Hon DAVID PARKER (Minister of Energy) Link to this
I move, That the Electricity (Continuance of Supply) Amendment Bill be now read a first time. I will be recommending that the bill be referred to the Commerce Committee for consideration. The bill amends the Electricity Act to provide an ongoing obligation upon electricity distributors to continue to supply electricity to places that were supplied via lines as at 1 April 1993. The obligation can be met by the lines company either via those existing lines or through electricity supplied through alternative means. Section 62 of the current Electricity Act allows electricity lines companies to cut off supply to places they do not want to supply in 2013.
Well, that provision was one of the more ridiculous, ideologically driven ideas passed by the previous National Government.
We have been fixing that and many other mistakes made by National.
Consumers that may be affected by the expiry of section 62 include farmers, small communities, tourism businesses, and owners of holiday homes located in remote areas. The Labour-led Government shares consumer concerns about the potential loss of supply. We in the Labour Government believe that rural customers deserve and need security of electricity supply. Around 1 percent of consumers could be affected. In response to these concerns and to our own, the Government has reviewed section 62. We considered what arrangements should be in place to ensure that affected consumers and communities continue to have access to electricity after 2013.
Providing an ongoing obligation to continue supply obviously improves certainty of access to electricity supply for those people living in remote areas. The bill provides that the obligation can be met by lines or by electricity supplied by alternative means such as remote area power systems. Allowing these alternatives will facilitate investment in these technologies where it is more cost-effective than lines. Existing arrangements for the quality and reliability of supply will continue to apply to electricity supplied from alternative means.
Supply can be ceased permanently only with the agreement of every affected consumer or with the agreement of the Minister of Energy. The bill includes requirements for consultation and notification where a distributor proposes a change to alternative supply. The distributor must consult with each affected consumer and provide an assessment of how each consumer’s reasonable needs for electricity will be met. The consumer must then have a reasonable period to comment on a proposal. The distributor must also provide for at least 6 months’ public notification of the proposal.
To ensure that electricity prices remain affordable for consumers supplied by alternatives to lines, the bill introduces a new regulation-making power to regulate for the use of pricing methodologies for electricity supplied by alternatives. The amendments made to the Electricity Act by this bill will improve certainty of electricity supply for affected consumers mainly in more remote rural areas, as I have said previously. It will enable distributors and consumers to assess whether there are better ways to meet the need for electricity by using, by way of example, onsite renewable resources or perhaps by also improving energy efficiency to assist.
Overall, what the bill does is to give consumers in remote rural areas certainty that their electricity will not be cut off in 2013, which could happen under the law at present. I commend this bill to the House.
GERRY BROWNLEE (National—Ilam) Link to this
The motion that the Electricity (Continuance of Supply) Amendment Bill be now read a first time will indeed be agreed to by the National Party. The history behind this goes back to the—
The Minister over there, the poor old fellow Trevor Mallard, calls out “Flip-flop.” Well, if anybody has done a flip-flop on this, it is Labour. What I am about to tell Mr Mallard will be, I suspect, of some interest.
Back when the Electricity Amendment Act 1993 was going through the House, the then Opposition spokesperson on energy, the Hon David Caygill, was involved in discussions—as is often the case with bills like this, which have no political point but have a significant effect on certain communities—with the Hon John Luxton, who was at the time the Minister of Energy. A structure was being put together for the way in which lines companies would continue to operate and the way some of the trusts that were around at the time would operate. From my understanding of the situation, there were some 68 lines companies—or distribution agencies—in the country at that time. Many of them were metropolitan electricity departments, and there were consumer trusts as well as straight companies. When they went through that exercise their number shrank, initially to somewhere in the 40s. Today we have 28 companies serving not only tight metropolitan areas but also, in many cases, quite remote and disparate supply requirements across all parts of New Zealand.
When consideration was being given as to how big the line should be and how far it should run for any particular company, the decision was that it is better to go with the geographical interests that were naturally there and had developed over the preceding 60 or 70 years. That, of course, meant that some companies picked up people on the end of supply lines who would never ever be able to meet the costs of the energy delivered to them, because of the maintenance that would be required on those lines. Any electricity line is an asset that will last for many years. In fact, the general thought is that they are 65-year assets. So in order to progress the movement—I suppose one would say the very favourable rationalisation—that was happening, it was decided that the particular issue of those at the end of those lines would be put off until some time in the future. By agreement, the date was arbitrarily set at 2013—20 years out. The commitment, though, was that during the intervening years discussions would take place about how those people on the ends of those lines would continue to receive their supply, and what the obligations would be on the various companies that were delivering that supply.
The interesting thing is that 3 years after that, when I came into Parliament in 1996—as you yourself did, Madam Assistant Speaker—the discussion was still going on. I remember very clearly during the 1998 discussions about electricity reform—5 years after the Electricity Amendment Act 1993—the intense discussion about the end of spur lines, as they were known, and what was going to happen to them. Spur lines generally refer to Transpower but can be heavy distribution lines as well.
There was a change of Government in 1999, and much trumpeting from the new Minister of Energy, the Hon Pete Hodgson. He said at various points that he had concerns about people on the end of these supply lines. But here we are, 9 years later, right at the death of the 48th Parliament, putting through a bill to sort this out in the way that it should have been sorted out many years ago. Over a number of years, plenty of public comments have come from me in my role as Opposition spokesman on energy advocating exactly what is in this bill. There is no point in saying that it is all National’s idea, and I am not saying that. It is the logical thing to do.
This bill will mean that where distribution companies have uneconomic lines they will be able to go to those consumers and offer them an alternative source for their electricity supply. One of the things I am unclear about in this bill, though, is just what the cost of that supply will be. I would have thought that the bill itself might want to link the end price for delivery—and, in fact, the cost of energy—to whatever anybody else was paying in the market on any particular day, or was paying by way of some longer-term hedge arrangement, perhaps. I am saying that if a lines company is facing many thousands of dollars of annual maintenance and can offset that by providing an alternative supply, one would think that some of the savings they might make would be passed on by way of direct subsidy on energy cost to those end-of-line consumers. Not many would have expected us to take that position, but I think it may in fact be the only reasonable way in which some of these consumers can be fairly dealt with. During the Committee stage this evening it will be very interesting for the Minister to give us a view on whether an amendment to put that provision would be supported by the Government.
As I said, the National Party supports this bill. We see it as the culmination of some 15 years—nearly 16 years—of discussion, and it will give certainty to people on the end of those lines, who have for some years now been asking what happens to them after 2013. It is clear that continuance of supply will be a requirement on those distribution companies. It is unclear, and it is up for negotiation—and quite reasonably so, I think—what the generation source will be for the supplied electricity. So we look forward to the Committee stage of this bill, and, subject to that very important question being answered, our support is likely to continue through to the third reading.
Hon TREVOR MALLARD (Minister for the Environment) Link to this
For a short period of time, I think on two separate occasions, I had the honour of being the Minister of Energy. This is an issue that was around in those times, and I think the time has come for it to be sorted out.
I do not agree with the policy that was enacted in 1993 and that is now unfair on people who are in remote areas and have had a tradition of supply, but I think we should also focus on some of the positive things that can come out of this legislation. I think of the use of alternative energy and the pulling together of the various methodologies of supplying people on—I do not think they are actually spur lines—some of these very long and uneconomic lines. There are some alternatives, and I am sure that over a period of time there will be a combination of, probably, in some areas, wind-fed batteries, solar power, and possibly some of the more modern generation of battery power being used as well within those places in order to minimise the use of those lines. It might be that in some cases, for a small percentage of time, some forms of power generation that might not be quite the best will end up being used. But what will happen is that individual packages will be put together for each of these places and they will be appropriate. I am sure there will be negotiations, and I am sure that in 2013 or 2023 we will have a much richer and much more diverse form of electricity supply to these places.
Hon Dr NICK SMITH (National—Nelson) Link to this
It is a pleasure to speak to the Electricity (Continuance of Supply) Amendment Bill this evening. It is telling that we have had a major U-turn in policy from the Government in an important area of the energy equation, and that is what I want to address in the context of this bill. I have been interested in, and would draw on, the Minister’s comments about some of the changes in the new energy technologies New Zealand needs to adopt if it is to be able to reverse the trend towards more and more dependence on thermal energy, but the comments I will make are in respect of solar water heating.
Today we saw an absolute U-turn from the Government. National announced in March a policy in which we said that the Government’s policy of having a price control on the solar water grant scheme was a disaster. The bizarre and unusual feature is that for the last 2 years we have seen a decline in the number of solar water installations. The Government has vigorously defended, and Jeanette Fitzsimons in the House this evening has vigorously defended, the Government’s policy, and in a little sneaky press release yesterday did a complete backward flip and adopted National policy. The price control on the Government’s solar grants scheme is a goner. The grant has been doubled to $1,000. They have even picked up National’s policy—that is, to provide for the inclusion of hot water heat-pump technology.
The ASSISTANT SPEAKER (Hon Marian Hobbs) Link to this
Excuse me, Dr Smith. I am having difficulty. I have the bill in front of me—
I raise a point of order, Madam Speaker. You will see that clause 4 talks about new sections 62 to 62B being substituted in the principal Act—this is an amendment bill. New section 62 deals with the continuance of supply, new section 62A is headed “How certain enactments apply to persons subject to obligation in section 62(3)”, and new section 62B is headed “Proposals to supply electricity by alternative means”. It is no surprise to any of us that if we are looking at alternative forms of electricity, solar heating for water is a major component. Indeed, I can recall numerous speeches made by the Minister of Energy and indeed, I think, by the Prime Minister on at least two occasions—
The ASSISTANT SPEAKER (Hon Marian Hobbs) Link to this
Are you taking a point of order, or making a speech? What is your point?
My point is that Dr Smith is totally in order to talk about, as it is said here, certain enactments that relate to alternative means of supply.
The ASSISTANT SPEAKER (Hon Marian Hobbs) Link to this
I will make a ruling, and it may not be very pleasant. Sometimes a game is played in this House. It goes: “I take a noun or a set of terms in the bill and, although the subject of this bill is about the continuance of supply lines, I take something it says from that and I take off on a totally different topic.” I am afraid that I had to stop another member from another party before who was speaking about general superannuation, instead of a special fund, and that was quite embarrassing. I am trying to be consistent.
This bill has nothing to do with the continuance of supply lines. It has everything to do with the continuance of supply. The very purpose of the bill is to enable distribution companies—
The ASSISTANT SPEAKER (Hon Marian Hobbs) Link to this
Your point is taken. Dr Nick Smith may talk about those issues, but please do not take off on to press releases and other issues that are slightly extraneous to this.
Hon Dr NICK SMITH Link to this
Let me make the point very plain. We have in this bill an attempt in an area of energy policy where we have seen one Government failure after another. I know it is embarrassing for Labour, but I will highlight the failure of this Government’s policies, where we have seen, over the last 2 years, the biggest drop ever in the number of solar water installations. We have seen a major policy failure.
If we look back on the record we will see that in 2000, 2001, 2002, and all the way through to 2006 there was quite substantial growth in the area of solar water heating. The Government has come out with an announcement that is not dissimilar to what have in this bill and suddenly we see a policy called Switch on the Sunshine. Since the Government announced its Switch on the Sunshine policy, we have seen the sunshine switched off. We have seen an embarrassing decline in the number of solar water installations and we have a solar water industry that is on its knees and is in crisis.
Hon Dr NICK SMITH Link to this
I will tell the member why. It is because the Government’s policy, worked out with the Greens, in terms of alternative energy has been a flop and a disaster; it has not worked. Why has it not worked? It is not dissimilar to the provisions in this bill. The Government and the Green Party have attempted to regulate the solar water industry by using price controls.
Jill PettisHon Dr NICK SMITH Link to this
What would we do? There are three things. The first thing is that National announced a policy in March of a $1,000 grant for all households, either for a retrofit or, alternatively, for a new home, for solar water systems. The second thing we announced in that policy was that there should be the same opportunity for hot water heat-pump technology to get those $1,000 grants. That is the second thing that we announced. [ Interruption] The third thing we announced, I say to Mr O’Connor, is that we would get rid of the stupid price regulation, which is killing off alternative energy technologies.
The busybodies in the Labour Party and the Green Party cannot help themselves but regulate. The interesting thing was this. When we announced our policy, what did the energy Minister say? He said that it was a mad, naive idea. And do members know what he did yesterday? He adopted the policy.
Hon Dr NICK SMITH Link to this
I would be happy to table it. Jeanette Fitzsimons, who made the announcement on behalf of the Government and who, as the Government’s spokesperson on energy efficiency for the last 2 years, has been vigorously defending the price controls on platforms up and down the country, says no, the National Party is wrong. What did Jeanette say yesterday? She said: “Oh, we will just take their policy.”
The question I have for Jill Pettis, for Damien O’Connor, and for others who have been chipping in is why it is that for 2 years they have wreaked havoc on the solar water industry. They have seen businesses up and down New Zealand close down, they have seen a record drop in the number of solar water installations, and they have refused to take on board the clear message from the solar water heating industry and from the National Opposition, and then, a few weeks away from the election, they have suddenly done a U-turn.
Do members know what the excuse was? The press release stated that the Government was dropping the price regulation because it will now be including the heat-pump hot water technologies as one of the alternative energies that will be eligible for the subsidy. That is weak, I am sorry. There is absolutely no justification, on the basis of including heat pumps, to get rid of the price regulation.
The real answer is that the price regulation policy was always a failure. It was never going to work. The only reason the policy has suddenly been changed, a few weeks out from an election, is that the Government and the Greens could not spend the next 6 weeks defending the indefensible, defending what was a flawed policy.
I do not mind all of that. I welcome the change of heart. I just would have expected a little bit more straightforwardness from the Greens and the Government as to why they have changed tack, and some acknowledgment of the fact that their policy was exactly what we announced in March. With this bill and with the future we have a—
The ASSISTANT SPEAKER (Hon Marian Hobbs) Link to this
How wonderful! For the last 2 minutes we will have the bill debated. Please go on. [ Interruption] Yes, I can. Sit down. I have tolerated for 6 minutes the member not talking on this bill. When I tried to point it out, he argued, through Mr Brownlee, that this was talking about solar energy. It was solar energy as a means to a continuation of supply. The member actually diverted. I gave a warning. In order to save the House’s time, I have let the member talk off the bill, but I feel that the member has trifled with the Chair and the House.
Hon Dr NICK SMITH Link to this
I am simply asking for consistency of rules. I listened very carefully to the contribution made by the Minister, Trevor Mallard. In all of his speech he talked in a very generic way around the issues facing the energy sector when he was the previous Minister. He did not mention any of the detailed provisions in this bill. I have, in the same way, talked about the generic issues. I simply ask that the same rules apply—
The ASSISTANT SPEAKER (Hon Marian Hobbs) Link to this
Sit down, please. I listened and I heard the Minister very clearly describe how alternative energy supplies could be used at the end of the line when we could not take electricity down the line to them. I am sorry, but that is what I heard, and that is what I was waiting for from you. We will now continue, please. [ Interruption] Would you both sit down.
The ASSISTANT SPEAKER (Hon Marian Hobbs) Link to this
Is this a new point of order on a new topic? I have ruled.
The ASSISTANT SPEAKER (Hon Marian Hobbs) Link to this
Are you sure you are not going to trifle with the Chair?
I do not believe I am trifling with the Chair. I do believe that the Chair is trifling with the right of members to take points of order.
I raise a point of order, Madam Speaker. Could you explain to us what you understand by section 62A, “How certain enactments apply to persons subject to obligation in section 62(3)”, if we cannot mention other Government policy where it refers to enactments that apply? The solar water heating provisions apply.
The ASSISTANT SPEAKER (Hon Marian Hobbs) Link to this
Sit down, please. I did that once, and I will do it again, and I do not expect another trifling with my ruling. My ruling is that it was perfectly all right to talk about alternative energy in the context of the continuance of supply. Instead, we have heard a discussion on alternative energy outside the notion of continuing supply to the end of the line. That is where the difference is. Please would you continue, Dr Smith.
The ASSISTANT SPEAKER (Hon Marian Hobbs) Link to this
I am sorry, Mr Brownlee. I really think that unless you are going to take a new point of order on a new topic—
Well, Madam Speaker, I still have not had the Chair explain to us how we talk about certain enactments without referring to those certain enactments. The Government’s solar heating policy—
The ASSISTANT SPEAKER (Hon Marian Hobbs) Link to this
Sorry, the member will take his seat, please. I have said that the bill is in relation to the continuance of supply. When the discussion is not in relation to the continuance of supply, I see it as being outside the bill. Would the member continue, please.
Hon Dr NICK SMITH Link to this
In talking about the future of supply for those people living at the end of the line, alternative energies will be important.
I will hold this Government to account, because for every year this Government has been in office we have seen a decline in the proportion of renewable energy. When this Government came to office, 73 percent of our electricity came from renewable sources, and that figure has dropped in each and every single year since. For all the rhetoric we have had about carbon neutrality, and about climate change and those issues, the reality is that this Government’s energy policies have failed. They have failed in the area of getting renewables, they have failed in the area of solar, and the Government has not achieved its objectives in terms of energy policy.
PETER BROWN (Deputy Leader—NZ First) Link to this
I am going to take a short call. I assure the Chair that I do not want to trifle with her, but I would like to respond briefly to some comments that Dr Nick Smith made in terms of solar energy. It will take 1 minute at the maximum. What he told us tonight is pleasing news. If the Government has changed its mind, we are very happy about that. We have long been an advocate of developing solar energy in this country, and we have always suggested that it should be developed along the lines of that in Australia in terms of finance. I think from memory, and from what Dr Smith has said, that the Electricity (Continuance of Supply) Amendment Bill is still short of what Australia offers. Am I correct?
The member is nodding that I am correct. The Minister of Energy, David Parker, summarised this bill very well. I am not going into any detail. He said it will give consumers in remote rural areas certainty that they will have access to electrical power on an ongoing basis, from one means or the other. That is my summation of what he said. We wholeheartedly agree with that and we support it 100 percent.
But I am compelled to say that some years ago I was sitting on a select committee discussing an electricity amendment bill of some form—I think it was the bill that dealt with lower charges for low-paid people. I can remember some farming people coming before us. I think they were Federated Farmers members but I have to be careful because I cannot remember exactly. I think they were representatives of Federated Farmers. They told us in no uncertain terms that electricity should be provided only on a user-pays basis. I took them to task on the cost of the lines and pointed out to them that they were being subsidised by urban users, because the urban users of this country were paying more for their lines so that the rural community could have access to lines. The rural farming people would not have a bar of it. They threw that point back at me in no uncertain terms.
I am very encouraged that the explanatory note outlines quite clearly under the heading “Status quo—benefits” that “For urban consumers it is reasonable to assume that their service cost should reduce. They currently pay more for their line services than they otherwise would as they subsidise the costs of supply to remote areas where revenue from those areas is insufficient to cover costs.”
We support this bill, which will deliver electricity on an ongoing basis to rural communities, despite some of them wanting the contrary—wanting the opposite. We are 100 percent behind the bill.
JEANETTE FITZSIMONS (Co-Leader—Green) Link to this
The Electricity Act 1992 was passed when the doctrine of user-pays was at its height. Even if those people were in remote areas producing high-quality farming products for New Zealand’s exports they were expected to pay whatever it took to take electricity to them regardless of the usefulness of the economic work they were providing for the rest of the country. That was the way the National Government worked at that time. It was right into user-pays. And the threat that the power supply of rural communities might be withdrawn in 2013 has been hanging over them ever since, particularly in areas with high wind speeds, where weather conditions often crash the lines, and where the maintenance costs are therefore very high. So we welcome the fact that security is being restored to people who live in those remote locations, often performing very useful work for the economy as a whole.
That year, 1992, was also an era of rapidly advancing technology when distributed generation showed promise for being able to relieve the grid, in many cases, of the burden of having to service very far-flung areas. So even at the time this legislation was passed, there was a thought, I think, that by 2013 the distributed renewables would be in a position in many communities to take over. They are still priced a bit on the high side but there will be some areas where that is true. It means that, for the first time, people will start to think in terms of energy services rather than just wires and kilowatt hours. They will think about the end use of energy that they actually want to achieve and what is the best way to get there. It may not simply be more kilowatt hours, it may be greater use of firewood, it may be greater use of solar or wind, it may be small-scale hot spot geothermal—a range of renewables that back each other up. It is much easier to do it at community level than it is at single house level. The technologies of wave and tidal generation are advancing. We have some equipment now being tested in the water and the best places for that tend to occur in quite remote locations dotted around the periphery of New Zealand.
We may well find that there are areas where a mix of these distributed renewables will make it possible to let the line go down altogether. And we will find in those communities that it is often much cheaper to manage demand down than it is to build supply up—that more efficient equipment is usually a much cheaper way of reducing electricity consumption than simply building more supply or putting in more solar panels. I have a little experience in this, having lived off-grid for 13 years. I know that batteries are the weak link in the system, and, therefore, a larger community of people and a range of sources of generation that needs less storage is a good thing to aim for. This may, in fact, turn out to be the jumping-off point for distributed renewables around New Zealand, to give us the experience of development, so that they then move more into the mainstream.
I also want to say a few words about solar water heating. I could only laugh when Nick Smith talked about the need to include hot water heat-pumps in the solar scheme and said that that was National’s policy. When the solar scheme was first announced a couple of years ago we made it very clear that there was work under way to look at including hot water heat-pumps in the scheme. It was not possible at that stage because we had no equivalent way of measuring the energy performance to compare them with solar. That work has been done, and yesterday’s announcement signalled the fact that we now can measure the energy performance of hot water heat-pumps and we therefore are in a position to give them a grant in the same way that we give solar. This is hardly adopting National’s policy. This is carrying out precisely what we said we were going to do 2½ years ago, and the work plan to do that has now been completed.
I was also very interested when Dr Smith announced a policy of doubling the grant to $1,000 some months back—early this year—because it happened the week after we had made that decision with officials and it was not yet public. I did wonder how he got had hold of that information, but that work was—
JEANETTE FITZSIMONS Link to this
Well, if the member is telling me that I lied to the House, I take objection to that.
JEANETTE FITZSIMONS Link to this
Well, it is one thing or the other. It is either true or it is not, and it is actually true. That has been the position for some time; it was announced many months ago that the grant had been increased.
In terms of the financial assistance, I want to mention Dr Smith’s position on solar water heating. [Interruption] Madam Assistant Speaker, I think I spent quite a lot of time speaking in detail about the bill. I am now talking about one technology that has the ability to significantly reduce energy demand at the ends of lines so that alternatives can be developed, and answering some matters that have been raised in the House that were simply untrue. Dr Smith’s policy was simply to throw money at any solar water heater that wanted it, never mind how much energy it would save, never mind the quality standards, never mind the training programmes for the installers—just throw money at mates in the solar water heating industry.
The Greens did not do that. We set up training schemes, because we found that a lot of solar water heaters in the past had been put in very badly, and we now have quality standards for installation. We have quality standards for the hardware, because some of that did not measure up. We have performance modelling for the systems so we know how much energy the solar water heaters will save. The National Party’s policy is to just throw money at it, regardless of what it does—to not require it to be cost-effective for the consumer and to not require it to save energy. I guess that is why National has to borrow so much for its policy—in order to pay for this kind of largesse.
TIM GROSER (National) Link to this
As the House knows, National is supporting the Electricity (Continuance of Supply) Amendment Bill. We support it because its underlying objectives are obviously commonly shared around the country. I think there is a fundamental point of equity that all the parties agree on. One cannot allow a rampant marginal costing regime to apply even within metropolitan areas, so why should it apply throughout more remote rural areas?
The idea of ensuring security of supply is something that affects all New Zealanders. Of course, there are some rather bigger issues than are dealt with in this bill, which certain aspects of Government policy have raised, concerning the actual long-term availability of supply, but that would lead us into another debate with you, Madam Assistant Speaker, over the purpose of the bill, so I will steer clear of that, in deference to your very robust position on this matter.
What concerns me about the bill is that it has an air of kicking for touch about it. It has obviously come up to a deadline in terms of the original deal done in the early 1990s of this 20-year grace period, in the expectation that a fix would be found. No fix has been found, and, as various speakers from our side have pointed out, a “kick for touch into the future bill” has been put into place in the last days of the Parliament to deal with a problem that might have actually benefited from more serious and systematic attention in the last 9 years.
The bill does the easy stuff in terms of the definitions in it, and I will not go systematically through that. What it does not do—and this is the nub of the point that Mr Brownlee, our energy spokesperson, was making—is deal with the real devil in the detail here about what the actual process going forward is. There is plenty of clarity around what I would call trivial aspects of the process; for example, new section 62B, in clause 4, states that the supplier must fulfil the obligations by giving notice outlining the proposal, and must describe how, under the proposal, the consumer’s reasonable electricity needs will be met. This new section also refers to the public’s access to information, and so on and so forth.
The crucial point, though, concerns how this will be resolved in a fair and balanced way. All we know is that clause 5, which deals with electricity governance regulations, states that the relevant section, section 172D(1), is amended by inserting paragraph (9A), which states: “requiring any person who fulfils the obligation in section 62(3) by providing electricity by alternative means to use a specified pricing methodology in setting the price for electricity supplied by alternative means:”.
That is a wide open loophole in this bill. That basically describes a situation, at least on my reading of the plain language of the bill, of an enormous lack of certainty into the way forward. It is relevant to the discussion of this bill to try to foreshadow, in the light of recent energy price shocks, what will happen to micro-energy development. I think most people accept that with the price of oil being very, very low for a very long period of time, we have seen these spikes in price primarily as a consequence of no investment in refining capacity around the world and, frankly, of a lack of economic incentive to develop much of the alternative energy resources right around the world.
We in New Zealand are unusually richly placed in this area, but the point is that we will now see literally trillions of dollars being invested around the world, because there are trillions more dollars to be made out of such investments in alternative energy resources. Given the development of new technologies—and the miniaturisation of technologies will continue just as powerfully in the next 10 years as it has done in the previous 10 years—it is not implausible to take the view that there will be more cost-effective micro-generation facilities available through technologies such as those that various members in the House have mentioned—solar technologies, wind technologies, and perhaps all manner of combinations of technologies that we just cannot envisage.
The price still remains the crucial issue for the consumer. We have not yet defined what we mean by the end of the line. Is it one consumer? Is it a group of consumers? We have not defined what type of caveats will be around the actual process of defining the price. I see a real danger here. In spite of all the formalistic protections in terms of giving due notice and so on and so forth, where, actually, is the negotiation in this process? Where is the guarantee that consumers at the end of the line will not be forced into a position where they say to the supplier: “Well, thank you very much for meeting your obligation to give a specified pricing methodology for setting the price, but the specified pricing methodology that you put forward means that you’re putting us out of business.”? I really think that a little more work is required on this.
But, yes, the bill introduced for this longstanding and long foreseen problem, right at the end of this Parliament, kicks for touch on the underlying principles. I am certain that we have not heard the end of this issue, and that future Governments will have to attend to this matter with a little more rigour than has been the case with this Government over the past 9 years.
Dr PITA SHARPLES (Co-Leader—Māori Party) Link to this
Twenty-year-old Ietitaia Muliaga puts the Electricity (Continuance of Supply) Amendment Bill into perspective with a comment he shared as he remembered the last hours of his mother’s life. Mrs Muliaga, who was hooked up to an oxygen machine, with tubes running to her nose, asked to speak to the contractor who had come knocking on their door that morning to turn off the switch because a bill of $168.40 had not been paid. His son remembered: “She asked him to just give us a chance.” Last week Gordon Mātenga released his coroner’s report into the death of Folole Muliaga. His formal verdict was: “The cessation of oxygen therapy and the stress arising from the fact of the disconnection have contributed to her death”—“just give us a chance”. Mrs Muliaga did not get that chance, but perhaps we as a nation have learnt through this tragedy to ensure that the crisis we have endured in the last 18 months will never occur again.
So we come to this bill considering the vital purpose of continuing the supply provisions to ensure an obligation on electricity distributors to supply electricity. The amendment brings relief to affected communities, which will continue to have access to electricity supply after 2013. It is about giving them a chance to enjoy the services and facilities that we expect any citizen in this land to have access to. We know that a fear in many rural Māori communities was that the deadline of 2013 would slash services and push companies out of town. In this context, we were interested to see that the extensive consultation exercise included a submission from Ani Pāhuru-Huriwai of Te Aroha Kanarahi Trust.
We are pleased that the consultation with key stakeholders held toward the end of 2006 and early 2007 included the affected communities. We would note, however, that with the exception of the eight submissions from individuals, Te Aroha Kanarahi Trust, French Pass Residents Inc., and Rural Women New Zealand, the bulk of the groups consulted were local government, businesses and business lobbies, distributors, retailers, energy trusts, central government, district health boards, and a Government agency. We in the Māori Party believe that any policy is only as good as the people’s voice, and we would hope that, in the select committee process of the bill, there is able to be full and diverse representation from the affected communities, to ensure that the options receive a solid analysis.
I think it is fair to say that this bill, although it might not have affected a wide group of New Zealanders, would certainly have had a dramatic impact on the affected communities, if the amendment had not been put forward. The number of connections that, as at 1 April 1993, were theoretically at risk of not being maintained was estimated at about 16,000. Some analysis of the impact of this legislation has suggested that the impact was minimal—just 1 percent of about 1.8 million connections. But I would put it to those analysts that it is all a matter of perspective. The impacts of even the potential threat of electricity being cut for some of our people is extremely distressing, particularly for those living in remote rural locations.
Section 62 of the Electricity Act had set the alarm clock for 31 March 2013, and for some of our communities that time was getting perilously close. The purpose behind the original 1992 time frame was never understood. It was never clear why there had been an expiry date. All that we could make out was that it was a decision probably made purely on economic lines. It appears that in areas where the provision of lines function services were uneconomic, due to the large distance between customers and the expense of servicing the lines, the decision was made that, come the magic date of 2013, lines companies would no longer be statutorily required to provide a connection to those remote rural locations. The most likely scenario was that 5 years on from here, if a flash flood occurred, an earthquake erupted, or some other unforeseen freak of nature took place, supply would either be terminated, or the cost to consumers would rise significantly.
Let us look at this a bit more closely. Let us take some of the adverse weather events that have tormented Te Tai Tokerau, Waiariki, and Te Tai Hauauru, in recent months. A month ago Mount Manganui was hit by a mini tornado. Significant flood-producing rainfall occurred in Northland, Coromandel, the Bay of Plenty, Whanganui, Manawatū, Marlborough, and parts of the central plateau. There have been flooding, high winds, and earthquakes—all of them weather risks for the more remote locations. The possibility that lines supply might suddenly cease in, say, Tolaga Bay, Takapau, or Te Teko is a hardship that no member of Parliament could possibly sit by and allow to happen. Cessation of supply could mean, as it did in the tragic case of Mrs Muliaga, a chance of life snuffed out. Cessation of supply would inevitably impact on the health, well-being, and capability of any community to survive. Cessation of supply would impact on the viability of economic development, on domestic services, on farming, and on rural life in general.
The Mayor of Ruapehu District perhaps summed this up in a release she issued on 28 May: “The concern for Ruapehu District Council and the rural communities we represent has been that lines companies will withdraw rural power lines once the continuance of supply guarantee expires, claiming a lack of economic viability. Historically the provision of electricity to rural areas was seen as an essential component of encouraging agricultural production and efficiency with electricity seen as a right for all New Zealanders.”
This is one bill that we are happy to support under urgency. The matter of security and assurance of supply to many of our constituents throughout the seven Māori electorate seats is absolutely critical. We are glad to be able to vote in support of the bill going to the select committee as a vote of confidence in investment in the rural economy. I hope this speech has been close to being about what the bill is about. Kia ora.
NATHAN GUY (National) Link to this
I think it is very appropriate that I take a call on this bill, because it is very important to rural New Zealand. Most of rural New Zealand will be tucked up in bed now, at 10.35 in the evening on Wednesday night, because that is where most normal people doing a hard day’s work actually should be. But the Government wanted to put the House into urgency, up until midnight this evening and midnight tomorrow night, and this is one of the bills it wanted to pass through. That just shows how disorganised, after 9 years, the Government is.
This bill is vitally important for rural New Zealand, which is often forgotten in this Parliament. It is important that I make a contribution, as we come to the end of the 20-year sunset clause for this legislation, which for those who are interested and who are still up listening—they may be having their cup of hot chocolate before they nod off to sleep—is the Electricity (Continuance of Supply) Amendment Bill. Section 62 of the Electricity Act will expire in 2013, which allows the lines companies to be able to review that section.
One of the most important things for rural New Zealand—which is often forgotten in this House, so I will make a contribution on it—is the continuation of electricity supply right through not only to the farm gate but to rural communities. When we think about all the isolated parts of rural New Zealand—it might be Mount Peel, it might be an area over on the West Coast, or it might be up and around the East Cape of the North Island or in the far north—we know that we have big tracts of rural New Zealand where electricity is supplied on power lines that might run down long kilometres of rural gully roads, and it is important that lines companies do supply that electricity to those properties. For those properties, electricity is actually their rural lifeblood, is it not? We can think about how they are able to milk their cows, shear their sheep, or just keep their refrigeration going—their freezers in their own family homes. Electricity is vitally important.
This legislation will mean that lines companies will still have to provide electricity, but it might be in a different form from what is currently there. It might be more cost-effective for properties to think about an irrigation-supply generation dam option. Of course, that will not happen under this present Government, because it will need the reform of the Resource Management Act, which is one of National’s key platforms going into the 2008 election. We are looking forward to getting into Government. That is one very important policy announcement for rural New Zealand, and there are several others. Of course, rural New Zealand is waiting on our tax policy, which will also be vitally important for it, as well.
I have touched on how lines companies will still have to supply electricity to these remote parts of rural New Zealand, but it may not be just an irrigation-supply generation dam option. It might be something to do with solar power, or a localised scheme to do with wind turbines. There are several options. But the fundamental thing with this legislation is that rural New Zealand should not be forgotten.
The important contribution I want to make in the debate this evening is to say that not so long ago in my area of Horowhenua-Kapiti we had what I guess we could call a very localised mini-cyclone. It came through, wiped out trees, and knocked over power lines. On our particular property we did not have power for about 6 days. Of course it makes us realise how reliant we are on electricity in New Zealand. When we cannot flick the light switch on, when our cows cannot be milked, and when all of our frozen items in our freezers are starting to thaw out, we pick up the phone and think “I will just get a generator from the local hire company down the road in our local town.” But if someone from the hire company says “Sorry, we sold out 2 days ago.”, we look through the Yellow Pages, because we cannot use the white pages on the Internet as we have no power, and the battery has gone down on our laptop.
So we look through the Yellow Pages and start ringing around. Suddenly, we find that there are no generators in Horowhenua-Kapiti. We ring Palmerston North, because we think we might get a generator there, but we find they have all been hired out. Then we think that we can get something from Wellington, but we find that they have all been hired out. In the end, I found a generator that came all the way down from New Plymouth.
Do you remember the blackout in Auckland, when the generator crashed—when National was in Government?
The generator came through that former member’s area of Whanganui. We are looking forward to hearing her contribution for the final time tomorrow. It just shows that she has had several years in Parliament and has not been able to sort out this issue for rural, remote areas around Wanganui. Chester Borrows is doing a fantastic job there representing that township and that area of rural New Zealand.
In summary, I say that this debate shows just how important it is that we get the Electricity (Continuance of Supply) Amendment Bill right. This is a first reading. It will go off to the select committee. Rural New Zealand will be able to have its say. It seems in recent times that the Government has just put the bulldozer blade down in urgency and just rammed legislation through. It is important that people have the ability to have some dialogue with the Government, even though we all know that the Government is in its dying days now. There are just a couple of days to go under this urgency motion, before we say ta-la-la not only to Jill Pettis but to all the other members on the other side of the House. We are looking forward to reigniting rural New Zealand. [Interruption]
I am coming to a summary. I know those members do not like hearing the truth, and I know it hurts them.
We need to acknowledge rural New Zealand. We need to acknowledge the powerhouse of this country. Of course, we remember the contribution former Prime Minister David Lange made when he said that rural New Zealand, the primary sector, was going to be the sunset industry. How wrong that has proved the Labour Government! This bill is important for rural New Zealand. It is very important for the continued supply of electricity through to those areas. This will enable the line companies to investigate a whole lot of options. The most important thing, I say to rural New Zealand, is that electricity will continue to be supplied under this legislation, but, of course, there will be some costs associated with it.
ALLAN PEACHEY (National—Tamaki) Link to this
I am very, very conscious, Madam Assistant Speaker, that you came to this House from a previous life with a most formidable reputation as a headmistress, and I would not want to trifle with you at all, but I would seek a little bit of room to move in rebutting some of the arguments that have been put up in this debate to date. We have here again, with the Electricity (Continuance of Supply) Amendment Bill, another bill having its first reading in urgency, in the last couple of days of the Parliament, under a struggling, strangling, dying Government—and we wonder why. I think about the comments made by the two Ministers who spoke, and we should observe that no other Government members have taken the call. It seems to have become their style now not to stand up and debate openly and according to the rules of debate, but to sit there and bellow, snipe, sneer, and that sort of thing. That is regrettable, Madam Assistant Speaker, as I am sure you will agree, and it does nothing to enhance the reputation of the Parliament.
Let this House be very, very clear as to the context in which this bill has been introduced, and in which we are having to debate it. For all the socialist rhetoric from the other side of the House, the reality is that the Government’s energy policies have been a failure. That is a comment most relevant to this bill, when we appreciate that the intention of the bill is to make a change to the Electricity Act 1992. It had always been the intention of that Act to guarantee continuance of supply, but now, as the sunset clause approaches, it is also appropriate to consider whether that clause should remain. This bill, of course, gets rid of it. Let us not forget that the 2013 clause was put in the 1992 Act for very, very good reason. The reason had to do with flexibility, with looking ahead, and with the anticipation that new forms of energy would be developed. We cannot blame the legislators of 1992 for not anticipating that there would be 9 years of failed socialist government, and that energy policy, like so much other policy, would just be allowed to drift. New Zealanders will take great heart from the knowledge that they can—and will—very, very soon put an end to that drift.
There is mention in the bill of alternative means. That is my point. The Government has not done its work. I think that if we could turn the clock back to 1992 and talk to the people who were in the House at that time, we would see they would not have envisaged a Government that would fail so badly. I want to take a moment to make reference to the comments—[Interruption]. Is that the final speech by Peter Brown? If you want to have a say, Mr Brown, through you, Madam Assistant Speaker, have it now, because I do not think we are going to see you back. Snipe away as much as you like. Enjoy it for the last few moments—
The ASSISTANT SPEAKER (Hon Marian Hobbs) Link to this
Do not bring the presiding officer into the debate. No second person references, please.
I apologise, Madam Assistant Speaker. You are quite right.
I refer to what the member for the Green Party had to say. There was not a great deal of substance to it. It was not a new, wider, or different perspective. It is disappointing that that party actually brings so little to the table in terms of the energy debate. Perhaps I could issue a caution, having listened when sitting on election platforms around the country at which some of the Green Party’s candidates have been present. It is easy to criticise. It is too easy to go all the way back to 1992 and have a crack at the National Government Ministers of that time, but sometimes one has to take responsibility for something. That is the experience the Green Party does not have—experience in Government. I think that in future debates on energy, and in the debate on the Electricity (Continuance of Supply) Amendment Bill, a party like the Greens would do well to try to bring a different perspective, rather than simply to indulge in criticism of legislation passed through this House in 1992 with the very best of intentions. I reiterate the point that the original intention of the bill, in 1992, was for ongoing universal supply. The repeal date was put in there to build in flexibility, and to try to anticipate what alternative technologies might be available, and what would be developed over a—what was it—25-year period. That was not an unreasonable thing to do. Now we find ourselves, at the end of 9 years of failed energy policies, in a position where things have not developed as we would have hoped. As I have said before, we cannot blame the legislators back in 1992. I am sure they did not contemplate 9 years of socialist rule—who would have? But given that that has happened, it is appropriate that the 1992 Act now be amended.
It is for that reason that the National Party will support the first reading and the referral of this bill to a select committee. As other speakers across the House have commented, New Zealanders need to be guaranteed an assured supply of electricity. That is a basic feature of New Zealand life, and every New Zealander, wherever he or she lives, and whatever his or her circumstances, is entitled to that. In conclusion, I say that we must be very, very clear about the context in which this debate is occurring and in which this legislation is receiving its first reading. That context is of a dying Government that has failed to move the energy debate forward in 9 long years.
PETER BROWN (Deputy Leader—NZ First) Link to this
I raise a point of order, Madam Speaker. I listened to the honourable member’s speech with interest and, noting that he is a former school principal, I wonder whether he could explain to the House how he can say that from 1992 to 2013 is 25 years.
The ASSISTANT SPEAKER (Hon Marian Hobbs) Link to this
I am sorry, Mr Brown, but that is a debatable point. It is not a point of order.
PETER BROWN (Deputy Leader—NZ First) Link to this
I raise a point of order, Madam Speaker. Mathematics is not debatable.