Electricity (Disconnection and Low Fixed Charges) Amendment Bill

Hon MAHARA OKEROA (Minister of State) Link to this

I move, That the Electricity (Disconnection and Low Fixed Charges) Amendment Bill be now read a third time. This bill will assist domestic electricity consumers. The bill really has two parts and purposes. Clause 4(1) of the bill amends the definition of a low-use consumer set out in section 172B(2) of the Electricity Act 1992. This will allow regulations to be made that will enable a greater number of low-use consumers of the lower South Island to benefit from a low fixed-charge tariff option. This part of the bill will also extend the Minister’s powers to grant exemptions from applications of the regulations to electricity distributors or retailers. This change is directed at small, isolated networks that are not connected to the national grid, where the cost of servicing customers can be far higher than is normal for grid-connected networks. This exemption is not automatic but is subject to an application verifying that because of the small size of the network and its position, a low fixed-charge tariff would not be beneficial to all consumers overall.

The low fixed-charge regulations were introduced in 2004, with the purpose of assisting low-use domestic consumers and to encourage energy efficiency. Prior to the introduction of the regulations, low-use consumers in many areas faced unreasonably high fixed daily charges for their limited or low electricity usage. The introduction of the regulations provided these low-use consumers with a tariff option that was more equitable for low energy usage and was compatible with the Government’s energy efficiency objectives. The regime particularly benefits small, low-use households, including older people on fixed benefits, by lowering their fixed energy costs. These regulations require electricity networks and retailers to make available a low fixed-charge tariff option to all domestic consumers whom they service and who have consumption rates at their primary dwelling of less than 8,000 kilowatts per annum. This bill alters the definition of a low fixed-charge consumer from a fixed threshold of 8,000 kilowatts currently defined in the Act to a definition to be provided in the regulations, so that the different regional locations and averages can be used.

Once the bill is passed the Minister will finalise new regulations that are currently under development, which will address any inequality currently being experienced by South Island electricity consumers. At the moment, 52 percent of households in and to the north of Auckland are on a low fixed-charge tariff, whereas only 9 percent of households in and to the south of Christchurch are on the tariff. Many in the lower South Island are missing out on the opportunity to take advantage of this rate of low electricity, due in part to the colder weather in these regions. The benefits, although not large, are material for some people. These new regulations will set the lower South Island threshold at 9,000 kilowatts, which is the average domestic consumption level for this region.

The second part of the bill responds to concerns about the disconnection practices of electricity retailers, particularly in relation to vulnerable consumers. The bill amends the Electricity Act so that the regulations can be set if electricity retailers do not follow the new disconnection guidelines developed by the Electricity Commission. The revised guideline on arrangements to assist low-income and vulnerable customers contains significantly improved arrangements, in relation to disconnection of vulnerable consumers. Significant improvements include retailers, first, reporting on compliance annually and explaining any non-compliance; second, having a process for identifying vulnerable customers; third, ensuring that disconnection notices contain information on where to obtain assistance and details on the costs of the disconnection; fourth, ensuring that all reasonable efforts have been made to contact the person, including at least one visit to the premises, if necessary, prior to disconnection; and, fifth, providing suitable training to staff and contractors interacting with consumers on overdue bills or involved in identifying vulnerable consumers. Further, retailers are compelled to follow a process to obtain the authorisation of consumers to consult the Ministry of Social Development prior to disconnecting any vulnerable consumer, and not to disconnect any consumer who is dependent on electricity for critical medical support. The revised guideline places responsibility on electricity retailers to identify vulnerable consumers and then consult Work and Income prior to disconnecting their power supply.

To give effect to the revised guideline Work and Income, together with the Electricity Commission and electricity retailers, developed a set of business processes that would guide how they work with one another to support vulnerable and low-income consumers. These processes were implemented in October 2007. There has been ongoing communication between Work and Income, the Electricity Commission, and retailers to ensure these processes work for all stakeholders and ensure low-income and vulnerable consumers have access to all of the support available to them. This bill will enable regulations to be made that may regulate for arrangements regarding the process for disconnection following non-payment of accounts, re-connection, billing information, and processes for alternative payment options such as smoothed payments, the redirection of income and debt recovery, and the process for identifying—

PHIL HEATLEY (National—Whangarei) Link to this

Mr Maharey might be able to afford to eat his lunch in this Parliament, Labour Party members might be able to afford to eat their lunch here, and National Party members also eat their lunch in the proper confines of Copperfields, where we are supposed to do that sort of stuff. But we have people across this country who cannot afford to pay their electricity bills. They cannot afford to pay their electricity bills or go to the supermarket and buy a block of cheese, a bottle of milk, or some lunch for Mr Maharey. They cannot go to the service station and fill up their petrol tank or their diesel tank. They are being taxed to death on everything they do, whether it is accident compensation levies, personal income taxes, petrol taxes, taxes on this, and taxes on that.

The situation in this country is that interest rates are going up, taxes are going up, petrol prices are going up, the price of Steve Maharey’s lunch is going up, rents are going up, and power prices are going up. We have a Minister who stands up in this Chamber and says that it is good news for New Zealanders that when electricity companies cut off their power they will not do it in a couple of weeks but they will spread it out; they will wait for a month. Electricity companies will cut off people’s power, but not in 2 weeks’ time; they will cut it off in a month’s time.

The Government is not so worried about the fact that people are in poverty because of the cost of food, rent, petrol, taxes, and everything else. The Government is saying that it will arrange it so that those people can pay their electricity bills, if they can afford them, over a 12-month period instead of monthly. The Government will smooth out the pain for them. It will drag out the pain for them.

I argue in this Chamber today that the Labour Government, rather than saying it will drag out the pain for people or that it will not cut off their electricity in 2 weeks’ time but will wait for a month—it will cut them 2 weeks’ slack—should be saying that it will lower their taxes, get interest rates under control, get the economy running so that petrol prices and transport costs are not going through the roof, supply housing so that rents are not going through the roof, and somehow make it easier for businesses so that the cost of a block of cheese, a bottle of milk, and every other basic dietary supplement that we eat is not going through the roof. Those are the things that we will address.

The former MP from Taupō—“Sam the Eagle”—may be sitting in that seat there, remembering the good old days when he was a Minister. He should remember that he had his chance to help struggling Kiwis, the most vulnerable, and he failed. He should not be voting for a bill that delays cutting off electricity; he should have looked at interest rates, petrol prices, and everything else.

National will be voting for this legislation, but it goes a very, very small way towards helping the poor. “Sam the Eagle” from Taupō had his chance. He is now a backbencher. What we are saying now is that it is actually John Key and his team who will help the underclass, not those guys. The country is looking forward to it.

Hon LUAMANUVAO WINNIE LABAN (Minister of Pacific Island Affairs) Link to this

Kia ora, talofa lava, and warm Pacific greetings. I rise to speak in support of the Electricity (Disconnection and Low Fixed Charges) Amendment Bill. I rise also to honour a mother, wife, daughter, sister, auntie, cousin, and friend—a woman of the Pacific. Folole Muliaga was a 44-year-old mother of four children. She worked as a preschool teacher at the local aoga amata—Samoan preschool—and she cared for her community. She was working hard to provide for her family. She was also studying to further educate herself.

Like many Pacific Islanders, Mr and Mrs Muliaga left their homes, families, and country to come to New Zealand in order to provide their children with education and opportunity. They worked very hard so that they would be able to succeed. Mrs Muliaga and her husband were low-income earners living in Māngere and were working hard to stay on top of their finances. This became even more difficult when Mrs Muliaga was hospitalised, and the family got behind in paying their power bill.

As members of Parliament, it is a story that we have heard before from our constituents. As a Labour-led Government we have worked hard to ensure that those who need it most are supported, especially when times are tough. Numerous policies are aimed at families like the Muliagas, such as Working for Families, increases to the minimum wage, income-related rents, and cheaper doctors’ visits—the list goes on and on. None of us expected that the tragic circumstances around Mrs Muliaga’s death could ever happen in New Zealand. As we know, she was using an electrically powered oxygen machine when her family’s power was disconnected because of an overdue account.

Her death was unnecessary and terribly saddening, and it shocked us as a nation. I will never forget the tears of sadness when, together with the Prime Minister, the Rt Hon Helen Clark, some of us visited the Muliaga family. There is a Samoan proverb that goes like this: “Ua tagi le fatu ma le eleele”—the stones and the earth wept. The expression designates great sorrow at the death of a loved one. “A ua toe fa’e’e le manuia ma le filemu tumau”—after the event, peace and tranquillity prevail.

The way the Muliaga family have dealt with the death of their loved one illustrates to all New Zealanders the spirit of forgiveness and the humanity of how Pacific people can deal with tragedy, leading to healing and reconciliation. The contractor who cut the power and the electricity provider, Mercury Energy and Mighty River Power, were invited by the family to Mrs Muliaga’s funeral. The family said they had only love for the contractor, not hate. That kindness and alofa is extremely admirable and inspirational. I am not sure that many of us could say that we would be so forgiving if we lost a much-loved mother and wife in these kinds of circumstances.

Since this tragedy, the Electricity Commission has worked with electricity retailers, Government departments, and community organisations to develop guidelines for dealing with disconnections for low-income and vulnerable consumers. These guidelines ensure that regulations are in place to protect vulnerable consumers and those reliant on electricity for medical equipment to maintain life. This bill ensures—

Dr RICHARD WORTH (National) Link to this

I follow a Labour speaker who has indicated support for this legislation, and that is assuredly National’s position also. We support the passage of the Electricity (Disconnection and Low Fixed Charges) Amendment Bill.

The previous speaker, Winnie Laban, spoke on only one aspect of the bill: that which touched on the question of the vulnerability of particular consumers. The bill is actually wider than that; it has two unrelated purposes. The first part of the bill amends the definition of “low-use consumer” in section 172B of the Electricity Act, so that regulations can be made that will enable a greater number of low-use consumers in the lower South Island to benefit from a low fixed-charge tariff option. The second part of the bill—which the previous speaker addressed—amends the Electricity Act to ensure that regulations can be made in relation to the content of the disconnection guidelines developed by the Electricity Commission. I will deal just very briefly with both parts.

First, I will provide some background on the issue of low fixed charges. In 2004 the Electricity Act was amended to enable the making of regulations that required a low fixed-charge tariff option for low-use domestic consumers. The regulations made under that Act were made for the purpose of assisting low-use domestic customers and to encourage energy efficiency. Obviously, with high fixed charges consumers gain very little financial benefit from reducing their consumption. The regulations required networks and retailers to make available a low fixed-charge tariff option to all domestic consumers whom they service who have consumption at their primary dwelling of less than 8,000 kilowatt hours per annum. The same threshold was used across the entire country.

The review that was carried out by the Ministry of Economic Development identified that an adjustment to the eligibility threshold was warranted, because far fewer consumers are on the low fixed-charge tariff in the lower South Island than in other parts of the country. So, really, this part of the legislation is about providing a framework to set for the lower South Island—the area from Christchurch southwards, excluding the West Coast—a threshold of 9,000 kilowatt hours per annum, which is the average domestic consumption level for that region. An amendment to the Act is required before the eligibility criteria can be adjusted.

In respect of the second part of the bill—which concerns changes to the electricity governance regulations—it is a trite saying, a matter of legal principle, that hard cases make bad law. The previous speaker dealt with the circumstances surrounding the Muliaga death. This is not a case where hard cases make bad law, and these changes are clearly warranted. The bill responds in an effective way to concerns about the disconnection practices of electricity retailers, particularly in relation to vulnerable consumers.

Other members have explained, and will continue to explain, aspects of the bill. Suffice it to say that National supports this legislation. That is to be seen from the fact that when the bill went to the Commerce Committee, it came back with no changes made to it.

LINDSAY TISCH (National—Piako) Link to this

As previous speakers from National have indicated, we will be supporting the Electricity (Disconnection and Low Fixed Charges) Amendment Bill. Although most speakers have focused on the tragedy that happened earlier on, I will direct my comments to the low fixed charges, which are addressed in clause 4 of this bill. It is interesting that this bill does not have any parts; it only has five clauses, and clause 4, “Low fixed charge tariff option for domestic consumers”, is one that most people other than Richard Worth have not spoken on. Most speakers have concentrated on clause 5, “Electricity governance regulations”.

Back in 2002 the Government proposed that low-use domestic electricity consumers be offered a low fixed-charge tariff option with the objective to “Ensure that electricity retailers offer a low fixed charge tariff option or options for the delivered electricity to domestic consumers at their principal place of residence that will assist low-use consumers and encourage energy conservation.” So that was the genesis of what the changes in 2002 were designed to do. We found that there was to be a regulator. This was put in the hands of the Electricity Commission, which was given the responsibility to monitor compliance with the regulations that were promulgated at that time. So the question has to be asked: if we already have a regulator in place, what is the need for this particular bill?

As I said earlier, the bill covers two parts—although it does not have parts, it covers two major issues—and this would indicate to us that the Electricity Commission has not been able to achieve what was set out in that deliberation back in 2002. If we were to look at some of the flaws that are there—which the bill does not address, but I think are significant and need to be highlighted—we would see that the low fixed-charge tariff is calculated so that the consumer’s electricity cost versus the standard option is neutral at the average of 8,000 kilowatts consumption level. The 8,000 kilowatts are mentioned in the introductory comments to the bill. Consumers who are using less than 8,000 are being subsidised by those consumers who are using more than 8,000 kilowatts. Therefore, the lower the consumption below the average, the greater the subsidy. Many low users who use a lot fewer than 8,000 kilowatts on average are not contributing towards even the electricity cost of overheads including network charges, let alone providing a margin to the retailer or the distributor.

Of course, the regulations do not take into account the users of dual fuels—gas and electricity. Those domestic consumers using gas for hot-water heating and space heating will reduce their electricity consumption by about one-half, compared with those using electric power. Those domestic consumers who by good fortune have gas appliances installed in their homes, or can afford to have gas appliances installed, will be able to receive the assistance, simply because they are dual-fuel users. That is also the case for consumers who use another alternative fuel such as solar heating, or coal—as is common on the West Coast and in Otago.

Although National supports the bill, there are certainly areas that needed to be thought through more than they have been. Someone who may live in a $2 million home and may spend 6 to 9 months overseas would well qualify for the low-user charge, yet could afford to pay the higher price but, because of the low consumption, will benefit from those changes. The bill does gives some flexibility, and I think that is significant. In relation to the low fixed-charge tariff, I note that the commentary on the bill states: “As a result of the amendment, the definition of ‘low-use consumer’ would be provided in regulations, so that different regions might have different thresholds, rather than a nationwide threshold of 8,000kWh per annum.” Those are the points I wish to make. I am happy that National supports the bill and I look forward to its passing.

PETER BROWN (Deputy Leader—NZ First) Link to this

New Zealand First supports the Electricity (Disconnection and Low Fixed Charges) Amendment Bill. I repeat what I said in the first reading: it was a sad day when the Government had to produce such a bill that basically came about because the power was shut off to the Muliaga family household, where Mrs Muliaga was dependent on electricity for her life. I have just come down to the Chamber to speak on this bill, and I have heard that a National Party member said earlier that it was worthwhile to cut the power off because the family had not paid their bill. That is absolutely appalling. A National Party member said that.

HONE HARAWIRA (Māori Party—Te Tai Tokerau) Link to this

Tēnā koe, Mr Deputy Speaker. I say that 22c is not a lot of money, but 22c was the price on the head of a Hastings woman who was recently threatened with power disconnection. For that woman, 22c was the price between life and death, because she used an electronically powered nebuliser just to be able to breathe at night. An account for 22c was sent out by Energy Online to this woman with a threat to disconnect her power if that 22c was not paid within 24 hours.

I say that 22c is a pretty cheap price for anyone’s life, and that was a particularly nasty threat from a power company that is obviously interested more in corporate profit than in providing a service. The worst thing is that this nasty little piece of corporate greed and malevolence came up not more than 2 months after the country was shocked by the tragedy caused when another power company refused to acknowledge its social obligations, and Folole Muliaga died from its mean-spiritedness.

It is sad that we have had to come to this Electricity (Disconnection and Low Fixed Charges) Amendment Bill through a tragedy, but it is good that this bill, which will help to sort out regulations around disconnection and low-charge options for domestic consumers, is before us now. But the very necessity for this bill also highlights the other areas of our economy that impact on a whānau’s ability to meet rising electricity costs, rising interest rates, rising petrol prices, and rising food costs.

We cannot help but shudder, really, when we think of last week’s announcement that nearly 20,000 kids need to be fed at schools every week because there is just no kai at home—20,000. That number is the equivalent of the population of a town the size of Thames or Queenstown. For those members from the north in this House, that is the equivalent of the entire population of Dargaville, Wellsford, Kaikohe, Kerikeri, and Kaitāia. The equivalent of the entire population of all of those towns is having to be fed every single week because there is not enough kai in the cupboards at home. Having 20,000 children living in poverty is a national bloody disgrace.

This morning the Māori Party hosted Kate Green, the chief executive of the Child Poverty Action Group in Britain. She told us about the perception that there is a deserving and an undeserving poor. There is sympathy for the disabled child living in poverty, but there is blame for others for poor parenting or making bad lifestyle choices, implying that they are responsible for their fate when often their economic background means that they have almost no other choices. She challenged us to establish a child poverty target to help measure the impact of social and income gaps on our nation’s children.

In a similar vein, 2 months ago, the Salvation Army issued A State of the Nation Report asking what priority we have given to families and to the poor, and, just 2 weeks ago, church leaders called for an increase in benefits to help people cope. What happened? Nothing, actually, because with all the bellowing, bragging, backslapping, and big-noting about our having a free-trade agreement with China, the call to help the poor here in Aotearoa got completely ignored.

There is a forest of reports highlighting the growing gap between the haves and the have-nots, yet still the changes are not being made. I ask members to take the submission of the Auckland Regional Public Health Service as an example. It detailed how living in damp, mouldy, and unheated houses makes illnesses like asthma and bronchitis worse, and it causes massive family stress. It detailed how inadequate lighting increases the risk of injury, it limits children’s educational achievement, and it restricts a family’s options for family activity. It detailed how, when the power is cut off, the fridge turns off, food spoils, milk curdles, people get sick trying to eat kai that they should have chucked out, and families turn to dangerous ways of heating, cooking, and lighting. They start fires in cracked, old chimneys when they should not. They bring old gas-fired barbecues inside the house to cook and they put candles in unsafe places for lighting. The submission of the Auckland Regional Public Health Service highlighted the fact that cutting off power to poor homes causes massive problems for the whole family, which society ends up paying a whole lot more for, later on.

The Māori Party is hugely disappointed that the guidelines provided by the Electricity Commission for electricity retailers in the past have been ignored, leading to the crisis we face now. But I also have to point out that we do not believe that tax cuts—as proposed by Mr Phil Heatley from National—will do anything at all to sort out this problem. I know that, because when poor people get a tax cut, what it means for them is another $2. They will not take that $2 and say: “Hmm, shall I consider what my electricity options are this week? Shall I consider what health insurance company my children should have? Should I consider what scholastic options I might save for my children?” Hell, no; they get another $2 in the pay packet and they spend it.

Tax cuts are great, but in this situation the basics of life are more important, and providing for the needs of people without a proper supply of kai, without decent housing, and without access to low-cost electricity is an absolute must. The Māori Party believes that every effort must be made to protect vulnerable consumers and to give priority to families and to the poor. Accordingly, we will be supporting this bill so that we can put guidelines into place to ensure that people having difficulty paying their bills are not just cut off randomly; that people who are reliant on electricity for medical equipment are not cut off, at all; that power companies are forced to deal properly with vulnerable consumers, whether they live in Kew, Aranui, Porirua, Flaxmere, Ōtara, or Ōtāngarei; and that the Government can step in to deal with power companies that refuse to honour their obligations.

This is not just legislation; it is a call for this House to start turning itself around, to start recognising the needs of people as being more important than profit, and to start restructuring our whole society accordingly. If we do not take that lead, then we certainly cannot expect those on the bottom to want to believe the kinds of things that we say. Mihi atu ki a koe e te Kaiwhakahaere, ki a tātou anō e te Whare, tēnā koutou, tēnā koutou, ā, kia ora tātou katoa.

SUE KEDGLEY (Green) Link to this

The Green Party is very, very pleased to support the Electricity (Disconnection and Low Fixed Charges) Amendment Bill, particularly the clause that allows the Government to regulate the content of guidelines for disconnection because of non-payment.

It is just as well that we are slipping this bill through and giving the Government these powers, because I predict that more and more vulnerable consumers will find themselves at the mercy of electricity companies and at risk of having their power cut off. As other speakers have said, the cost of electricity is going up; that is a huge concern for many New Zealanders. We will be faced with rising food prices, rising oil prices, and rising electricity prices, so many more New Zealanders in coming years will not be able to afford to pay their electricity bills, and will stand at risk of having their electricity disconnected summarily, as happened in the tragic incident that many have talked about today. So thank goodness for that!

I will say a few words about why our electricity prices are rising so dramatically. I well remember back in 1993, when I was newly elected to the Wellington City Council, waging a campaign against the sale of Capital Power—the lines company that Wellington City Council owned. There was a move, which I and a few others opposed, to sell off our lines company to a Canadian company called TransAlta. I think that company bought 49 percent of the shares for about $100 million. Then it managed to take over the Lower Hutt lines company, which it onsold. Mark Blumsky, now a National MP, was one of those who argued strongly in favour of selling our lines company. Those in favour said it would reduce consumers’ electricity prices, enable investment in the lines company, etc. But, of course, instead of saving Wellington ratepayers money, it has cost us literally hundreds and hundreds of millions of dollars. If we had sold Capital Power now, we would have millions and millions of dollars. Far from the projected savings, all we had was our lines company onsold from one company to another, and then it was sold off to Vector. Now we have Vector wanting to sell our electricity grid to a Chinese company—well, a number of companies, including the State Grid Corporation of China, are bidding for it.

Meantime, under Vector’s ownership power prices in Wellington, far from declining—as Mark Blumsky, the present mayor, Fran Wilde, and others assured us would happen when we sold off Capital Power—have in the last 10 years increased 600 percent. We have had the extraordinary situation whereby Vector, which owns our Wellington electricity company, has actually charged more to Wellingtonians than it has to Aucklanders. Meantime, an American bank, Wachovia, with a very questionable reputation internationally, owns the grid in the South Island. So, basically, since the National Government introduced its electricity reforms, the situation has gone from bad to worse. The South Island electricity grid should be a strategic asset, should be protected, and should be in New Zealand ownership. Instead it is owned by some strange American bank called Wachovia—which is no doubt watching over us, and watching huge profits being sent off to that American bank at our expense. This explains why our electricity prices are rising so astronomically, why electricity has become such a huge concern for New Zealanders, and why our prices seem to be rising, inexorably, more and more.

It is all really a consequence of the National Government’s reforms, which we were told would, like the sale of Capital Power, result in reduced electricity prices, greater competition, and greater savings. But of course the exact opposite has happened, and now we find ourselves in a situation where electricity prices are rising to such an extent that more and more New Zealanders cannot afford to pay their bills, more and more New Zealanders are having their electricity disconnected, and we are coming in with a rather feeble effort—nevertheless it is better than nothing—of giving guidelines. This bill gives the Government power to regulate guidelines so that companies like Meridian Energy can switch off power only in certain circumstances, not arbitrarily. We have got ourselves into rather a tragic situation with our electricity prices, with astronomical increases, particularly in the Wellington region. Who would have believed that electricity prices could rise by 600 percent in 10 years, when we were sure they were going to come down?

If only we had done what Christchurch City Council did. It retained control of its lines company. All the people of Christchurch are benefiting from the wisdom and foresight of the Christchurch city councillors who retained ownership of their lines company, rather than being like the majority on the Wellington City Council who opposed efforts by me and other councillors to retain control of our power company, Capital Power. So whereas Christchurch is benefiting, we are faced by this ridiculous situation of astronomically increasing electricity prices and the fact that our electricity lines now stand to be controlled by a State electricity company in China. How bizarre and ridiculous is that? Whether the new owner is the State electricity company of China or one of a couple of other companies that I think are lining up—I think some Canadian company is interested; maybe TransAlta in another guise is lining up to buy it back and make more profits on it—I ask whether it will really have our interests at heart. Will it be concerned about our electricity prices and about the social issues we face when we have increasing prices for electricity, food, and oil?

DAVE HEREORA (Labour) Link to this

I take this opportunity to take a call in support of the third reading of the Electricity (Disconnection and Low Fixed Charges) Amendment Bill, and I want to highlight the two parts of the bill. As the title of the bill indicates, this bill deals with both the disconnection of electricity and low fixed charges.

In respect of disconnection, I would ask the following questions. Were power companies being overzealous in threatening to cut off power due to late payment? And if we revisit the tragic episode that occurred last May, was that due to a lack of awareness of that whānau’s situation and their dependency on electricity, or was it simply the case that a company that supplied essential services did not bother to treat its customers as customers, but rather treated them with contempt? I think those critical questions need to be explored.

Whatever the reason may be for that tragedy, it has become clear that in the absence of a social conscience within this industry particularly, it is necessary to ensure that electricity retailers do more to observe a sense of social responsibility, particularly towards those who are in desperate need and suffering financial difficulty. This also brings to mind the fact that we had to experience the loss of a life before doing something about this issue. When parts of our society breach that fine line—a lack of compassion—we feel a sense of loss. We all feel that sense of loss, which leads to a fear that hardening attitudes will continue to crystallise. The bill, in its title, quite rightly promotes the word “disconnection”.

Because of some of the issues I have raised, there needed to be provision for electricity retailers to be able to provide domestic customers with better billing and payment options. We needed to look at the arrangements around the process of disconnection following the non-payment of accounts, around reconnection, and around billing information and processes, and to look at alternative options, such as smooth payments and the redirection of income. We also needed to consider the process for identifying those consumers who would be at risk if their electricity was to be disconnected. We needed to consider the supply of electricity or line function services by electricity retailers or distributors. We also needed to consider provisions for electricity retailers to provide domestic consumers with information about overdue accounts and disconnection processes, provisions for them to be able to have access to information about a particular domestic consumer—or access to information about the account, with the consumer’s authorisation—and also provisions to ensure that retailers must reconnect a domestic consumer’s electricity supply after a disconnection.

We have a set of guidelines being promoted in this bill that will, at the very least, address the moral issue of social responsibility. It is designed to capture assistance, support, and financial help for those in need.

The second part of the bill relates to low fixed charges. It is about regulating for low fixed-charge tariff options for domestic consumers. The purpose of that is to assist low-use domestic consumers and also to encourage energy efficiency. We learnt that low-use consumers in many areas were facing unreasonably high fixed daily charges for their limited or low electricity usage. The introduction of this regulation provides low-use consumers with a tariff option that is more equitable for low energy usage and is also compatible with the Government’s strategy on efficiency objectives.

We are all aware that at the moment networks and retailers make available a low fixed-charge tariff option to all domestic consumers who have electricity consumption within their homes of less than 8,000 kilowatt hours per annum. That is used as the threshold across the country, despite the reality that in the colder parts of the South Island the average power use is higher than it is elsewhere, in large part because the climate is colder and there is little reticulated gas available there. Further considerations surrounding the consumption data showed an adjustment to the low fixed-charge eligibility threshold of less than 8,000 kilowatt hours per year was warranted, because far fewer consumers are on the low fixed-charge tariff in the South Island than in any other part of the country. The bill alters the definition of a “low-use consumer” from that of someone who has a fixed threshold of less than 8,000 kilowatt hours per annum to a definition that will be provided in the regulations, to ensure that different regional locations and averages can be used.

A second provision in the bill will extend the Minister’s power to grant exemptions from the application of the regulations to electricity distributors or retailers. This change is directed at small, isolated networks that are not connected to the national grid.

The key parts of this bill support Labour’s plan for the future to ensure the safety and well-being of all Kiwi whānau—that is, to ensure that we continue to protect some of the most vulnerable people in our society. Let us be confident that electricity retailers will follow these guidelines to prevent a repeat of the tragedy that occurred in May last year, but members can be assured that the regulating power is an important last resort, taken to ensure that the Government’s objectives are met. I commend this bill to the House.

LESLEY SOPER (Labour) Link to this

I stand to take a call in support of the Electricity (Disconnection and Low Fixed Charges) Amendment Bill for the very good reason that I am a lower South Island MP, and I represent many people who have been waiting for this bill to be passed; people in my city of Invercargill, Bluff, Riverton, Ohai, Nightcaps, Wyndham, Edendale, and all the other towns of the lower South. Why? Because, unlike the National Government that privatised and deregulated the electricity market, and unlike the National Government that created an environment where profit was the motive rather than providing a service to the people, Labour is actually repairing the damage. This bill is part of Labour’s plan for the future to ensure the safety and the well-being of all Kiwi families.

I want to talk particularly about that low fixed charge regime. The low fixed charge regulations were introduced in 2004 by this Labour-led Government with the purpose of assisting low-use domestic consumers, and to encourage energy efficiency. Prior to that introduction, low-use consumers in many areas—and this was a National Government legacy—faced unreasonably high fixed daily charges for their limited or low electricity usage. The introduction of the regulations in 2004 provided those low-use consumers with a tariff option that was more equitable for low energy usage, and compatible with the Government’s energy efficiency objectives.

At present those regulations require networks and retailers to make available a low fixed charge tariff option to all domestic consumers whom they service who have consumption at their primary dwelling of less than 8,000 kilowatts per annum. The same 8,000 kilowatt threshold is used across the entire country, despite the reality that in the colder parts of the South Island average power use is higher, in large part, because the climate is colder and there is little reticulated gas. That is the situation in my Invercargill and Southland area. Analysis of average consumption data shows that an adjustment to the low fixed charge eligibility threshold of 8,000 kilowatts per year is warranted, because far fewer consumers are on the current low-fixed charge tariff in the lower South Island than in other parts of the country. For example, in Auckland and in the north, over 52 percent of domestic consumers are covered by the low fixed charge tariff, whereas in the lower South Island—Christchurch and further south, excluding Westland—only 9.2 percent of domestic consumers are covered by that tariff. Those figures mean quite a bit to my people in the lower South Island.

The bill alters the definition of a low-fixed charge consumer from a fixed-charge eligibility threshold of 8,000 kilowatts per annum to a definition that will be provided in the regulations to ensure different regional locations and averages can be used. That means a great deal indeed to my lower South Island people, and I am very proud that we are passing a bill that will make a difference to their lives. I have had many calls to my office asking when this bill will be passed, and here we are in the third reading tonight, and I am very proud of that fact.

But I also want to dwell for a moment on the other thing that this bill primarily does, and that is that it strengthens the regulation-making powers in the Electricity Act 1992. It responds to recent concerns about the disconnection practices of electricity retailers. I do not think I have to remind anybody of the Muliaga family, and what it went through—and what other families have gone through—when an electricity retailer chose, for the sole reason of its profit, to disconnect its power despite the life-and-death situation that Mrs Muliaga faced.

The Electricity (Disconnection and Low Fixed Charges) Amendment Bill is designed to ensure that the Government can, if necessary, regulate the content of the disconnection guidelines that have recently been developed. Retailers are, however, being given the opportunity to follow the voluntary guidelines first.

The changes in this bill will require electricity retailers to observe a sense of social responsibility in respect of those in financial difficulty, and that is a message to the Muliaga family, and to every other family or individual who was ever caught in that terrible disconnection mix.

This bill will protect some of the most vulnerable people in New Zealand society, and that is why it is part of Labour’s plan for the future; a future that ensures the safety and well-being of all Kiwi families. Some of those families are our most vulnerable people. They cannot afford to be forgotten. The National Party forgot them during the 1990s, with benefit cuts, with its changes to bring in the Employment Contracts Act, with its changes to the health system, with its pernicious asset-testing, and with its bed-night charges in hospitals. All that 1990s stuff did nothing but disservice to the most vulnerable families. The benefit cuts in the 1990s that National was so proud of created, and still create, major levels of poverty in this country. Labour has taken a great deal of our term to address this issue, and we are proud of having addressed it.

Let us not forget that in 1999, when we became the Government, the National Government had left us with a minimum wage for adults of $7 per hour, and a minimum wage for youth of $4.20 per hour. That was disgusting. As of 1 April this year, the minimum wage for adults became $12 per hour, and we effectively ended the youth minimum wage. We have delivered that to vulnerable people whom the National Government deliberately forgot about and penalised during the 1990s.

We are confident that electricity retailers will abide by the Electricity (Disconnection and Low Fixed Charges) Amendment Bill. We are confident that they will follow the guidelines to prevent a repeat of the May tragedy for the Muliaga family. The regulating power is an important last resort to ensure that the Government’s objectives are met. That is why we have put it in the bill.

For people listening to the debate in the House, the new disconnection guidelines will ensure that consumers who have difficulty paying their bills are advised of the assistance available from community service providers and from Government agencies—those Government agencies that we have restored after the National Government allowed them to break down in the 1990s. These guidelines will protect vulnerable consumers and those reliant on electricity for medical equipment to maintain life, so that never again does a Mrs Muliaga have her power disconnected in the way that happened in May of last year.

I am immensely proud of both parts of this bill; the part that will deliver to so many of my people in the south, and the part that will deliver to so many vulnerable people throughout this country. I commend this bill to the House. I am proud to have spoken in the third reading.