Clark DavidELECTRICITY INDUSTRY AMENDMENT BILLSecond ReadingHon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs) on behalf of the Minister of Energy and Resources: I present a legislative statement on the Electricity Industry Amendment Bill.ASSISTANT SPEAKER (Hon Jacqui Dean): That legislative statement is published under the authority of the House and can be found on the Parliament website.Hon Dr DAVID CLARK: I move That the Electricity Industry Amendment Bill be now read a second time.The bill will implement a number of the recommendations from the 2019 electricity crisis review. It will support the Government's efforts to adopt the right regulatory and market settings for an electricity system that supports a low-carbon economy. The bill will promote competition and innovation in emerging distributed energy markets such as by allowing the Electricity Authority to amend extend or revoke arm's length requirements between distributors and affiliated businesses. The bill will reduce industry costs through enabling the Electricity Authority to regulate more standardised distribution access agreements. The bill will also protect the interests of small consumers through providing clearer powers for the Electricity Authority to regulate how retailers deal with medically-dependent and vulnerable consumers such as for non-payment of their electricity bill.The bill has four main purposes which are informed by its sponsor the Hon Dr Megan Woods: to provide for the establishment of a small electricity consumer advocacy agency and enable the levy on industry participants to recover the Government's costs relating to small electricity consumer advocacy. To remove ambiguity in the ability of the electricity authority to amend the Electricity Industry Participation Code 2010 the code for the purposes of protecting household and small business consumers. Thirdly provide more regulatory agility to promote competition in evolving contestable markets by shifting from the Act to the code a number of existing provisions relating to a distributor's involvement in regeneration or retailing activities. And fourthly ensure that the code can regulate distribution access terms and conditions as it already does in relation to Transpower.Following the bill's first reading in September it was referred to the Economic Development Science and Innovation Committee where it was I'm told extensively examined. The committee tabled its report on 22 March and it falls to me to thank the committee for its work. It received 41 written submissions and heard 18 oral submissions and those submissions have resulted in a small number of amendments to the bill which were unanimously recommended by the committee. While some minor and technical amendments have also been proposed in this contribution I'll discuss the main amendments which the committee has recommended.First it's recommended that the bill be amended to enable the Electricity Authority to share information with overseas regulators in particular the Australian Securities and Investment Commission. That's because ASIC as it's known regulates the Australian Securities Exchange ASX on which New Zealand electricity futures contracts are commonly traded. The amendments include appropriate safeguards on the use of information including compulsorily acquired information ensuring that it may not be used by an overseas regulator to incriminate the person who provided the information. This amendment will also enable the Electricity Authority to share information with New Zealand's gas industry co-regulator the Gas Industry Company. The electricity and gas industries are closely related and information obtained by one regulator could be valuable for the exercise of functions by the other.Secondly the committee recommended that the time-limited backstop power given to the Minister of Energy and Resources in the bill be brought forward by one year to help lessen any potential regulatory uncertainty. This backstop power would allow the Minister to amend the code in relation to specified matters if the Minister is not satisfied with how the code addresses the specified matters. It is recommended that the period during which the backstop power may be exercised would now be not earlier than one year after and not later than three years after the date of enactment.Third it's been recommended that the bill be amended to clarify the ability to define a new industry participant. This would allow regulations to identify any persons not limited to industry service providers as industry participants where their activities or roles in the electricity industry are material to the Electricity Authority's objectives. That will ensure that the code would apply to new industry participants and help to continue to promote competition in evolving contestable markets.Finally a number of amendments resulting from a review of the electricity compliance framework have also been recommended. This review was recommended by the 2019 Electricity Price Review to bring the compliance framework and related enforcement regulations up to date with best practice. This review was completed by the Ministry of Business Innovation and Employment last year and resulted in a number of proposed changes to the Act as well as other proposed changes to the Electricity Industry (Enforcement) Regulations 2010. The amendments recommended are: to increase the maximum penalty for a code breach from $200000 to $2 million; allow an additional $10000 penalty for each day that a breach continues; give the rulings panel discretion to award costs whether or not it determines a breach has occurred; and clarify that code breaches resulting from a series of closely related events are treated as a single breach subject to a single penalty rather than separate breaches subject to multiple penalties.During the select committee phase some submitters did raise opposing views to certain provisions in the bill in particular the additional consumer protection objective for the Electricity Authority and moving aspects of Part 3 of the Act into the code. While these views were examined in detail by the committee I believe it is worth noting them again—and I'll note again that the committee was unanimous in its recommendations that it did make. Some submitters suggested that the additional consumer protection objective for the Electricity Authority would be unnecessary and should be limited to a consumer protection function only. However analysis conducted during the drafting process concluded that it is prudent to also change the objective due to the risk that a consumer protection rule might be considered inconsistent with the existing objective. I note the select committee's report did not recommend any amendments to this provision in the bill as drafted and I agree with this decision.Protecting small consumers is intended to be a relevant consideration for a relatively small portion of the Electricity Authority's work. It is expected to come into play only when the Electricity Authority is considering the conduct of retailers and other participants that deal directly with small consumers where there is an imbalance of power in those relationships that can result in adverse outcomes for small consumers. I also note some submitters were concerned about moving elements of Part 3 of the Act into the code which will enable the Electricity Authority to revoke or amend the existing business restrictions that apply when distributors are involved in generation or retailing. Submitters viewed that such intrusions on commercial freedom and property rights are generally a matter for primary legislation rather than delegated legislation. The select committee's report did not recommend any material amendments to this provision. I believe this is the correct recommendation as technology advances are increasingly and will continue to blur the boundary between distributors and retailers.The Electricity Authority needs to be able to develop rules in the code. A secondary legislative instrument that can respond if distributors use their monopoly position deliberately or inadvertently to deter competitors from entering the market for such products and services or disadvantage those already in the market. This will help ensure that consumers can benefit from new products and services that offer high quality lower cost or more choice enabled by these emerging technologies and consumers.In closing this bill will ensure the electricity regulatory system is more future-fit in light of significant changes occurring in the industry. I look forward to an enthusiastic and enlightening debate and I commend this bill to the House.ASSISTANT SPEAKER (Hon Jacqui Dean): The question is that the motion be agreed to.