Seymour David: Electricity Industry (Small-Scale Renewable Distributed Generation) Amendment Bill — First ReadingText is incorporated into the Bound VolumeSeymour David: Electricity Industry (Small-Scale Renewable Distributed Generation) Amendment Bill — First Reading[Sitting date: 11 November 2015. Volume:710;Page:7914. Text is incorporated into the Bound Volume.]DAVID SEYMOUR (Leader—ACT): Could I begin by agreeing with some of my colleagues in paying tribute to Gareth Hughes for bringing what I believe is a well-intentioned bill. This House at its best exists to improve public policy for all New Zealanders and I think that is what Mr Hughes has sought to do with this bill. I have actually corresponded with him at some length about the bill and how it might work and whether or not its intentions which are good might be matched by good results. I felt that as Parliament’s only electrical engineer I should come and explain why I think the results of Gareth Hughes’ bill may not match the good intentions.I think the question that we should ask ourselves when making legislation or when we regulate as Ministers is: what is the problem definition? What is the market failure that we are seeking to allay by taking this action? As far as I can understand there are a number of concerns that Mr Hughes has. One is that there is collusion. He is suspicious that the prices that different retailers offer for buy-back have moved somewhat in sync in recent times. That is not unusual in a commodity market. The whole point is that there is really only one type of product and the price is fairly uniform across the market. If indeed there was collusion occurring it would be an open-and-shut case for the Commerce Commission under existing law so I do not think there is a problem that justifies action there.The next concern gets a bit technical: the idea that for distributed generation the call on distribution networks is somewhat smaller than what it is for other forms of generation. As the member has put it we are really just sending electrons next door to the neighbour’s house. That is not quite accurate. It is not so much the electrons that move; they drift at about 7 millimetres per second. It is the wave of energy that energises the grid that moves and it does so almost instantaneously. The point of transmission and distribution networks is that they are with very small line losses in general equally useful wherever you may be. That is the point of a network and if you wish to have access to that network then you must pay for using it wherever you may happen to be.I think there is an argument that other reforms should take place that there should be more time sensitivity in the price charged for access to distribution and transmission as it becomes technically feasible to measure the time of use or at least cheaper to do so. But it is simply not the case that because your dependence on the grid is perhaps more fleeting than others—the fact is if you still want to be able to access the grid then you have to be able to pay to access it.Finally is the idea that there simply is not enough certainty in what the future price will be. Well I agree. That is a problem that all generators face. The Hon Ruth Dyson brought this up. Whether you are Mighty River Power or whether you are Mr Speaker or whether you are perhaps Gerry Brownlee who tells us he has a solar panel you face that uncertainty. But again there is no market failure here. There are actually solutions already emerging in the market to insulate people against that uncertainty. People will allow you to have solar panels installed owned by a third party and they take the risk away from you so there are already market solutions to this perceived market failure. It seems that the market failures that the legislation is supposed to be addressing either do not exist or are already well addressed by market mechanisms.However there are unintended consequences. What we are ultimately saying is if there is going to be some sort of fairness in a deal then some authority has to know what a fair price is and be able to enforce that it is charged over time. There are really two ways you can get a price wrong: too high or too low. If it is too high it will actually discourage retailers from entering the market which would be disastrous for the whole intention of Gareth Hughes’ bill; if it is set too low then of course you are going to end up starving retailers from being able to actually serve the market that way. Whichever way you get it wrong you are going to actually counteract the intention of the bill.So I am opposed to this bill. It has very good intentions but for all the reasons I have laid out the results will not be good enough to match those good intentions. Thank you.