Hon HARRY DUYNHOVEN (Associate Minister of Energy) Link to this
I move, That the Electricity Industry Reform Amendment Bill be now read a third time. This bill will encourage lines companies to invest in permitted generation, particularly renewable generation, and it amends the Electricity Industry Reform Act 1998. That was a ridiculous, ideologically driven Act passed by Max Bradford and the National Party, with considerable opposition from people like myself, Peter Brown from New Zealand First, and others who have since come along and said that they absolutely agreed with what was done by the Opposition of that time in fighting that legislation. That legislation forced local electricity businesses to be split up into lines companies, retailers, and generators. It all but stopped local lines companies generating electricity, despite their long history of doing so cost effectively. For example, in my own area the New Plymouth Municipal Electricity Department had a very good, little local hydro station, which it was forced, of course, to separate off from the lines business.
This bill makes four main policy changes, which were outlined earlier, each of which will enable lines companies to get back to generating renewable electricity.
I thank the Commerce Committee for its work on the bill and also those who made submissions. I also thank all those who have spoken in the debate, because they have raised issues that were raised during the process of this bill through the Commerce Committee. I commend the Electricity Industry Reform Amendment Bill to the House.
LINDSAY TISCH (National—Piako) Link to this
We have supported the Electricity Industry Reform Amendment Bill right through all its stages, and it is with pleasure that I take the last call on—[ Interruption] No, I think we will have other colleagues who want to have a say, so I will not be taking the last call—
There is a window of opportunity and I know that my colleagues, with their esteemed knowledge and expertise, will want to articulate and crystallise the arguments that will be forthcoming.
We have supported this bill mainly because of the construction of renewable energy generation capacity, and that is vital for New Zealand if we are to reduce our carbon emissions. There is a strong view that if we are to be serious about carbon emissions then the whole area of renewable energy generation should factor that in. So that is one of the reasons behind what we have done here. We believe that this bill will move in that direction and help that, although we have heard from my colleagues who have spoken that, in fact, renewable generation has gone down. That is a sad indictment on this Government—renewable generation has actually gone down. In fact, the point that I made, which I have made twice but I will make for the third time, is that generation—the number of megawatts—in the 9 years of a National Government was 1,600, yet in the last 8 years of this Government less than 700 megawatts of new energy has gone into the grid. That is an indictment on this Government.
What this bill does, and which we support of course, is allow lines companies to enter into generation. That is important; it will facilitate a lot of those companies that would like to move into generation. The Commerce Committee did not make many changes because the original bill had support, and with the help of the advisers—and I mentioned their contribution earlier—we were able to move this one along. The bill is beneficial to the smaller lines companies, and I mentioned my colleague Chris Auchinvole from the West Coast, because it is on the West Coast and in the Buller region that this bill will be beneficial. Those people will be able to capitalise on the changes that this bill envisages. The bill frees up these companies to become engaged in electricity generation, thereby improving income and security of supply and limiting their dependence on the increased costs, imposed costs, from other generators. Without this bill, if Westpower were to build a hydro scheme, for example, it would have to seek a special exemption from the Commerce Commission. Making an application for an exemption is not a cheap exercise, and the associated costs are very restrictive.
My final point is that the Resource Management Act is still a major impediment, a major shackle, that we have to get over if we are to have speedy construction of renewable energy generation. The Act needs reforming, and National has a plan to do that. National will be releasing its policy on the Resource Management Act in a timely fashion, but I can say that over the last few years, over half of all the net generation that this Government has put in place—and that is not very much, from the figures I mentioned before—has come from thermal sources and not from the renewables that we have considered.
With those few points, I will leave the final words to my colleagues who will be finalising the debate in support of this bill.
PANSY WONG (National) Link to this
I suppose that after 9 years of the Labour-led Government, which has no vision and has taken small steps, we should be grateful for tiny steps. I started to take comfort in the passage of the Electricity Industry Reform Amendment Bill, because my good colleague Lindsay Tisch has said that the passage of this bill will do a lot of good on the West Coast, particularly with an effective MP like Chris Auchinvole who will, I am quite sure, monitor its implementation. I hope he can explain “involvement” in the new section 7A “How to measure involvement” to encourage the flourishing of renewable resources in New Zealand. As we have all said, for the last 9 years the volume of renewable generation of energy has gone down, so for that reason National will support this bill, even though it is a very tiny step towards reversing that.
The last thing I want to say is that every time the Hon Harry Duynhoven stood up he raved against the Electricity Industry Reform Act 1998, but I have not seen any attempt in the last 9 years, from that member or from any members on that side of the House, to repeal the 1998 Act. I imagine that if they think the particular legislation is so bad, they obviously do not have any solution. It is a pleasure to take a short call on this legislation in order to take one very small step for New Zealand humankind, and to encourage more renewable generation starting from here.
PETER BROWN (Deputy Leader—NZ First) Link to this
I will also take a short call, mainly to respond to some of the concerns that have been raised in the debate thus far. First of all, I listened with keen intent to Chris Auchinvole. He took issue with my saying that we should have an abundance of supply. He seemed to say that we should have just enough, with sufficient back-up to cover for emergencies such as low lake levels and extra demand.
I say to the honourable member, and indeed to the House, that if we settle for that, then we will not have a true market. A true market depends on having a surplus and on having people compete because they need the incentive to sell. If we settle for having just enough, with a back-up for emergencies, then we might as well go back to the old ECNZ days. Indeed, as I said earlier, there are people in New Zealand First who want us to look at amalgamating Genesis, Mighty River Power, and Meridian Energy into the old ECNZ, if for no other reason than that there would be only one head office and it need not be on the waterfront in Wellington.
It is important that a genuine effort is made by generators to sell, and they must have a surplus to have that genuine incentive to want to sell their products. We are talking about trading. If I want to sell something ahead of someone else, I must know that if I do not sell it somebody else will, otherwise it is a monopoly-type situation.
This bill allows lines companies to produce more generation, and New Zealand First supports that, principally to keep us up to speed with the amount we have right now. It is not advancing the situation. The price of electricity is a very key issue for many New Zealanders, and it is important that we have a structure that keeps as much downward pressure on prices as is possible. This bill will not do that. It will simply bring a little bit more electricity on board to ensure that we do not fall over in an emergency situation.
I want to respond to Dr Cullen. He said that nuclear power is very expensive. The fact is that the infrastructure is exceedingly expensive, but as I understand it the production of electricity is relatively cheap. If we compare other forms of electricity, the cost of the infrastructure is reasonable but the cost of production is reasonable also.
The reason for this country not going nuclear is a political one, and it is a reason that I agree with, personally. I am not advocating for nuclear power; I am simply saying that there are New Zealanders out there who say that politicians should have a closer look at it. I am not one who supports that, but I say to the House that more and more people are putting up their hands to say that we should have a closer look at it. They might well be a minority, a very small minority, but because of the price of electricity and because of the environmental concerns, more and more New Zealanders are saying: “Please have a look at it.”
New Zealand First supports this bill, but we are not kidding ourselves. It really is a patch-up bill to keep us up to speed. It does not advance the electricity industry in this country very much at all.
HONE HARAWIRA (Māori Party—Te Tai Tokerau) Link to this
Kia ora, Madam Assistant Speaker. Kia ora tātou katoa e te Whare. The Auckland Energy Consumer Trust recently announced it would be paying dividends from Vector to 300,000 beneficiaries in Auckland City, Manukau, and Papakura of about $320 each. This is a welcome windfall for people who have been suffering high electricity costs for far too long. It is a windfall that makes the Government’s offer of about $112 in compensation to soften the effect of the emissions trading scheme—and, wait for it, in 2 years’ time—look kind of measly, miserly, and mean-spirited in comparison. That one-off compensation payment will disappear at great speed when power bills go up about 5 to 19 percent once the electricity sector becomes part of the emissions trading scheme in 2010.
This bill is supposed to be about developing renewable energy resources. One approach is to define “new renewables” to include hydro and geothermal power, so that lines businesses can invest in them as well. This will be good news for Māori resource trusts like Ngā Awa Purua, which 5 months ago announced a new $450 million geothermal power station in partnership with Tauhara North, Mighty River Power, and the Sumitomo Corporation, and which is planning a second operation at Rotokawa that will generate enough energy to power a city the size of Tauranga. We hope that any future innovation in renewables—hydro, wave, wind, and geothermal—will include fair negotiations with mana whenua as well.
We know that Aotearoa benefits hugely from electricity generated in Ngāi Tahu - Ngāti Whāoa territory, even though these iwi derive very little benefit from the resource. We also know, on the other hand, that geothermal stations like Ōhaaki can cause great damage to iwi, and that, in fact, of the five marae in the area, four of them can no longer fulfil their functions because of subsidence caused by geothermal development. Indeed, the latest predictions are that within the next 5 years the area will suffer widespread flooding, and that after only 10 years the whole area will be regularly underwater at high-water level on the Waikato River. With all these impacts, we naturally support benefits coming back to iwi from the rich resources that drive the nation’s power stations.
This bill also proposes to allow owners of lines businesses to get involved in generation and retail, to encourage a bigger market for generation of renewable energy resources. The New Zealand Wind Energy Association welcomed this move, believing that it might help to reduce potential barriers to investment by lines companies. Others, however, thought that the bill went too far, and that relaxing the corporate separation could possibly push prices up for consumers.
Finally, the bill sets in place incentives to provide better conditions for the owners of lines businesses to invest in generation from renewable energy sources.
The Māori Party has consistently spoken out about the need to prepare for the reality that coal, gas, and oil production are going to peak and we have challenged members of Parliament to work together to learn how best to adapt to the end of cheap oil and energy, to become proactive and energy-literate, and to properly evaluate energy options. Ōhaaki, for example, reminds us that the environmental impacts of geothermal energy may, in fact, be too great to bear. We know, too, of marine alternatives, like marine energy, which is close to commercial development, but we also know of the massive impact on local iwi in and around Kaipara, for example, of Crest Energy’s proposed harbour turbine project, which will stop fishing, diving, and even boating across 17,000 hectares of traditional fishing grounds.
We are happy to support any idea that will help create a larger renewable energy pipeline now, and we know that time is of the essence not just for the ending of urgency but for real solutions to reduce oil dependence and consumption and to our ultimately becoming energy independent here in Aotearoa. Tēnā koe, Madam Assistant Speaker.