member who asked the question. She will withdraw and apologise.Hon Dr MEGAN WOODS: Sorry—point of order Mr Speaker. I'm happy to withdraw and apologise but I do want—as a point of clarification what I was doing was referencing an Australian Associated Press fact-check finding that occurred during the general election.SPEAKER: Order! The member will withdraw and apologise.Hon Dr MEGAN WOODS: I withdraw and apologise.SPEAKER: Continue with the answer.Hon Dr MEGAN WOODS: What I would caution that member about is leaping to conclusions that have not been founded in the situation that we are facing. The situation that we are facing today is the product of a dry year coupled with a situation around Pohokura field. All expectations within the industry is that the gas situation will resolve in the coming months. This is a situation that we need to treat with concern but we also need to assure the public there is no need to panic. I am more than happy to provide that member with a briefing around the facts if she would like it."