Gilmore Aaron: Smart Meters (Consumer Choice) Bill — First Reading 
Gilmore Aaron: Smart Meters (Consumer Choice) Bill — First Reading 
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AARON GILMORE (National) 
: 
 Members might remember the issue of VHS versus Beta in the 1980s. They might remember Microsoft’s Internet Explorer versus Netscape in the 1990s. They might remember the recent thing about the Sony Blu-ray Disc versus Toshiba in the 2000s. The issue of smart meters in the Smart Meters (Consumer Choice) Bill is a very similar situation. All aspects of technology that are common today have eventually become very well adopted. But in their time particularly in the early stages of technology like smart metering a lot of confusion existed about whether we had jumped to the right standard of technology. That is why National will not be supporting this bill. 
It has some good aspects; I must commend the member for bringing it to the House. I will touch on some aspects of the technology in the bill but I believe that the bill will compel New Zealand to make a choice today on a set of standards and technologies that is not quite there yet—an idea whose time has not yet come. I will touch on that. People have a lot of confusion about what a smart meter is. Recently in Canterbury Meridian Energy has been rolling out what are called by the Parliamentary Commissioner for the Environment “almost smart meters”. Some people call them smart meters; in other places they would not be called smart meters. It depends on people’s situations. In other countries particularly in Europe and even more particularly in Italy significant numbers of smart meters have been rolled out—tens of millions of them. But very different standards exist across the world. Recently in other parts of the world—like Germany the United Kingdom and Canada—we have seen the roll-out of smart meters. Nearly every single one of those countries has rolled out a different form of technology and a different set of standards and that is one of the issues National has with this bill. 
As the previous speaker David Clendon talked about we have seen that New Zealand was a world leader in what was called ripple control mechanisms. In fact in the 1950s and 1960s we were one of the first countries in the world to bring in ripple control. That mechanism allows consumers to control their hot water load and it was a very useful hot water load management system. New Zealanders have used that technology and sold it in many places. 
There is an issue with metering generally in New Zealand. Many of the ferrous iron - type meters that have been in place since the 1950s are coming to the end of their natural lives. That is why there has been some interesting debate about the issue of smart metering today. In Christchurch where I live Meridian Energy has made the call to put in place metering technology that will allow automatic meter reading. It will stop meter readers from having to go to consumers’ doors to read the meters on the wall. That is a good step. The technology for that is very well-developed and has been used very well across the US and in other parts of the world. We think that technology makes sense. 
A lot of work has been put into these issues of smart metering and particularly into the issue of how smart a metering device should be. I think we would all agree that in a perfect world we would have devices in our homes—for example for our fridge or freezer—that would monitor the electricity use and turn an appliance off and on to take into account the load that might exist. I think we will get there and that in our lifetime that will occur but we are not there yet. Having the ability to jump to put in the meters what is called a home area network chip would cost a significant amount today. I accept that the marginal cost today would be quite low relative to the expected benefits of that mechanism but the reality is that consumers cannot bear that cost. That chip might cost a consumer anywhere up to an additional $200 to install today but the benefit to that consumer of putting in place an in-house display on the meter in the case of that chip would be effectively zero. National does not feel that that is an appropriate thing to do at this time when people have been facing record price rises in electricity over the last few years. 
We believe that one of the things we have to think about is how we get this technology right to bring it through into the market. The Parliamentary Commissioner for the Environment wrote a report recently on metering. That report has been considered by the Electricity Commission and the Minister of Energy and Resources and some guidelines have been put in place around smart metering. I am pleased to say that there has been some success in the roll-out of some of those smart meters. Some would say that that is not enough but it is a start. Given what we have seen so far in the technology I think that it is a good start. 
I understand that there is some sort of fear over this issue and particularly over the home area network chip. I spoke at the start about the issue of VHS versus Beta Netscape versus Internet Explorer and Sony Blu-ray Disc versus Toshiba. In each of those cases there was a winner and a loser in the field of technology. If we make a decision to jump to one standard today when it is actually not clear whether that will be the dominant standard in the world we will end up incurring a whole lot of unnecessary costs for the consumer. It would cost a couple of hundred bucks extra for the consumer but that is basically a waste of money if the consumer has to spend that money again some time in the future. We do not think that that is the right thing to do. For example the meters that Meridian Energy has put in at Arc Innovations in Christchurch have allowed the situation where in the future home area network chips could be put in should that be the right technology to jump to. As that member has outlined in his bill it may end up being the right technology to jump to in the future but I think that idea has not yet been proven—it is not proven that it is the right place to go. 
A number of regulations exist currently about the guidelines on metering by the Electricity Commission. In fact a bill currently before the Finance and Expenditure Committee has been looking at a number of issues about electricity. This issue has arisen in passing. If the member had brought the bill before the House with some alterations particularly in terms of the home area network chips and other things about tariffs we might have been able to support it. 
I will touch on one example of the tariffs the member spoke about. Again in Canterbury the Orion New Zealand lines company has one of the most innovative sets of tariffs in the country. Up and down New Zealand there are currently something like 300 different types of electricity tariffs. The electricity reforms that the Minister of Energy and Resources is currently undertaking outline a series of regulations for the new Electricity Authority to formalise and make some changes in those tariffs in order to bring together a simplification. I think that that makes some sense. But we have to be very careful not to put in place what is effectively more compulsion in other tariff rates when it makes some sense to have some innovative tariff arrangements particularly in Canterbury with the use of irrigation. I know that the Green Party has some particular concerns about irrigation but tariff rates and the innovative tariff structures used by Orion actually help to reduce water use and power consumption. I think that is a good thing. 
It is true that smart meters have the potential to reduce peak demand. They have the potential to defer the need for more electricity generation in the future and to encourage people to change how they consume electricity through their appliances throughout their lifetimes. But there are smart meters and smart meters. As I outlined earlier the question is whether we jump now to what is probably the wrong conclusion or whether we wait and take into account a more cautious approach to implement an arrangement whereby we would have meters that are more appropriate for New Zealand. New appliances will come on to the market from developers such as Fisher and Paykel which is a world-leading developer of technology for appliances and they will be able to access a standard of communication between meters and their appliances. That will be a good thing but we are not there yet. I think this bill in outlining some way of jumping that decision before the technology is there is a move too far. 
Finally I reiterate the issue of costs. Some matters in this bill contain too much detail for a bill and are probably better taken into account in terms of regulation. They are better taken into account in the electricity reforms we are undertaking at the moment with the electricity legislation and I encourage the member to get involved in some of the final stages of those regulations and their development to make the current situation with the Electricity Commission and those guidelines more formalised. These reforms will take into account a big chunk of what this bill does but will not take into account the tariff restructuring the home area network chips and the in-home displays which we think are a cost too far. Thank you.