Parker David: Electricity Industry Bill — In Committee 
Parker David: Electricity Industry Bill — In Committee 
[Volume:667;Page:14138] 
Hon DAVID PARKER (Labour) 
: 
 Part 2 sets up the electricity industry governance and creates a new authority called the Electricity Authority which effectively replaces the Electricity Commission. We should not fool ourselves that this makes a substantial difference to competition in the market. It does make a difference in that it takes away some of the functions that one would think need to have some governance like how clean our electricity is a focus on renewables and a focus on the efficiency of use. Those sorts of functions are stripped out of what used to be called the Electricity Commission and by and large they are not replaced in the new authority called the Electricity Authority. I cannot understand the logic for that step backwards and I ask the Minister in the chair the Hon Georgina te Heuheu to explain why the Government calls that progress. 
But more particularly I am interested in what the Electricity Authority will be doing that the Electricity Commission could not do in respect of setting market rules that will improve competition in the market. That is what the Hon Gerry Brownlee told us from the chair just some minutes ago. He said that these changes will reduce the pressure on prices by improving competition. I cannot understand how that can be. I cannot see anything in Part 2 that materially changes the authority’s powers from those of the existing commission. I come back to the issue that I started to address in the discussion in the first part of the debate: how can the Minister do anything but conclude that we do not have real competition in the electricity markets? 
I refer again to the example that we have not had a response from the Government on yet in respect of Alexandra power consumers. I expect this issue will have been raised by Jacqui Dean who I see is in the Chamber. 
Jacqui Dean 
: Because they sell to Transpower. The member knows how the market works. 
Hon DAVID PARKER 
: That is not right. No that is not how the market works I say to Jacqui Dean. Transpower does not buy any power; not one kilowatt except for the power in its head office mainly. Maybe Transpower has a wee bit of power in its head office but it does not trade in power. I say that Ms Dean has that completely wrong. Transpower transmits power. People buy services from Transpower which provides the grid and electricity companies use that grid to transmit power. I am afraid the member knows absolutely nothing about the way the electricity market works. It is no wonder her constituents come to me instead of to her and complain about the ridiculously high tariff that they have to pay in Alexandra. 
The reality is that Alexandra sits next to the Clutha River. Nearby is one of the biggest dams in New Zealand the Clyde Dam and 10 kilometres in the opposite direction the Roxburgh Dam generates probably 100 times the electricity demand of Alexandra yet Alexandra residents pay amongst the highest tariffs in the country for each kilowatt hour of power that they use. I ask Ms Dean to explain that to me. If the market works why do Alexandra residents who are so close to the resource that generates the electricity pay such a high tariff for their electricity? 
When I was the Minister of Energy this issue used to vex me. I used to ask the officials to explain why the tariff per unit of electricity is higher in Alexandra than it is in other places that are further away from hydro dams. An adequate explanation was never given. I was always nervous that the reforms from Max Bradford did not produce a sufficiently competitive market to constrain electricity prices as evidenced by the fact that residents in Alexandra which is next to the hydro stations pay more for their electricity. I am not talking about their lines charges; that is a different issue. They pay really high lines charges as well partly because they are a geographically spread population. But in respect of their energy use they pay more. What in this part will constrain that problem? 
Jacqui Dean 
: What did Labour do about that? What did the previous Minister do about that in his 9 years? 
Hon DAVID PARKER 
: I say to Ms Dean that I am ready to conclude that nothing in this legislation will constrain that. In fact what is happening here is smoke and mirrors to cover the National Government’s demand for higher dividends from the State-owned enterprises. There is no real constraint on power prices.