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Power Prices—Reduction

Thursday 25 February 2010 Hansard source (external site)

Chauvel12. CHARLES CHAUVEL (Labour) Link to this
to the Minister of Energy and Resources

What actions, if any, is he taking to reduce power prices?

BrownleeHon GERRY BROWNLEE (Minister of Energy and Resources) Link to this

I have often said that no Government can promise to lower power prices. Certainly, the Labour Opposition cannot do so, because under the Labour Government’s watch residential power prices increased by three times the rate of inflation. The aim of the Government’s electricity industry reforms is to flatten out the very steep price path that New Zealanders faced during those years. I would point out that since the National Government has been in office we have had a 1 percent price rise in real terms in the electricity sector. I hope that will continue through the coming year. It is significantly better than what was done by the previous administration.

ChauvelCharles Chauvel Link to this

Does he know that his own expert advisory group says that, on average, 227 megawatts per year in new generation were added under Labour between 2004 and 2009, and that only 174 megawatts per year are projected to be added between 2009 and 2014—not enough, according to the Electricity Commission, to keep the lights on past 2012?

BrownleeHon GERRY BROWNLEE Link to this

Yes, but I am also aware that those projections are somewhat determined by the ability of those proposing projects to get consent. I am confident that many of those seeking consents or considering seeking them are waiting for the Government to pass the next round of Resource Management Act legislation, which we believe will make it much, much more straightforward to gain consent.

YoungJonathan Young Link to this

What is the Government doing to increase competition and constrain future electricity price increases?

BrownleeHon GERRY BROWNLEE Link to this

The electricity bill that is currently at the select committee contains a suite of important changes to the electricity sector. The key initiatives that will beef up competition include the transfer of Tekapo A and Tekapo B power stations from Meridian Energy to Genesis Energy; requiring all major electricity generators to put in place an accessible electricity hedge market; allowing lines companies back into electricity retailing, subject to strict controls; and establishing a $15 million fund over 3 years to promote customer switching for retailers.

ChauvelCharles Chauvel Link to this

Does he still say that it would be “audacious” for any power company to raise its prices while he was still considering changes to the electricity sector; if so, what does he say to those New Zealanders now facing increased power bills while electricity companies ignore him and simply put up prices?

BrownleeHon GERRY BROWNLEE Link to this

I spoke before of the measurable period of price rises under the National Government. In that time we had a 1 percent, in real terms, price rise. That is a third of the record for each and every year of the 9 years of the Labour Government. So I think it is a very proud record. What I would say is that last year most power companies appear to have made reasonable profits, and they have done so while containing the price. I think that is the way we will see things happening in the future.

ChauvelCharles Chauvel Link to this

Has he seen comments from David Baldwin, the Chief Executive of Contact Energy, that “The outcome of the electricity review itself is of no particular concern to Contact.”; if so, how does he expect to address issues within the electricity sector—in particular, price rises—when one of the major players in the industry dismisses his reforms and increases its prices by 5 percent?

BrownleeHon GERRY BROWNLEE Link to this

The reason that Mr Baldwin suggested that the Electricity Act changes were of no consequence or concern to Contact Energy is that it supports them and knows that it will be able to operate successfully within them. It is the most balanced electricity generating company in New Zealand, and I welcome his comments.

ChauvelCharles Chauvel Link to this

Supplementary question.

SmithMr SPEAKER Link to this

By my reckoning and from the advice I have received, the Labour Party has now used its 28 supplementary questions, and that is not counting the one where I gave the Hon Ruth Dyson the opportunity to repeat one of them—I did not count that one.

MallardHon Trevor Mallard Link to this

I raise a point of order, Mr Speaker. I know that this is relatively unusual and I am doing something that I have never done before. I am almost certain that I used five supplementary questions. My colleague the whip counted my asking five supplementary questions, which is what I was allocated. Your—

MallardHon Trevor Mallard Link to this

That is the man who should have—

SmithMr SPEAKER Link to this

The member will resume his seat immediately, and that is the end of that point of order.

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