Electricity (Renewable Preference) Repeal Bill

I will talk to Part 2, which is a relatively small part with some consequential amendments to other parts of the principal Act, beyond the repealing of Part 3. I want to address my remarks on this part to rebut some of the logic—actually, logic is far too strong a word—some of the commentary that the Hon Dr Nick Smith has made throughout the debate, in the first reading and in the second reading. Actually, he was active during the biofuels bill, too, but I should not talk about that at length when we are dealing with the Committee stage of this. He was active, also, last week, when we were setting up a select committee to look into climate change. But I really should not talk about that at great length, because we must contain ourselves to the purposes of the Committee stage. But the consistent theme has been, in the words of the Hon Dr Nick Smith—

💬 Hon Dr Nick Smith: I raise a point of order, Mr Chairperson. We are debating Part 2 of the Electricity (Renewable Preference) Repeal Bill. This part deals with only the consequential amendments, such as the powers of the Electricity Commission to investigate issues in respect of the electricity renewable preference provisions that are being repealed. I think you should require the member to speak on that part.

The CHAIRPERSON (Eric Roy): That is right; you have made a fair point. Thank you. I think the member on his feet knows that. I just say that when it comes to closures, repetition and relevance are a matter that the Chair considers.

I thank the Hon Dr Nick Smith for repeating the very words I had used. This is like being in an echo chamber, not in the Chamber of the House of Representatives. The point I was about to make, and now will make, which is relevant to this part because this part makes some consequential amendments and therefore makes the abolition of the energy renewable preference bill complete—without it, it would not be complete—is that the Hon Dr Nick Smith has throughout this debate said, for a day and a half now, that Labour’s record on climate change was shocking, and that Labour’s record on building fossil-fuelled plants has been shocking. He has been listing figures and listing power stations. He has been not taking his tablets, and all the while he has been voting against any improvement.

💬 Hon Dr Nick Smith: I raise a point of order, Mr Chairperson. You can always tell when Labour members are in trouble with the debate; they get personal and nasty. I do not think that those sorts of statements do anything for the Committee, and I take offence.

The CHAIRPERSON (Eric Roy): Let me just say that we are going to have to change our habits, in terms of points of order. I will make a general point first, then I will respond. Members raising points of order should adhere to what the Standing Orders and Speakers’ rulings say—that they should be terse. The presiding officers will not tolerate barbs, innuendos, or imputations in points of order. We will deal with points of order in a fair and just way, in the House in general. The member has just offended in that way—not in a particularly bad way, but it is symptomatic of what is going on. I want to make that point very clear. We are going to change our habits, as a House, about that. That is the first thing. The second thing is that the member did breach what is accepted.

Very good, Mr Chairman. Dr Nick Smith has, all this while, said that the progress this country has made—

💬 Hon Dr Nick Smith: I raise a point of order, Mr Chairperson. I think the statement that was made by Mr Hodgson was offensive, and I take offence. I think the member should be required to withdraw and apologise, Mr Chairman.

The CHAIRPERSON (Eric Roy): I ask the member to withdraw and apologise.

I withdraw and apologise. Right through the debate the Hon Dr Nick Smith has railed against this country’s poor record, but voted to make it worse. I want him to get to his feet to explain what is logical about a member apparently caring a great deal about our progress on climate change, and apparently caring a great deal about emissions that occur in our electricity sector, but then voting to make them worse—voting to get rid of biofuels, and in the case of this legislation and this part, which completes the abolition of the moratorium, voting to allow the building of baseload fossil-fuelled generation. He speaks in one direction and votes in another. I want the honourable gentleman to take the call and explain himself, because he has not got any logic to his logic. The gentleman says one thing and votes in the other direction. I am getting sick of it. I reckon—

💬 Hon Dr Nick Smith: I raise a point of order, Mr Chairperson. We are meant to be debating Part 2. It is a very narrow part, and it changes, very narrowly, the investigative powers of the Electricity Commission. The Standing Order around the Committee stage debate is that the member needs to narrowly reflect on those issues in Part 2. I ask that he be required to comply with the Standing Orders.

The CHAIRPERSON (Eric Roy): I uphold that point of order.

Very good, Mr Chairperson. I was simply making the point that Part 2 completes the abolition of the moratorium. Therefore, by completing the abolition of the moratorium, Part 2 allows the moratorium to be lifted; therefore, it being lifted allows for the development of further fossil-fuelled electricity generation, and, therefore, is not consistent with anyone who argues against that.

The most vociferous arguments against those things have come from the Hon Dr Nick Smith, who, none the less, votes in the other direction. I do not understand it, and there are a bunch of words I cannot use to describe it, so I shall not. But I do think that, in the course of this part of the Committee stage of the bill, the Hon Dr Nick Smith, Minister for the Environment, should get on his pins and describe what it is about his contribution that is remotely logical. So far, it appears to me to be bereft of logic. The good gentleman has got himself a PhD from somewhere and therefore has to have a couple of brains to rub together, and I would like to see that exposed. I would like to see the gentleman get to his feet and see whether he can make something resembling a coherent argument in favour of fewer emissions but somehow against a moratorium that would stop them. Thank you, Mr Chairperson.

Part 2 amends the principal legislation by removing the inquiry powers of the Electricity Commission. I will discuss those inquiry powers and describe to the Committee how those powers currently work under the existing legislation and why it is important that they not be repealed. One reason I want to explore this is that when the existing legislation was passed, one of the principal objections raised in the debate by National Party members was that, essentially, the decision as to whether an exemption should be given from the restrictions was a ministerial discretion, which effectively enabled the future shape of the electricity market to be determined by ministerial fiat. That was never the case, and it is interesting that in this debate National members are no longer using that justification; they have moved to different grounds. I make that point because it shows that the underlying purpose now is political, not principled.

The existing legislation states that the Minister of Energy can grant exemptions in a number of categories, and that it is for the Electricity Commission to do an inquiry on an application by someone who wants to come within the ambit of one of those exemptions, in order to see whether the exemption should be granted. The commission then makes a recommendation to the Minister of Energy, and the Minister has the authority to do only one of two things: the Minister can either accept the recommendation or reject the recommendation. The Minister of Energy cannot replace the recommendation of the commission with some different decision. The Minister cannot replace the recommendation with his or her own decision, but can accept or reject the recommendation.

The exceptions that are allowed for under the legislation, which the Electricity Commission has the duty to consider, are set out in section 62G in Part 6A of the Electricity Act. The first is that the Minister of Energy can grant an exemption—again, on the recommendation of the Electricity Commission—if the specified generation plant will be non-baseload plant that will have an average load factor less than a prescribed limit, will emit greenhouse gases less than a prescribed limit, or will have a start-up time of less than a prescribed limit.

The second exemption is where there is a combination of renewable or other non - fossil-fuelled plant, together with fossil fuels. That cogeneration process can be a sensible way to generate electricity.

The third exemption is one that I have mentioned in previous contributions in response to the National Government’s assertion that the country could not build new, more efficient thermal plant to retire less efficient coal plant, for example. That category exemption is found in section 62G(1)(e). It states that the specified generation plant that could be allowed will be connected and operated in circumstances where an existing thermal electricity generation plant will be retired in whole or in part, and that the specified generation plant, together with any part of the existing thermal electricity generation plant that is not retired, will be operated in a manner that will reduce greenhouse gas emissions by at least 20 percent, based on emissions of the existing thermal electricity generation plant and the projected emissions assessed in the prescribed manner. It also requires the Electricity Commission not to reduce the security of supply.

So what would happen in practice under the legislation as it stands will not be able to happen if Part 2 of this bill passes in its current form—that is, the Electricity Commission will lose its ability to make that inquiry. If, as National members say, they are concerned about being able to replace inefficient thermal plant with efficient thermal plant, then the Electricity Commission is the body that would listen to those applications, and it would have the expertise to assess the security requirements of the system. For example, we do not want to lose the whole of the Huntly power station to some interruptible gas-peaking plant, because that would not be good for the security of supply, but we might be willing to have that replaced by a more fuel-efficient gas plant that has lower emissions than a gas-fired plant. It would be for the Electricity Commission—

I move, That the question be now put.

I just want to build on the comments of my colleague David Parker about the powers of the Electricity Commission, which are covered under Part 2 of the bill, because, as was kindly pointed out to us by members opposite, we are debating the investigation powers of the commission, which are being removed as a consequence of what we have already done with Part 1. Really, we have to ask what the commission would be investigating. We have already heard from David Parker that some of that is around the question of exemptions; and in listening to the debate, it seems to me that a number of members opposite do not seem to realise that there was an exemption part of the Act. It does not even seem as though they want to know that. The very reason it was there was to allow, as we know, the Electricity Commission to investigate situations where there was a more efficient thermal option that could be brought on board. That was an important part of the Act, because although we wanted to ensure that renewable generation was preferenced, and we wanted to make sure that New Zealand goes forward into the future with renewable energy, we also wanted to make sure that we continued to develop efficient options where they are. So that is what the commission would have been investigating, but it will not be able to do that now, as we go to repeal that legislation.

What else would the commission be investigating? It would potentially be investigating other areas where people perhaps were going to breach the moratorium. We do not know that there was a lot of that going on, because what we do know is that there was a large amount of renewable generation coming on stream—1,400 megawatts. So it would have been unlikely that the Electricity Commission would have been investigating this kind of breach of the moratorium, but it is possible. Once again, we will not be going down that path because we are here trying to repeal that under Part 2.

Another part of what the Electricity Commission would have been looking into around the grounds, terms, and conditions of exemption was under section 62H of the Act. The Minister of Energy would have had to specify in the exemption the ground or the purpose under which the exemption was going to be granted. It then went on to state what conditions would be imposed upon that, and if the person was granted an exemption, he or she then had to specify the kind of generation plant that would be operated and how it fitted with the rest of the Act. So that is the kind of work that the Electricity Commission would have been investigating. It was an important thing. But a really critical part that we have not discussed yet is section 62I, which is actually the public consultation process.

💬 Moana Mackey: National doesn’t believe in that.

I know that National would find that a difficult subject to discuss, because we have seen throughout this week that public consultation is not something it is interested in, but that was the role that the Electricity Commission was going to do—to make sure the voice of the public would be heard if there was a case for an exemption or, indeed, if there was a case for someone being prosecuted.

Section 62I of the Electricity Act states: “Before making a recommendation to the Minister of Energy to grant an exemption, the Commission must—(a) publish its intention to do so … and (b) give a reasonable opportunity to those persons to give those views; and (c) have regard to those views.” So that is what the commission was going to be doing. It was going to be operating a public forum in which people could put forward their views. That is a very, very good thing and it is not something we have had an opportunity to do under this bill.

This bill makes a significant change to the way we look at our sustainability challenge going forward, and there is no opportunity for public consultation. Obviously the Electricity Commission had that role and that is now gone. The select committee would have been a great venue at which to have a debate about the mixture of New Zealand’s energy generation that we want going forward. But, no, National has come to this Parliament for the past 2 weeks to show us that it does not really want to listen to the public’s concerns. It does not want a body like the Electricity Commission to have the opportunity to hear public concerns.

It simply wants to ride roughshod over New Zealand’s global and local interests. It is sort of like a perverse version of the “think global, act local” approach that the National Government is taking. On a global level it wants to take us backwards by ensuring that we will not only be made a laughing stock on the world stage but also be told here in New Zealand that we will not look forward and we will not try to protect our environment. What we see in Part 2 is the enabling of the repeal of an important part of the make-up of our sustainability going forward. We want renewable energy because it is good for the environment. That is also good for jobs and employment, and we can see that right around the world—in the European Union, and in Germany in particular where a lot of jobs have been created in the renewable energy industry. That is not what the National Government wants. It does not want to see any jobs created in this area; it wants to take us backwards to a time that realistically is not where we want to go.

I move, That the question be now put.

I will take a short call—a skimpy, small contribution inversely related to the problems that will follow—on Part 2. I follow on from what Mr Robertson has said. The stripping away of these institutional powers worsens the capacity for ordinary, garden-variety Kiwis. Whether they be firms and users of energy, investors, or communities, they will have their rights to engage in participatory democracy stripped away from them.

💬 Hon Gerry Brownlee: This is very good.

I say to Mr Brownlee that the bill is inversely related to a certain girth, but I will say more on that at another time. It is a very mean-spirited approach to people having a stake, an opportunity, to participate in, and influence the outcome of investments in, the energy sector. It might suit some narrow sectional interests that have been driving, for a whole host of reasons and for a long time, to change the character of energy investment and the range of sources from which we derive energy or the resources we use to create energy. In that sense it is a very blinkered approach. Others have spoken about how it will have ruinous consequences on our international reputation.

💬 Hon Dr Nick Smith: I raise a point of order, Mr Chairperson. We are meant to be debating Part 2 of the Electricity (Renewable Preference) Repeal Bill. It is a very narrow part, dealing only with the deletion of the words “Commission” from the investigating powers of the Electricity Commission. I have listened carefully to the member. He has been well outside the Standing Orders, and you should require him to speak to the part.

Speaking to the point of order, I say that it is quite simple. This strips away institutional powers, and it will have an effect in terms of how the full legislation is implemented.

The CHAIRPERSON (Eric Roy): No, the member is getting into the debate. Several cautions have been given to Committee members to stay on target, to stay on message, and to keep within the realms of Part 2. I invite the member to continue.

For fear of spurring another avian contribution from Dr Smith, I say fair enough. Dr Smith may laugh, but as I have said before, there is a famous Māori proverb: “He pīpīwharauroa atu i konei, ki konā—when the cuckoo leaves one nest, it goes over there, still a cuckoo, so kaua koe e katakata. [do not laugh]

To go back to Part 2, I say that it is an egregious slur that Dr Smith puts upon the ability of a parliamentarian to contribute to such an important matter. National has brought forth a set of ideas and is hiding them as narrow, technical amendments. But, in actual fact, it is a circuitous attempt to erode our ability to act in a sustainable and very wise fashion and uphold our international integrity in the eyes of our competitors. Also, it worsens the prospects of moving towards a broad, sustainable approach in relation to energy. This is a very worrisome, negative, and mean-spirited attempt to strip away a fantastic set of changes that was brought forward by my colleague here. The Government refused to allow them—[Interruption] Ah, there is noise from the cuckoo’s nest, and it is now being joined by chirps and trills from the back of the Chamber. Of course, those members fear the accuracy of what we are saying. One cannot reduce people’s rights to participate, and one cannot force industry to pay higher costs as a consequence of stripping away the institution’s ability to investigate and to test the worthiness of various energy proposals. For that reason this will be only a short contribution to the statutory landscape, until such time power returns to where it belongs. Kia ora tātou katoa.

I move, That the question be now put.