Smart Meters (Consumer Choice) Bill

DAVID CLENDON (Green) Link to this

I move, That the Smart Meters (Consumer Choice) Bill be now read a first time. At the appropriate time I intend to move that the bill be considered by the Commerce Committee. The genesis of this bill is, in part, a response to a report published in June last year by the Parliamentary Commissioner for the Environment, Dr Jan Wright, entitled Smart electricity meters: How households and the environment can benefit. This bill would give effect to the recommendations of the commissioner. It would do that by ensuring that all meters have functionality enabling them to automatically control loads and talk to smart appliances, and by requiring installers to give consumers the choice to have real-time information about their electricity use and variable tariffs, so that they can make use of that function if they wish to. The bill would also ensure that a variety of tariffs is available to consumers.

It is known that new meters are currently being installed in households as part of a replacement programme for very old equipment. The meters being installed through that programme are being described as smart. Although those meters are indeed capable of adding value by providing services useful to power companies, they are not capable of delivering much of anything to consumers. This bill seeks to remedy that imbalance by ensuring that meters that are installed are genuinely smart, and will provide choices and benefits to consumers as well as to the providers of electricity.

The much less smart meters being rolled out now allow power companies to use them for remote meter reading. They avoid the need for meter readers to go into homes. That cuts costs for the companies, but that saving may or may not be passed on to consumers. The meters also allow companies to data mine about the consumer’s user profile and consumption patterns, and enable remote disconnection or reconnection of supply. Although those are useful benefits for the providers, the same meters—the same hardware, in effect—could be installed quite simply and cheaply with the capability to enable consumers to manage their power load to minimise cost on a differential or cost-reflective tariff. As well as saving households money, which is one of the core features and intentions of this bill, that would benefit the nation by making better use of installed energy-generating capacity, by delaying the need for extra generation, and by reducing carbon dioxide emissions from coal and gas stations, because they would be required to run less often. The key difference between what is currently being rolled out and what we would like to see rolled out is the addition of a home area network capability, enabling the functions that can deliver sustained demand reduction and reduce cost to the consumers through load shedding and load shifting. The cost of ensuring that meters have this capability when they are installed is very low. To retrofit them later, as has been proposed by some, would be much, much more expensive.

The Electricity Commission was charged with investigating whether the roll-out of advanced metering infrastructure—effectively, smart meters—should be regulated, and it came back with a recommendation that “it is not necessary to extensively regulate the roll-out …” of those meters, as “the benefits of regulation do not outweigh the costs.” We have no quarrel with that part of the commission’s findings, to the extent that the regulation proposed in this bill is deliberately very light-handed, doing only enough to secure the necessary degree of standardisation and to ensure consumers are offered the opportunity to exploit the benefits of the technology. The Parliamentary Commissioner for the Environment, in a briefing note signed by the heads of a number of consumer-owned and council-owned lines—or distribution—companies, advocated for a somewhat more stringent approach to regulation. The companies saw the installation of smart meters as a significant building block towards a smart grid, which is already an objective in Australia, in many European countries, and in parts of the US.

The Electricity Commission notes that one of the primary drivers of smart meter installation nationally is to enable load management, in particular allowing peak loads to be manipulated and levelled, thus reducing the pressure on that critical peak-load capacity. The commission’s report notes also that “New Zealand has had an effective centralised load management system (the ripple control system) in place since the 1950s.”, but goes on to concede that “the ability to enable more controllable load does make AMI systems attractive.”—considerably more attractive than the very old technology. The ripple control system we have is a very blunt instrument, a one-trick pony, and the new technology would allow for a much more comprehensive array of load management options.

Clause 4 of the bill states: “The purpose of this Act is to empower domestic consumers to better manage their electricity use by requiring providers of smart meters to inform the domestic consumers of their options when upgrading to smart meters, and setting minimum requirements for the provision of smart meters.” It is important to note that nothing in this bill obliges any consumer to adopt any of the new options. There is absolutely no obligation on consumers to accept or take on any extra cost; they simply must be given a choice. The cost to the company of offering that information at the time of installation would be negligible.

One of the options a company would be required to offer to a customer is an in-home display—effectively a small screen inside the home that displays in real time the current tariff in cents per kilowatt, the current rate of consumption, and the current use for the day in consumed dollars and in kilowatt hours. It is a very simple read-out that can sit conveniently in the home. We know from experience that, where these have been trialled in business premises and domestic situations, such a real-time display works as a constant reminder to consumers of their consumption and is a prompt for them to turn off unnecessary, non-essential consumption at that moment. The units are a really effective mechanism for initiating and embedding long-term behaviour changes in energy use and conservation. That will benefit the individual consumer, and, again, will reduce demand, particularly for peak generation.

The bill requires retailers to offer to consumers the choice of a cost-reflective tariff, an average-price tariff, or a low fixed-charge tariff. Those who are currently on the low fixed-charge tariff will be able to stay on that tariff if that is their preference. It is entirely in a consumer’s hands. The cost-reflective tariff is a tariff where the customer pays a different rate according to the time of the day the units are consumed. Those types of tariffs can be designed to closely signal the network cost—the generation cost—of the electricity being consumed at any given time. The average-price tariff is simply a tariff where the consumer pays the same fixed rate for each unit of electricity consumed, reflecting the average cost of generation across the 24-hour period. The low fixed-charge tariff is an average price offered to people who consume low amounts of electricity, as defined in the regulations. That spread of options will allow householders to select the model that best provides for their needs, whether they have large households with a relatively high demand—as with growing young families, perhaps—or small, low-user households, such as with older couples, who have lower needs and a lower demand for electricity.

All we are seeking to do with this bill is to combine available, well-proven technology with some options being offered to consumers, to enable them to make intelligent choices and so reduce their costs. The bill is appropriately titled a consumer choice bill. It suggests we use the readily available technology. In that way, we can reduce the need for add-in generation, with all the social, environmental, and financial costs inevitably associated with that. I commend this bill to the House.

AARON GILMORE (National) Link to this

Members might remember the issue of VHS versus Beta in the 1980s. They might remember Microsoft’s Internet Explorer versus Netscape in the 1990s. They might remember the recent thing about the Sony Blu-ray Disc versus Toshiba in the 2000s. The issue of smart meters in the Smart Meters (Consumer Choice) Bill is a very similar situation. All aspects of technology that are common today have eventually become very well adopted. But in their time, particularly in the early stages of technology like smart metering, a lot of confusion existed about whether we had jumped to the right standard of technology. That is why National will not be supporting this bill.

It has some good aspects; I must commend the member for bringing it to the House. I will touch on some aspects of the technology in the bill, but I believe that the bill will compel New Zealand to make a choice today on a set of standards and technologies that is not quite there yet—an idea whose time has not yet come. I will touch on that. People have a lot of confusion about what a smart meter is. Recently in Canterbury, Meridian Energy has been rolling out what are called by the Parliamentary Commissioner for the Environment “almost smart meters”. Some people call them smart meters; in other places they would not be called smart meters. It depends on people’s situations. In other countries, particularly in Europe and even more particularly in Italy, significant numbers of smart meters have been rolled out—tens of millions of them. But very different standards exist across the world. Recently in other parts of the world—like Germany, the United Kingdom, and Canada—we have seen the roll-out of smart meters. Nearly every single one of those countries has rolled out a different form of technology and a different set of standards, and that is one of the issues National has with this bill.

As the previous speaker, David Clendon, talked about, we have seen that New Zealand was a world leader in what was called ripple control mechanisms. In fact, in the 1950s and 1960s we were one of the first countries in the world to bring in ripple control. That mechanism allows consumers to control their hot water load, and it was a very useful hot water load management system. New Zealanders have used that technology and sold it in many places.

There is an issue with metering generally in New Zealand. Many of the ferrous iron - type meters that have been in place since the 1950s are coming to the end of their natural lives. That is why there has been some interesting debate about the issue of smart metering today. In Christchurch, where I live, Meridian Energy has made the call to put in place metering technology that will allow automatic meter reading. It will stop meter readers from having to go to consumers’ doors to read the meters on the wall. That is a good step. The technology for that is very well-developed and has been used very well across the US and in other parts of the world. We think that technology makes sense.

A lot of work has been put into these issues of smart metering, and particularly into the issue of how smart a metering device should be. I think we would all agree that in a perfect world we would have devices in our homes—for example, for our fridge or freezer—that would monitor the electricity use and turn an appliance off and on to take into account the load that might exist. I think we will get there, and that in our lifetime that will occur, but we are not there yet. Having the ability to jump to put in the meters what is called a home area network chip would cost a significant amount today. I accept that the marginal cost today would be quite low, relative to the expected benefits of that mechanism, but the reality is that consumers cannot bear that cost. That chip might cost a consumer anywhere up to an additional $200 to install today, but the benefit to that consumer of putting in place an in-house display on the meter, in the case of that chip, would be effectively zero. National does not feel that that is an appropriate thing to do at this time, when people have been facing record price rises in electricity over the last few years.

We believe that one of the things we have to think about is how we get this technology right to bring it through into the market. The Parliamentary Commissioner for the Environment wrote a report recently on metering. That report has been considered by the Electricity Commission and the Minister of Energy and Resources, and some guidelines have been put in place around smart metering. I am pleased to say that there has been some success in the roll-out of some of those smart meters. Some would say that that is not enough, but it is a start. Given what we have seen so far in the technology, I think that it is a good start.

I understand that there is some sort of fear over this issue, and particularly over the home area network chip. I spoke at the start about the issue of VHS versus Beta, Netscape versus Internet Explorer, and Sony Blu-ray Disc versus Toshiba. In each of those cases there was a winner and a loser in the field of technology. If we make a decision to jump to one standard today, when it is actually not clear whether that will be the dominant standard in the world, we will end up incurring a whole lot of unnecessary costs for the consumer. It would cost a couple of hundred bucks extra for the consumer, but that is basically a waste of money if the consumer has to spend that money again some time in the future. We do not think that that is the right thing to do. For example, the meters that Meridian Energy has put in at Arc Innovations in Christchurch have allowed the situation where in the future home area network chips could be put in, should that be the right technology to jump to. As that member has outlined in his bill, it may end up being the right technology to jump to in the future, but I think that idea has not yet been proven—it is not proven that it is the right place to go.

A number of regulations exist currently about the guidelines on metering by the Electricity Commission. In fact, a bill currently before the Finance and Expenditure Committee has been looking at a number of issues about electricity. This issue has arisen in passing. If the member had brought the bill before the House with some alterations, particularly in terms of the home area network chips and other things about tariffs, we might have been able to support it.

I will touch on one example of the tariffs the member spoke about. Again in Canterbury, the Orion New Zealand lines company has one of the most innovative sets of tariffs in the country. Up and down New Zealand there are currently something like 300 different types of electricity tariffs. The electricity reforms that the Minister of Energy and Resources is currently undertaking outline a series of regulations for the new Electricity Authority to formalise and make some changes in those tariffs, in order to bring together a simplification. I think that that makes some sense. But we have to be very careful not to put in place what is effectively more compulsion in other tariff rates, when it makes some sense to have some innovative tariff arrangements, particularly in Canterbury with the use of irrigation. I know that the Green Party has some particular concerns about irrigation, but tariff rates and the innovative tariff structures used by Orion actually help to reduce water use and power consumption. I think that is a good thing.

It is true that smart meters have the potential to reduce peak demand. They have the potential to defer the need for more electricity generation in the future, and to encourage people to change how they consume electricity through their appliances throughout their lifetimes. But there are smart meters and smart meters. As I outlined earlier, the question is whether we jump now to what is probably the wrong conclusion, or whether we wait and take into account a more cautious approach, to implement an arrangement whereby we would have meters that are more appropriate for New Zealand. New appliances will come on to the market from developers such as Fisher and Paykel, which is a world-leading developer of technology for appliances, and they will be able to access a standard of communication between meters and their appliances. That will be a good thing, but we are not there yet. I think this bill, in outlining some way of jumping that decision before the technology is there, is a move too far.

Finally, I reiterate the issue of costs. Some matters in this bill contain too much detail for a bill, and are probably better taken into account in terms of regulation. They are better taken into account in the electricity reforms we are undertaking at the moment with the electricity legislation, and I encourage the member to get involved in some of the final stages of those regulations and their development to make the current situation with the Electricity Commission and those guidelines more formalised. These reforms will take into account a big chunk of what this bill does, but will not take into account the tariff restructuring, the home area network chips, and the in-home displays, which we think are a cost too far. Thank you.

CHARLES CHAUVEL (Labour) Link to this

I would like to begin by congratulating David Clendon on bringing the Smart Meters (Consumer Choice) Bill successfully to the House. It must be a record in the annals of the proceedings of the House for a new member to have a bill drawn from the ballot as quickly as he has managed to do.

PESETA SAM LOTU-IIGA (National—Maungakiekie) Link to this

I rise to speak on the Smart Meters (Consumer Choice) Bill introduced by my colleague the Green list MP David Clendon. I acknowledge his knowledge in this area. The Commerce Committee heard from the Parliamentary Commissioner for the Environment and various other submitters on this very subject. Obviously the bill’s aim is to give effect to some of the recommendations that the Parliamentary Commissioner for the Environment stated in her report. I must say up front that National will be voting against the first reading of this bill. “Advanced” meters I think is the proper term that should be applied to this because there are very few smart meters out there—not just in New Zealand, but across the world. Smart meters communicate with appliances in a really advanced way.

In terms of the development of the technology, advanced meters have changed electricity meters into complex systems. These systems are able to measure and record electricity consumption in almost real time. It makes that information available to the electricity market, its participants and, most important, its consumers. The benefits have already been espoused by previous speakers. Obviously it allows retailers to remotely read meters, without needing to physically access consumers’ properties. It provides consumers with accurate monthly invoices, not just guesstimates of what their bills will be. It also enables faster switching between retailers, reducing the barrier to entry for new-entrant retailers.

Smart meters have the potential to reduce peak demand, thereby deferring the need for investment in new generation, transmission, and distribution assets. As all speakers have alluded to, it could lead to cost savings for consumers, retailers, and distributors, enabling greater consumer participation in, and understanding of, the electricity market. The recent ministerial review of electricity market performance, led by the Hon Gerry Brownlee, endorsed the introduction of smart meters in New Zealand because of the benefits they will bring. But the key point is that the Government supports the introduction of smart meters.

In terms of the current regulation around smart meters, some aspects of metering are regulated under Part D of the Electricity Governance Rules. The roll-out of smart meters is unregulated. However, the Electricity Commission issued guidelines in May 2008 that recommended minimum standards for smart metering systems. These guidelines are recommendations only. The Electricity Commission, of course, reported to the Minister in December 2009 about the regulation of smart meters. The commission’s overall recommendation is that it is not necessary to extensively regulate the roll-out of smart meters, because, and this is the critical point, the benefits of regulation do not outweigh the costs. Let me repeat that, for the benefit of members opposite. The benefits of regulation do not outweigh the costs. The commission considered that some technical aspects of smart meters addressed only in the current voluntary guidelines should be regulated. Those regulations are being progressed as part of the fundamental review of the electricity market rules, as my colleague has alluded to.

Why should we not support this bill? Well, some of the bill’s provisions are unnecessary because of widespread compliance with the voluntary guidelines on smart meters. There are technical matters contained in the bill that are inappropriate for primary legislation. They can instead be advanced through the rules made by the new Electricity Authority. The bill is also inconsistent with the expert advice of the Electricity Commission that we have all spoken about. It recommended against the extensive regulation of smart meters. Passing this bill would impose extra cost on consumers, who are still reeling from the electricity price rises under the last Government. What were those price rises? I will remind the House. Prices rose at three times the rate of inflation—75 percent over 9 long years of the Labour Government.

CHRIS HIPKINS (Labour—Rimutaka) Link to this

There we have it. National, the party that purports to be the party of choice, is denying consumers the choice to have lower power bills and to save money on their electricity. National purports to be the party of choice, except when it comes to giving ordinary working New Zealanders any choice over saving money, those members do not want a bar of it. At a time when prices are continuing to go up and we have low, low rates of wage growth under this Government—the lowest in almost a decade—National does not want to give people the choice of saving money on their power bills. That is what this Smart Meters (Consumer Choice) Bill would do. It is a very good bill from our colleagues in the Green Party, it is supported by the Parliamentary Commissioner for the Environment, and the National Government is turning its back on it.

Those members do not care about the evidence. They do not care about giving people choice. They want to take the Gerry Brownlee “we know best” approach and not give people the choice. National members do not care about energy efficiency at all. We saw that from the minute they took up the Treasury benches, when they repealed the restriction on new thermal generation. They repealed laws on biofuels. They slashed the $1 billion home insulation fund that would have given so many New Zealanders the opportunity to save money on their power bills and to live in warmer, drier homes. That all went out of the door as soon as National got into office and as soon as Gerry “Sexy Coal” Brownlee became the Minister of Energy and Resources.

JOHN BOSCAWEN (ACT) Link to this

That was certainly an impassioned plea from Mr Chris Hipkins in this debate on the Smart Meters (Consumer Choice) Bill. It would seem that the debate has broken into one on the electricity industry, the price of electricity, and energy conservation. I will start by saying that the ACT Party will not be supporting this bill.

TE URUROA FLAVELL (Māori Party—Waiariki) Link to this

Tēnā koe, Mr Deputy Speaker. E te Whare tēnā tātau katoa. Kātahi anō ahau ka hoki mai i te nehu o tētahi o ngā uri o roto o Ngāti Manawa, ko Bill Bird tērā. Koia tērā i whakatakotohia ki roto i te rua kōiwi o ngā mātua tūpuna o roto o Ngāti Manawa, i Murupara. Nō reira, e tika ana kia tuku i ngā mihi nui ki a ia kua riro ki tua o te pae. Nō reira, waiho ia kia moe, kia okioki.

Ko tā tātau ko te wānanga i ngā take o roto i te Whare Pāremata i tēnei pō. Me kōrero au mō te āhuatanga ki a Murupara. I a au i Murupara i te rangi nei ehara i te mea, he hāngai tonu ō rātau whakaaro i tēnei rangi tonu nei ki tēnei pire. Ko tā rātau i a tātau e kōrero nei mō tēnei mea mō te hiko, ko tā rātau e whakaaro nui nei, mō te moni hei utu i ngā nama. Ehara i te mea mō te mītā, ehara i te mea mō ētahi atu take, kāo. Ko tā rātau, ko te kimi moni kia taea ai e rātau te utu ngā nama e pā ana ki te hiko.

Ehara i te mea he nui wāku kōrero mō tēnei take. E ai ki ngā kōrero kua puta ki te komiti whāiti o te Commerce Komiti, i tae mai wētahi kōrero mō tēnei kaupapa, mō te smart meters. Kāre au i te mōhio, mēnā i tētahi taha ko te smart meter, ko tētahi taha ko te dumb meter, aua hoki. Engari i tōna mutunga mai, e ai ki ngā kōrero he kaupapa pai tēnei hei āwhina i te hunga e whakapau moni ana mō te hiko nā runga i te mea tuatahi, he āta titiro ki te moni ka whakapauhia i runga i te hiko, ā, ka mutu, tērā pea nā runga i tērā āhuatanga, ka kore rātau e tere whakapau moni i runga i te hiko, ka mutu, ka āwhina i a rātou ki te āta tiaki i te pūtea kai roto i te pūkoro. I tōna mutunga mai, te tūmanako ia ka whakamāmā i te āhuatanga o tēnei mea te hiko mō tēnā, me tēnā o roto i ngā hapori, kia kore e raruraru nā runga i te taumahatanga o ngā pire kei runga i a rātau.

He paku āwangawanga nō mātau nō roto i te Pāti Māori, ana ko tēnei nā. I ngā tau kua hipa kua rongo mātau, ā, whakakīkīngia ngā roto o Te Wai Pounamu mō te hiko, ā, ka mutu, ko ngā kamupene nui, ko rātau te hunga ka whiwhi pāinga nā runga i tēnei mea o te hoko hiko. Ka pātaia te pātai, e, mēnā koi rā te āhuatanga ko te nuinga o te moni ka haere tonu ki roto i te pūkoro o ngā kamupene nui, he aha tā rātau ki te hapori, ki a Aotearoa whānui tonu? Koi nā te pātai nui. Hē āwangawanga tonu nō roto o te Pāti Māori i te mea, mēnā ka pērā, e aroha atu ana ki te hunga e rongo nei i te pōharatanga, e rongo nei i ngā uauatanga o te kore moni nā runga i te kore mahi, ka mutu, ā, koi nā te āwangawanga nui.

Ā, kāti, ka tautoko ake i tēnei pire. He poto noa ake taku kōrero engari, he whakatakoto i ēnei kōrero ki mua i te aroaro o te Whare Pāremata i tēnei pō. Kei wareware i a tātau, ko te hunga rawa kore, ko te hunga kore moni, kore mahi nei i te mea, tōna mutunga mai, ka riro anō rā mā rātau ngā nama e utu. Mēnā he āwhina tēnei ki a rātau, kia āta tiaki pai mai i te āhuatanga o te moni kei roto i te pūkoro, e tika ana kia tautoko ake. Nō reira, ka waiho ake ngā kōrero ki reira, me te tautoko ake i tēnei pire i tōna pānuitanga tuatahi. Kia ora tātau.

[Greetings to you, Mr Deputy Speaker, and to us all, the House. I have just returned from the burial of a descendant of the Ngāti Manawa people. That person was Bill Bird, and he was laid to rest in the cemetery of his Ngāti Manawa ancestors in Murupara. Therefore, it is apt that tributes of the highest order be placed upon the one who has passed beyond the horizon. Allow him to slumber and rest there.

Our task is to debate the issues that are before the House of Parliament tonight. The thoughts of the people in Murupara today were, as expected, not focused on this bill. Their main concern, as we debate the issue over power, is about where the money is going to come from to pay the bills. It is not about meters, or any other issue, absolutely not, but to find the money to pay the bills relating to electricity.

I do not really have a lot to say about this issue. According to some reports from the Commerce Committee, submissions about this policy relating to smart meters were received. I am not exactly sure whether the submissions were about smart meters, or dumb meters, or whatever. But at the end of it all, and according to the discussions, this is a sound policy in that it helps people who spend on power, because, in the first instance, it monitors the money being spent on power and conserves the funds in the pocket. The desired outcome is that it eases costs to the individual and spreads it more evenly over the whole community.

The Māori Party has a small concern, and it relates to this. We heard that the ones who reaped the benefits by storing waters in South Island lakes and selling the electricity generated from that in the past were the huge power companies. The question then is, if the majority of the money continues to go into the coffers of big power companies, what is their contribution to the community and to New Zealand at large? That is the big question. It is a real concern for the Māori Party, because if that is going to be the case, we pity the ones struggling to keep above the breadline and struggling to find work. It is a huge concern.

That aside, we support this bill. While my contribution is a small one, I have at least expressed it before the House. We must never forget those without means, money, and jobs, because eventually they are the ones left to pay the accounts. If this bill is of some help to them in terms of stretching the money in the pocket, then it is right that it be supported. So I leave my comments there, and endorse this bill at its first reading. Greetings to us .]

Dr KENNEDY GRAHAM (Green) Link to this

I take pleasure in rising to support David Clendon’s Smart Meters (Consumer Choice) Bill. The purpose of the bill is to empower domestic consumers to better manage their electricity use. The mechanism to achieve that is twofold: first, by requiring the providers of such meters to inform domestic consumers of their options when smart meters are about to be installed; and, second, to set minimum standards for the provision of smart meters.

As the title of the bill indicates, this is all about consumer choice. It must, therefore, be clear that this Government would be positively predisposed to support it. I note that earlier in this debate Sam Lotu-Iiga acknowledged that his Government supported the introduction of smart meters in themselves, but, alas, not this bill.

The Minister of Energy and Resources has expressed a concern that the bill imposes over-regulation on the industry. But the Parliamentary Commissioner for the Environment and the chief executives of six major lines companies have called for far more stringent regulations than are proposed in our bill. Under the bill, one of the requirements for smart meters in this country is the provision of a home area network, as has been acknowledged. This is a chip that can be installed inside the smart meter that would enable any electric or electronic device to communicate with the meter. The Minister, along with the Electricity Commission, recommends against proceeding with these chips. But if the bill is voted through to the select committee, this issue can be explored. We could perhaps accept deletion of this provision, although it is not easy to follow the logic of the argument against that.

The basis of the cost-benefit analysis against such chips, assessed by the New Zealand Institute of Economic Research, was highly skewed against them in three ways: first, it used retail prices for the costs and wholesale prices for the benefits; second, it downplayed the electricity savings by 80 percent, compared with the studies it quoted, without giving any substantive reason besides suggesting that somehow New Zealand was different; and, third, it used the retail price for the home area network chip, but, in fact, the chip comes pre-installed in the meter, which makes a difference of $65 per unit.

In the United States there is some public concern over the accuracy of smart meters, resulting in calls for regulation. Our bill does not require regulation; it just gives the Minister the authority to regulate, should that be needed. It has been argued that appliance manufacturers must move on a protocol first, before smart meters do. I note that Aaron Gilmore earlier in the debate expressed concern about the different standards prevailing, and concern about uncertainty over the precise technology that might apply in the future. Yet we understand, from at least one major manufacturer, that until the smart meter protocol is mandated, they will not move to develop the interface. That is why other countries are mandating a protocol by way of regulation. Only this initiative will get things moving. Of course, there may be problems of obsolescence down the line, but the chip socket will still be in place, so the chip can be upgraded at less than total cost.

Does the Government truly believe that the cost-benefit analysis of the consumer aspects of smart meters will not pay? Does it believe that it will be 10 years before they are fully functional? If so, the Government should introduce a moratorium on their installation. Otherwise, the extra costs that retailers are charging to customers for smart meters that are of no use would be indefensible.

This bill is about making New Zealand a smart economy. It is about using high tech to make us warmer, more efficient, and less polluting in our lifestyle. It gives the consumer the option of choice. The only thing standing between households and the absurd power price increases we are all facing is this bill. There can be no sound reason to oppose the bill. Any refinements that are warranted can be agreed to in the select committee. I call upon Government members to support the bill still, at this stage, and work with the Green Party to make it become law.

KATRINA SHANKS (National) Link to this

I rise to take a call tonight on the Smart Meters (Consumer Choice) Bill. National is voting against the first reading of this bill. We have heard a lot of talk about what smart meters are, what they can do, and how good they are. Smart meters are good, and this Government supports their introduction. But we have to make a distinction between smart meters and advanced meters. In New Zealand we have advanced meters. Smart meters are an emerging type of technology that is still coming into the market, still being commercialised, and still being put into products that we can use. But in New Zealand, we are not quite there. In fact, it may not be wise to make regulations and pass legislation to make happen something that is not in existence now, and that maybe will change significantly the way it is delivered or as technology changes. There might be a great big shift. If we are going to regulate and enforce something, why do we not wait until we have smart meters in New Zealand and see what they look like?

Although some aspects of metering are regulated under Part D of the Electricity Governance Rules, the roll-out of smart meters is still unregulated. However, the Electricity Commission issued guidelines in May 2008 that recommended minimum standards for smart meter systems. The guidelines are recommendations only; participants are not required to comply with them. But many, many organisations already are gearing up to do so, and many are already in that space without being told they have to do it and without having this legislation.

What does the report say? The Electricity Commission report, which is the most recent information we have, was reported back to the Minister in December 2009. The commission’s overall recommendation was that it is not necessary to extensively regulate the roll-out of smart meters because the benefits of regulation do not outweigh the costs at this stage. The last thing this country needs is increased electricity prices. The last thing this country needs is another law put in place that will make the costs for those users go up even higher. Now is not the right time for a bill like this.

What does the bill do? It requires providers of smart meters to offer to consumers, before the installation service or upgrade of any domestic smart meter, an in-home display unit, import and export capability, and the choice of particular types of prescribed tariffs. It sets out minimum requirements for smart meters, such as that they must include certain components and features that accord with the Electricity Governance Rules, the means to control any existing hot water cylinder, various other features, and, crucially, home area network functionality, not just capability—and there is a difference there. The bill also introduces regulation-making powers for the purposes of assisting domestic consumers. This is already happening in certain areas, without this legislation having been passed.

Some of the reasons why the bill’s provisions are unnecessary are that there is widespread compliance. There are already voluntary guidelines on smart meters. The technical matters contained in the bill are inappropriate for primary legislation, and can instead be advanced through rules made by the new electricity authority. Maybe there will be a time and a place for this legislation, but the industry is already doing all right on its own. We do not need to interfere at this stage. Thank you.

CLARE CURRAN (Labour—Dunedin South) Link to this

Poor value for money—that was the Treasury advice on the Government’s so-called jobs package last August. Do we have more jobs? No, we have fewer jobs, and 168,000 people are unemployed. More jobs are disappearing offshore every day, and the Government has refused to invest in jobs and skills.

The fact is that this Government is not very smart, but here we are talking today on a bill about smart meters that is intended to put the power back into the hands of consumers. The Smart Meters (Consumer Choice) Bill is timely, and it should be supported. Unfortunately, it will go nowhere, because we have a Government that is stuck in mundane and bland thinking. It does not see its role as being to invest in skills and jobs, let alone to promote new technologies to deliver new policy directions and transform our economy and society. I will talk about smart thinking, something this Government does not do. I am deadly serious about it, because if we do not do some smart thinking, then we will stand still as an economy.

The communications revolution means massive changes in the way that we live, work, and communicate, which has an impact on health care, education, and environmental services. It requires collaboration between various industries, such as utilities services, the telecommunications companies, and the information technology sector. I wish that I could stand here in this House today and say that is what is happening in this country, but unfortunately it is not.

Despite a big plan to put $1.5 billion into ultra-fast broadband, this Government is doing very little thinking about what it will use that broadband for or about how it can drive demand and help transform our society to deliver better education, health services, and energy services through new technology. Instead, that thinking is going on in Australia. Its smart thinking is being led from the top. The Rudd Government has made the connection between smart meters, new technology, and energy efficiency, and the importance of having the Government drive change for the good of all society.

In Australia a fundamental shift has taken place in environmental policy since 2007. That has had a huge effect on the utilities market. For the information and communications technology and the energy industries, Government initiatives on smart meters and national fibre telecommunications networks are moving in new directions, such as towards smart grids. By mid-2010 the outlines of Australia’s first smart grid project should become visible, starting in Victoria. The major players are mostly large energy retailers and producers, supported by information technology and telecommunications firms.

The Australians grasp that smart meters should only be considered in the broader context of the modernisation of electricity networks that introduced sensing communications and information technology on to the grid. Reputable Australian telecommunications analyst Paul Budde has talked about trans-sector thinking. He has talked about how the Australian Government is leading on all infrastructure projects and on the potential synergies between the building of roads, sewerage systems, and water and gas pipe networks, and telecommunications and electricity networks. The concept of smart communities is based on intelligent infrastructure, such as broadband and smart grids.

In this country one would hope that there would be smart thinking by our Government to go with the delivery of broadband, and that the Government would think of putting broadband in place to make sure that people in communities are better connected, with services that link their homes to broadband. What are we doing as a Government to make that happen? Well, stuff-all, as it happens.

I sit on the Commerce Committee. Last year a stream of State-owned electricity companies came before the committee for their financial reviews: Meridian Energy, Genesis, Mighty River Power, Transpower, and the Electricity Commission. I asked every one of them the same question, and I got virtually the same answer from each of them. That question was whether, given that the efficient use of electricity and saving power is a key issue for our time, any more work was being done on it, and whether the organisation was doing any thinking about where we are going next. The answer, consistently, was: “Not much.” Then I asked whether they were aware of the work being undertaken in Australia and other countries on smart grids and whether they were doing any thinking about that. The answer was “Yes” to the first part of the question, and “Um, no” to the second part. I rest my case. No smart thinking is being promoted by this Government in the electricity industry.

There is a huge opportunity to use this bill to propel thinking about how to better use smart meters. We could use new technologies to build smarter communities, to save people on their fuel bills, and to save energy.

DAVID CLENDON (Green) Link to this

Kia ora koutou. I will begin by thanking those members who have spoken in favour of the Smart Meters (Consumer Choice) Bill, particularly the Labour and Māori Party spokespeople; that demonstrates the forward-thinking and progressive nature of those two parties. It must be said of some of the opposition comments that members have shown damned good “faint praise” in recognising that many of the benefits we are proposing for the installation of smart meters are in fact very real. Nevertheless, they are choosing to vote against offering choice to consumers.

There seems to be a strange phenomenon around electricity prices. In years when the hydro lakes are dry we are told the power price must go up, but in years when they are full the power price must still go up. We bring in more renewables, and electricity prices go up. When we fire up the old coal burning stations, there seems to be some strange economic alchemy that demands that electricity prices must continue to rise. This bill would not be the entire solution to electricity pricing and to managing that, but it would be one significant and very positive step towards giving consumers the ability to manage their usage and cut their costs. It is a great shame that the Government tonight is demonstrating its failure to protect householders from rising electricity prices by voting against this very sensible and very timely bill. It is ironic that the two political parties that pride themselves on being advocates for choice, will be voting against a proposal that would enhance choice and offer consumers even more choice in this very critical area of energy in the household.

Consumers are indeed paying for the new meters that are currently being rolled out, so consumers are stuck with paying for a technology from which they cannot benefit. That to me seems to be at odds with at least the professed beliefs of the two parties that are so far opposing this bill. We have heard much objection that the legislation has come too soon and that we must not get ahead of the game in terms of putting the technology in place before it is certain. In fact, that belies the reality. This is not new technology; it is well-proven technology. In fact, it is mandated in Victoria, the state of Australia, and in parts of the United States.

We are told that we must catch up with Australia. But suddenly the Government seems entirely reluctant to adopt the technology that is proving its worth in Australia, and that has been adopted there for all the reasons we are proposing that it would be appropriate to adopt it here. For a Government that speaks a great deal about innovation and the advancement of New Zealand’s economy, it seems to have a remarkable reluctance to innovate—not even to take a risk but simply to display some leadership—and to demonstrate a willingness to accept that time has moved on.

I must thank Mr Chauvel for his very appropriate comments that this is the iPod generation. We no longer content ourselves with just 78 records, but that is what this Government seems satisfied to do. There has been some mention of smart appliances. One spokesperson hoped that in his or her lifetime, smart appliances would be seen. I am not putting words in the mouth of Fisher and Paykel Appliances; I am not suggesting that that company is coming out in support of this bill, necessarily. But I spoke a few days ago to one of its technical people, who assured me that technically, in terms of electronic design and development, it could have smart appliances on the market within 18 months. All the company requires is confidence and the surety of the standard. Essentially, all it needs to light the fuse to make New Zealand - manufactured smart appliances available is an assurance of a standard. That is a very, very slight—minor—regulatory step, but that is what we see the Government unwilling to adopt tonight. Eighteen months is a very short time in the scheme of things, and that is how long it would take—not 10 years, not a lifetime.

Overall, the objections from the Government have been in effect quite niggling objections—that the bill is too soon and that the bill is imperfect. Of course it is imperfect; I doubt whether a member’s bill has ever come to this House that could not have been improved by appropriate attention from a select committee. It is very disappointing that this Government will not allow that process to proceed. What will come out of this debate, though, is that New Zealanders will note which parties were willing to stand up and support the best interests of consumers, and which parties were not there to support consumers’ interests. Kia ora koutou.