7. GERRY BROWNLEE (National—Ilam) Link to this
to the Minister of Energy
Does he stand by his statement made in the House on 15 April 2008 that there is a “less than 5 percent probability” we will have serious electricity shortages this winter; if not, what is the probability today?
Hon DAVID PARKER (Minister of Energy) Link to this
Yes, that statement was accurate. I went on to say that I was advised that for that low probability to become a reality the current severe drought would have to extend beyond autumn, or an unexpected major failure of large thermal plant would have to occur.
Has he seen the recent reported comments of independent energy consultants who put the risks of a 1992-style blackout as high as 30 percent, and that lines companies have warned customers that power could be cut, without warning, for at least 30 minutes; if so, is he prepared to indicate what he now thinks the risk of that occurring might be?
The first point I would make is that my understanding is there were not rolling blackouts in 1992. The second point I would make is that the industry is acting responsibly. We are seeing some of the major users back off a little, as a consequence of the higher spot price, which is, of course, one of the intended effects of that system. Contact Energy, I am also pleased to tell the House this afternoon, has announced that it is recommissioning 100 megawatts of its New Plymouth station, which it closed at the end of last year; and that will help, too.
Dr Ashraf Choudhary Link to this
Has generating capacity increased to improve security of supply under this Labour-led Government?
The demand for electricity goes up by around 150 megawatts a year. Last year more than 550 megawatts was added to the system, and this year another 300 megawatts is being connected—with more on the way. Generation security margins have improved, but, nevertheless, in an extremely dry year such as this, things get tight.
Has the Minister seen the comments of Alan Seay of Meridian Energy, that consumers should prepare for price rises this winter because of the severe electricity shortage; and bearing in mind that residential prices have risen already by 50 percent in the last 5 years, how much extra cost does he expect that hardworking Kiwis will be paying this winter to keep the lights on and the house warm?
I am sure that commercial users who are exposed to the spot price will, of course, be paying higher prices this year. In other years the price they pay is far lower than the average and far lower than paid by domestic consumers.
Is the Minister telling House that Mr Seay of Meridian Energy is wrong and that prices for electricity will not be rising for domestic consumers this winter?
No, I did not say that, but I have previously said, and I say again, that domestic users are not exposed to the spot price for electricity; to the extent that the spot price is high this year, that impacts mainly on commercial users.
Is the Minister telling the House that Mr Seay, who is the representative of Meridian Energy, telling the media and anyone who wants to listen, that New Zealanders can expect to pay much higher electricity costs this year, has got it wrong in implying that households will be affected, and that the Minister is saying household electricity prices will not rise this year?
I have not said that household electricity prices will not rise this year—indeed, I am sure there have already been some price rises in the residential sector this year. But that is not necessarily connected to the winter power shortage, which impacts mainly upon the spot price and commercial users.
Is the Minister then telling the House that electricity price rises for domestic consumers this year have nothing to do with the shortage of supply?
I raise a point of order, Madam Speaker. That is not an answer; it is not even addressing the question. The question was about residential customers, and the Minister has been at pains today to explain that residential customers are not exposed to the spot market. Indeed, his answer to this question was exactly that. My question asked whether household prices will rise this winter as a result of the shortage. There would be a simple answer, I would have thought, for a Minister who is so much on top of his portfolio!
Madam SPEAKERI think in the line of questioning that has been pursued that the Minister did address the question. As I have said before, members do not always get the answer they want, but if the member wishes to ask another question, there are more supplementary questions.
As I have said previously, I do not expect that the current shortage of water in hydro lakes will have a material effect on residential prices.
Gordon CopelandIs the Minister of the view that the risk of future electricity shortages could be reduced if lines companies were permitted to invest, without limitation, in new generation and in retailing, given that the Commerce Act ensures that profits from the lines themselves are now well controlled?
The Government has been relaxing the restrictions on the ability of lines companies to invest in generation, and it has a bill before Parliament to relax considerably those restrictions. We are not completely abandoning any restrictions, because if we did that, the danger would be that the major generator retailers would gobble up some of the lines companies and we would have less competition, overall, in the market.
I raise a point of order, Madam Speaker. I guess that that, in a way, addressed the question, but the question was not really asking whether generators and retailers could buy a lines company; it was asking whether he was prepared to allow lines companies to invest in generation and retail.