LINDSAY TISCH (National—Piako) Link to this
I rise to share with members some of the interesting points that have come out of this debate and out of this bill. I first acknowledge the support of the advisers who are here today, because we have had a number of bills, including the amendment to Commerce Act and the other power and energy ones, and from a layperson’s point of view, it is difficult to get involved with and come to grips with some of these complex issues. I must say we have been impressed by them, and certainly I have been very mindful of their expertise. So I thank them on behalf of the National Party team.
I refer to clause 5, “Interpretation”, and I will look at the definition “renewable energy source”. It relates to a comment I made in the second reading about power generation, which Peter Brown also picked up on—on the amount of generation in megawatts that had been brought online alongside those plants that had been decommissioned. If we look at clause 5 we see that “renewable energy source” means “solar, wind, hydro, geothermal, biomass, tidal, wave, ocean current sources, or any other energy source that occurs naturally and the use of which will not permanently deplete New Zealand’s energy sources …”. I will not go through the rest of the definition, but, in essence, we are talking about renewable energy sources, and the genesis of this bill is about using as much renewable energy as we can.
So it was of interest when I spoke in the second reading to note that over the 9 years of the previous National Government, 1,600 megawatts of new generation came online, yet over the last 8 years under Labour less than 700 megawatts has come online. I will expand on that point, because it is relevant, and when we look at renewable energy sources we want to see where the new generation has come from. We have those that have been commissioned, and I will start back in 2000 when Contact Energy at Ōtāhuhu B, whose fuel type is gas, had a capacity of 380 megawatts. I will not go through them all, but Contact Energy at Te Rapa, in the year 2000, which is gas, had 44 megawatts.
Just so there is a reference point here, this information comes from the Ministry of Economic Development’s Energy Data File of June 2008, at page 132. That is the source of the information, just in case some members may think I am making it up, which I am not. That is the source.
Russell FairbrotherWell, I am not making it up, and the member will have an opportunity to articulate the Government’s point of view if he wants to take a call.
Here is another one under gas—Genesis Power at the Huntly project in 2004 had 40 megawatts. I was fortunate to be there for the commissioning when that came online. Also here we have Pan Pac in 2005. But let us look at those of geothermal fuel - type: Todd Energy at Ngāwhā, 2008, had 13 megawatts; Contact Energy at Wairākei had 20 megawatts; Mighty River Power at Kawerau, in 2008, had 90 megawatts; Meridian Energy at Manapōuri, 2007, which is hydro, had 130 megawatts. With TrustPower, we have a wind one of 93 megawatts; Meridian Energy, at White Hill in 2007, whose fuel type is wind, had 58 megawatts; Genesis e3p, which I mentioned before, 2007, whose fuel type is gas, had 385 megawatts.
When we are looking at the whole essence of this bill, it is to say that we want to have renewable energy sources. It is really interesting to see where over the last few years—in fact, from the year 2000 through to 2008—the actual generation has come from. While there are new plants and what has come on stream, there have also been those plants that have been decommissioned. Since 2000—once again the source is the same source—Contact Energy in New Plymouth had plant decommissioned in 2000.
CHRIS AUCHINVOLE (National) Link to this
In speaking to Part 1 of the Electricity Industry Reform Amendment Bill, I note from the report from the Commerce Committee that the submissions fell into two opposite, and probably irreconcilable, schools of thought when they were being considered in the committee. I guess with electricity one should expect a degree of polarisation, but there is a current of enthusiasm for progress associated with Part 1. It does not generate too many surprises, and the recommendations of the select committee incorporate the best of the submission points.
I would like to follow on from my colleague Lindsay Tisch and select that same area of significance in Part 1—the interpretation clause—which will be of particular interest to electricity lines companies, consumers, generators, and others. The particular definition that is of interest is of a “renewable energy resource”. This is a very significant part of the bill and determines that a renewable energy resource comprises—and I will read out the list so that people are aware—“solar, wind, hydro, geothermal, biomass, tidal, wave, ocean current sources, or any other energy source that occurs naturally and the use of which will not permanently deplete New Zealand’s energy sources of that kind, because those sources are generally expected to be replenished by natural processes within 50 years or less of being used”. The West Coast has 56 rivers and heaps of creeks, and this means that with all the necessary compliance conditions being met, and all the permits properly gained, it will not be necessary now for small lines companies to seek special approval from the Commerce Commission. This means smaller companies can be spared that additional cost and can now consider getting out of the poverty trap that they were previously in.
We do need the electricity, and I would in some measure support the earlier comments of Mr Brown, having said that I did not quite agree that we need “abundant” electricity. We have the abundant means of generating it already there, but we do need a sufficient amount of electricity to encourage new business and development. The latest projection of power requirement, or power demand increases, for an area such as the West Coast, which currently uses only 46 megawatts, with increased dairying, with increased mining—
Hon Parekura HoromiaWe will come to the East Coast. I would have hoped the member would be the advocate for the East Coast. I am the advocate for the West Coast. But I have no objection to the East Coast. I have been up there a little bit.
Hon Harry DuynhovenI raise a point of order, Mr Chairperson. I was not aware it was normal for Ministers in the chair to interject.
The CHAIRPERSON (H V Ross Robertson) Link to this
They can interject, but I have my finger here and it goes on the button. Also, if they constantly interject then they will be pulled up by the Chair.
Thank you, Mr Chair. I am more than happy to advocate for the West Coast, particularly in the absence of anybody else doing so. We need that electricity increase for the farms and mines that are developing in that area. It is an interesting list of approved energy sources, and I look forward to checking it again in a couple of years and seeing how many of the opportunities have been taken up by small-scale operations, hopefully fulfilling the purpose of this bill to drive down the cost and price of power. I note the combination of cost and price. That is a good idea so that the benefit of efficient electricity generation flows to all classes of consumers and to new investment in generation from renewable energy resources. Thank you, Mr Chairman.
PANSY WONG (National) Link to this
According to the Minister in the chair, the Hon Harry Duynhoven, the Hon Damien O’Connor is doing a good job on the West Coast. The only question I have, if he is doing such a good job, is why the Prime Minister and the president of the Labour Party have dumped him so far down the ranking on the party’s list that has just come out. He is unlike our hard-working, effective member, the next MP for the West Coast, Chris Auchinvole, who makes so much sense. I think the people on the West Coast deserve a good, effective MP.
Given that the Minister in the chair, the Hon Harry Duynhoven, is looking forward to taking a call, I would quite like him to stand up and explain to us a very important part of Part 1, namely clause 7. He is not very good at making comments about who is an effective MP, so maybe he could try to see whether he can do a better job of explaining the meaning of “involved”. I say to colleagues that I have started to think that this bill will generate a lot of business for consultants and lawyers. Apparently there are all sorts of restrictions on who can trade with whom, so therefore we get down to the nitty-gritty and have a definition of involvement. New section 7(1), to be inserted by clause 7, states: “For the purposes of this Act, a person is involved—(a) in a line if the person conveys electricity by the line, or owns or operates, directly or indirectly, the line or any other assets used in connection with the line, either alone or together with its associates and either on its own or another’s behalf:”. I would really like the Minister to take a call and say how legislation that defines involvement in such a way can actually help competition or incentivise anybody to generate more electricity. Actually, it gets more interesting. The definition goes on for about five more paragraphs, which I do not want to bore the public with. These paragraphs get into the question of how to measure involvement. So lawyers and everybody else need to get around the definition of involvement, and how to measure involvement? Is that not intriguing?
This is very enlightened legislation, because there is an example included in the bill of a company called LineCo, which has a 20 percent shareholding in a joint-venture company that operates a connected 100 megawatt plant. That means that the company is involved in 20 megawatts of generation. As a very qualified accountant and a fellow member of the Institute of Chartered Accountants, I can assure everybody who is listening that a 20 percent shareholding in a joint-venture company does not necessarily translate into 20 percent of the revenue generated, etc. The direct relationship is not very obvious, but apparently that is the formula that this company has to operate under. Therefore, as the example in the bill states, “LineCo can sell to connected customers”—and that is interesting; we will have to look for a definition of who is qualified to be a connected customer—“all of the total annual nominal MWh capacity of the 20 MW. The selling cap does not change in proportion to the extent of LineCo’s interest in the business selling the electricity.” I can see that even the Minister has a perplexed look on his face. I am sure that the great listeners to this debate, like me, really want the Minister to take a call and explain to us, in very simple terms, what involvement is and how one measures it. Once we get hold of this definition and measurement, how can that actually encourage anybody? I can just see people lining up to get into this new legislation so they can get involved and measure how involved they get in generating the much-needed electricity to power those plants. I want the Minister to get up, take a call, and say how this definition and measurement of involvement can reassure people that there will be no power cuts.
DAVID BENNETT (National—Hamilton East) Link to this
If members look at the electricity sector over the last 9 years, they will see two features that show what the Labour Government has done to the sector. The first is the tremendous increase in the cost of electricity. The Labour Government has managed to increase the cost of electricity for ordinary New Zealanders. Somehow it has managed to take advantage of the economic conditions of New Zealand and sting the New Zealand public through higher energy costs.
The other thing that is quite interesting to look at in respect of the legacy of Labour and energy is that its policies have led to a situation where we have fewer renewables as a percentage of what this country actually produces in energy. At a time when any other country in the world is looking at increasing renewables, the Labour Government of New Zealand has spent 9 years reducing the percentage of renewables in New Zealand. Is that what members call good governance? In the last week of a dying Government, Labour has produced legislation to try to increase the renewable target. What kind of leadership is that? What kind of industry awareness is that? What kind of dedication to the environment is that? What kind of approach to energy issues is that? It is not good enough.
The New Zealand public deserves better from its Government. It deserves a Government that looks forward and takes action before issues become such a distinct problem, as has happened in respect of this Government. This Government has not taken the necessary actions over the last 9 years to encourage renewables. Any members who have been in touch with their constituencies would know that the individual lines companies want to have the ability to produce renewables. Many proposals in the Waikato, for example, have not got off the ground in recent years, and this Government is waiting until the last week to put some legislation forward. The last week is when it decides to do something about it. Well, it is far too little, far too late.
The reality is that New Zealand has got into a situation now where we do not have the renewable component that we are used to. It is hurting us economically, and it will mean that we have to make a huge investment, under a National Government, to achieve that renewable target. What is more, New Zealanders have had to pay for that electricity over the last 9 years, and they have had to pay for dirty electricity, not for clean electricity that could have helped our brand as a country and could have helped New Zealand as a leader in the renewable energy stakes. No, this Government has charged New Zealanders more for electricity—for dirty electricity. Is that good policy? It is not.
The Government has had the opportunity over the last 9 years to make structural change, to make investment in electricity, and to make the progress that New Zealanders demand of a Government. But the New Zealand public did not get that. The Government did not provide that leadership. This bill is just one little attempt, in the last week, to try to provide that leadership. Well, it is not leadership.
This bill is not leadership. Leadership is about providing some distinct vision about how we can make our renewable target a reality. That will come under the National Government, because we will not walk away from the tough issues, and we will not put up legislation in the last week of a term to try to find solutions. We will go out there and think about the issues, provide solutions, and make sure they are workable.
And I am—to the Electricity Industry Reform Amendment Bill. When we look at this bill, we see that it is far too little, far too late. It does not cover the issues that the public of New Zealand have had to deal with in the sector. The bill does not deal with the increasing costs that have been put on the public, and it does not deal with the lack of renewable electricity generation in this country. They are two immediate failures in the energy policy of this Government, and that shows the true intention of this Government not to provide a clean, green New Zealand where we can prosper and make the most of the physical attributes of this country.
LINDSAY TISCH (National—Piako) Link to this
I wish to conclude the points I was making in the first call I took, in respect of the numbers of megawatts that have been commissioned and those that have been decommissioned. I got to the point of identifying some of the plants that have come on stream since 2000. The amount of megawatts commissioned came to 1,942 megawatts, but for decommissioned plants the capacity amounted to 797 megawatts. So the net figure gain is very, very low compared with what it was back in the period of the previous National Government. I just wanted to finish off that point, in regard to the capacity we have.
My colleague David Bennett has talked about the amount of renewables, and how they have been reduced considerably, yet this bill is focused on renewable energy sources. I want to look at clause 7, “Meaning of involved”. There have been some changes here, because originally an issue that one of the submitters came up with was to say that we needed to amend the definition of “involved”, and this concerns clause 7. The effect of the broad definition of “involved” in the Act will be to include the generation capacity of the entire wind farm, or any generation, in a calculation of generator cap, even if the lines business owns only a small proportion of the wind turbine. I refer to one of the submissions, which was from WEL Networks, and it had this to say: “One potential structure of ownership being considered by WEL Networks is the ownership of a proportion of turbines in a wind farm so as to come within limits of generation prescribed by the legislation. If the 30 megawatt restriction continues to apply in section 2(9), schedule 1, of the Act, the effect of this broad definition of “involved” will be to include the generation capacity of the entire wind farm in the calculation of WEL Networks’ connected generation even if WEL Networks only owns a small portion of the wind turbine, which amounts to below the 30 megawatt capacity.” So that change was made because that very good point came up during the WEL Networks submission.
Another point I raise came from the Vector submission, and relates to the regulatory impact statement consolidation of November 2007. The submission said: “If line companies invest in electricity generation, it is likely to be within their own lines networks or other distributor generation. This is because generation in their own region enabled line companies to (a) develop a more diverse portfolio of assets capable of meeting consumer demand such that is possible to defer or avoid investment in new capacity, and (b) ensure better local optimisation between investment in lines generation and demand sign management, as noted in the November 2006 Cabinet paper.”
It is interesting to note that when we are looking at bills we need to know exactly what the regulatory impact analysis is. A lot of bills that have come forward before this Parliament have not had a regulatory impact statement, and we have seen that with the KiwiSaver legislation, as an example, and with the Waste Minimisation Bill. It is important that when we are looking at legislation, we know what the costs associated with that legislation will be, by way of a regulatory impact analysis. Those are the only points I want to bring to the attention of the Committee. There is no need for the Minister to respond to my questions unless he wants to. National is in support of this legislation, and with those comments I will finish.